Understanding Albany's Residential Property Tax

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How does property tax work in Albany?  Who gets taxed the most and least in Albany?  What types of residential development are the most valuable?  The City of Albany’s current financial crisis brings property tax into focus - how the City may need to raise property taxes and how we need to incent residential development to generate more property tax asap.

This is one of a series of articles where we will attempt to demystify the City of Albany’s property taxes.  In this article we review the data for one, two and three family homes in the City including the number of properties, their value, their property tax, and the distribution of each of the home types across the City of Albany.

If this article interests you we have also written about property tax revenue generation trends and about outcomes when the City of Albany Industrial Development Agency has supported residential development.   

If you have never looked at property data there is a plethora of information collected for each parcel.  The two most important things about property data are 1) having complete and correct information to fairly value a property and its taxes and 2) making sure you have a good address to send the tax bill.  

For example, each parcel includes its dimensions (width, depth, pitch), building style (ranch, townhouse, colonial), building type (one-, two-, or three-family properties, commercial, etc.). The characteristics of the property are used by the City's Assessor to assign value to the land, generate a full market value, and ultimately calculate a property's assessed value. To better manage all these pieces of information, we’ll clearly note what information we used when performing calculations or showing graphs.  

Another great aspect of property information is that all of the information we’ll be presenting in this story comes from readily available, open sources such as: 

Albany (city) - https://ny-albany.civicplus.com/207/Assessment (PDF)

Albany (county) - https://www.albanycountyny.gov/departments/management-and-budget/real-property-tax-service-agency/assessment-rolls (PDF)

New York State - https://data.ny.gov/Government-Finance/Property-Assessment-Data-from-Local-Assessment-Rol/7vem-aaz7/about_data (CSV, etc.) 

In this story we’re examining one, two and three family properties (defined as One-Family Year-Round Residences in the datasets listed above).  We focused on these properties because they are the most abundant property types in Albany and because residents living in Albany pay property tax either directly or indirectly through rent. 

We started our analysis examining the number of properties by property type, the median and average (mean) Assessment Total by property type, which we define as Assessed Value, and median and average square footage (SqFt) by property type.  See table below.

There are notable differences in median and average between these property types.  For example, the average one-family property has an Assessed Value 23% higher than the average two-family property despite being 30% smaller. Putting this another way, one-family properties are assessed 78% higher per square footage!  These numbers are even more exaggerated when comparing one-family to three-family properties. What we found interesting here was a noticeable differences in median (and average) between one family compared with two and three family residences.  These early numbers encouraged us to focus this story on comparing one-family with two- and three-family properties.

* Note that we are analyzing properties based on their Assessed Value and not Full Market Value because there are several factors that contribute to Assessed Value that directly impact the taxes paid by any one property (e.g., veteran status.). However, looking at these numbers showed that nearly all Assessed Values were closely aligned with a property’s Full Market Value. 

What stands out from the table above is that the median (and average) price for one-family properties is higher than that of two and three family properties despite their generally larger size.  This inspired us to plot each property's assessed value relative to its square footage. 

Across the range of square footage, one-family properties consistently have higher assessed values than equally sized two- and three-family properties. This is evident by the steeper slope observed in the figure above. 

We also observe several small one-family properties with 500 SqFt or less. A quick glance at these locations suggest they are condominiums, which are classified as one-family properties. 

The one-family data were also partially obscured by the two- and three-family data, so we also plotted the distribution of Assessed Values for one-family properties, which is provided below. (For the sake of brevity, plots of two- and three-family properties were left out). 

The data also suggest that there’s no significant difference between two- and three-family properties of the same square footage, suggesting the same criteria is used to determine their assessed values.  

To loosely tie this analysis back to Albany’s budget shortfall, assuming the average $162.2/SqFt that one-family properties pay and an effective residential property tax rate of $7.31 per $1,000 Assessed Value, one-family properties contributed approximately $25.12M to Albany’s budget. Two and three family properties contributed $8.99M and $2.16M, respectively. 

However, if the Value/SqFt for both two- and three-family properties were increased (from $91/SqFt and $84/SqFt, respectively) to the same average rate for one-family properties, this would result in annual property taxes of $16.01M and $4.17M, respectively. Or a total increase of $9.03M. 

We are NOT advocating for an increase in their property tax and are aware that there are many arguments both in favor and against raising the property taxes on multi-family houses (e.g., higher rents, investment property, etc.). We are simply presenting the results of our analysis hoping to add to the larger discussion.  

As we evaluated these three types of residential properties we wanted to understand owner-occupied and remote landlords.  While there is no perfect way to do this, the property data contains both the property address and the mailing address for the owner.  We could review, for each property type, the number of property owners who receive their bill who live outside of Albany.  

Single family ownership is generally owner-occupied. Two and three family properties have a significantly lower rate of owner-occupied properties.  

We are not naive regarding the distribution of one-, two-, and three-family properties throughout Albany, and are aware that location likely impacts a property’s Assessed Value.  As part of another analysis (https://www.capitalexaminer.com/story.php?id=14) of housing data, one-, two-, and three-family properties were overlaid on city parcels and displayed on a map of Albany. 

We’ve copied a few of those images here to aid in our discussion. Note that Yellow represent are one-family properties, Blue indicate two-family properties, Red are three-family properties, and Black represent all other residential types. 

Residential properties from Washington Park (SW corner of map) to Arbor Hill.  Yellow one-family properties, Blue two-family properties, Red three-family properties, and Black all other residential types. 

Residential properties around 2nd Ave.  Yellow one-family properties, Blue two-family properties, Red three-family properties, and Black all other residential types. 

Residential properties located near Harriman Campus, Buckingham Pond, and Eagle Point.  Yellow one-family properties, Blue two-family properties, Red three-family properties, and Black all other residential types. 

The City’s zoning code reinforces the current distribution of property types.  The City maintains their zoning map which shows the zoning districts.  For example, the primarily yellow areas (map above) are zoned R1-L and R1-M (map below) which restrict development to single family homes.  There are nationwide movements that suggest rethinking zoning, including Strong Towns and YIMBY.  In future articles we may be commenting on the applicability of these organization’s policy proposals to the City of Albany. 

The biggest takeaway from this analysis is that one-family properties have a higher tax per square foot than two- and three-family properties. We used Assessed Values rather than Full Market Values to eliminate any discrepancies due to exemptions; however, that impact is negligible on our findings.  We did a back-of-the-envelope calculation showing an additional $9 million in property tax revenue if two- and three-family houses were taxed at the same rates as one-family houses.  

We noted that approximately 34% and 47% of two- and three-family property owners are likely not owner-occupied.  We didn't suspect that magnitude and it merits additional explorations on the impact.

Lastly, we highlighted the differences by neighborhood of 1- 2- and 3-family properties and how those different distributions are reinforced through zoning.  

We will be putting out additional housing-related analysis in the future.  As the City of Albany needs to grow our housing stock by 2500+ housing units, it is important that we understand the current residential property landscape and property tax distribution.