New York City Department of Finance


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NYS Comptroller


Taxpayers' Guide to State and Local Audits

New York City Department of Finance
Selected Controls Over the Property Tax Assessment Process

Issued: July 11, 2017
Link to full audit report 2015-N-1
Link to 90-day response

To determine if the New York City Department of Finance has sufficient controls to ensure the accurate determination of property tax valuations and assessments. We also determined whether all changes to the assessments were authorized. This audit focused on Tax Class 2 properties that are valued as income producing, based on income and expense data. The audit period was July 1, 2013 through May 31, 2016.

The New York City Department of Finance (DOF) is responsible for assessing all real property throughout the City – approximately 1.05 million properties each year. Property in New York City is divided into four different classes, each treated differently under the law. The class of the property determines how property value is assessed. For Tax Class (TC) 2 properties, which include rentals, co-ops, and condos with more than three units, Market Value (MV) is determined by using income and expense data reported by those or similar rental properties. DOF acquires income (e.g., rent from conventional rental units) and expense (to maintain and operate property on a daily basis such as fuel, insurance) data for most rental and other income producing properties through annual submission of the Real Property Income and Expense (RPIE) form. RPIE information is used to determine MV for large rental buildings, co-ops, and condos (11 units or more), and income only is used for smaller rentals, co-ops, and condos (ten units or less).

For large rental properties, income and expense are adjusted to current year levels to capture market conditions, and the MV is determined by applying a capitalization rate (expected rate of return based on the income generated by the building) to the net operating income. Co-ops and condos, which do not produce rental income, are compared to similar rental buildings. For large co-ops and condos, MV is determined by using the net operating income of similar rental properties called comparable properties (comps). Comps are not used to value smaller co-ops and condos; instead, all smaller properties are valued by using available income information from small rental buildings in the area that file an RPIE using the Gross Income Multiplier method. Once the MV is determined, DOF calculates the Assessed Value (AV). The AV is based on a percentage of the MV. For TC 2 parcels, the percentage is 45 percent.

DOF Property Division (Property) assessors input data into DOF’s Computer Assisted Mass Appraisal (CAMA) system to collect property-related information and perform valuation calculations. For co-ops and condos, assessors can select comps contained in CAMA. Once CAMA determines the MVs, the values are then transmitted to the Real Property Assessment Database (RPAD) to determine the AV for tax purposes.

In fiscal year (FY) 2016, there were 272,640 TC 2 properties with a total assessed value of $103.5 billion.

Key Findings

  • We reviewed 508 parcels valued during FY 2014 to FY 2016 and found that Property did not conduct necessary inspections for 276 (54 percent) of them. Property inspections are required so that the assessor can make an informed determination of the value of the property when performing the assessment, including consideration of building alterations and new construction. Without the required inspections, DOF cannot be certain such changes are adequately considered when valuing a property.
  • In certain instances, assessors did not use all of the comps selected by Property’s Modeling Unit, changed valuation methods year-to-year, and/or valued relatively similar properties differently without any explanation of the basis for the changes. While we recognize that assessors are allowed to make adjustments per DOF’s guidelines, without sufficient documentation of the rationale for such adjustments, the objectivity of the process can be compromised.
  • 93 (39 percent) of 237 Global Changes and mass updates in the CAMA system did not include the User ID that executed the script (program logic/instruction code) in CAMA. Also, for 25 of 237 Global Changes and mass updates in CAMA, there was no record of the official that requested the script. Therefore, DOF is unable to ensure that all changes made within CAMA were authorized and warranted.

Key Recommendations

  • Require field valuation employees to conduct and document the necessary periodic inspections of real property parcels, as prescribed.
  • Ensure the reason for the valuation method selected for parcels is clearly documented in CAMA.
  • Ensure that a User ID or Service ID is recorded for every Global Change and mass update.
  • Prevent unauthorized data changes to properties by ensuring the requestors of all scripts are documented and that the executed scripts are what was requested and documented in the CAMA User Audit Table.

Other Related Audit/Report of Interest
New York City Department of Finance: Reporting of Billboard Income (2011-N-2)
New York City Department of Finance: Reporting of Billboard Income (2015-F-17)

State Government Accountability Contact Information:
Audit Director: Carmen Maldonado
Phone: (212) 417-5200; Email:
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236