Money Talks, Bullshit Walks!

01.17.14

City overrules its own assessors and lower Google's real estate taxes by $21 million

Google will save as much as $21 million after the city overruled its own assessors and lowered the tech giant's real estate tax

HO/AFP/GETTY IMAGES

Google, one of the country’s richest companies, shelled out a staggering $1.8 billion in December 2010 for its New York City headquarters — the 17-story former Port Authority building that takes up an entire block in Chelsea’s red-hot real estate market.

City Finance Department brass overruled their own property assessors twice during the past two years to lower Internet giant Google’s real estate taxes by as much as $21 million, the Daily News has learned.

Google, one of the country’s richest companies, shelled out a staggering $1.8 billion in December 2010 for its New York City headquarters — the 17-story former Port Authority building that takes up an entire block in Chelsea’s red-hot real estate market.

But three veteran Finance Department assessors have claimed “highly unusual” interventions in the Google assessment process by their supervisors. Those interventions, they say, slowed the rise in the building’s official market value and reduced the company’s tax bite.

In early 2012, they say, an assistant commissioner ordered a reduction in his agency’s $816 million appraisal for the building, even though Google had not even filed a formal objection.

The city releases tentative property assessments each January. By law, those for commercial buildings are based on rental income and expenses, not sales price, and owners have until March 1 to file objections.

But on Feb. 24, 2012, the Finance Department suddenly cut the Google assessment to $628 million. That “adjustment” was done “per [assistant commissioner Timothy] Sheares,” according to a printout of the department’s computer log obtained by The News. The change reduced Google’s tax by about $8.7 million.

“This agency almost never reverses an appraisal before an owner objects,” said one assessor who asked not to be identified.

The department merely corrected “a mistake” in its original appraisal of the building, spokesman Owen Stone countered.

Google had filed only a partial income and expenses report for the building during its first year of ownership, Stone said, so the agency used a previous report from the former owner instead.

Taconic Management’s Peter Febo, who manages the building for Google, likewise rejected any claims of special treatment.

“It is a matter of public record” that the city “corrected” its error before Google completed filing an appeal, Febo said.

CRAIG WARGA/NEW YORK DAILY NEWS

At Google’s headquarters in Chelsea city tax bosses overruled their own assessors, cut the value of the property and saved the company a bundle.

But there’s no public record of the next unusual Finance action.

On Nov. 26, 2012, a department supervisor overruled another tax assessor’s appraisal that the Google building’s market value should be hiked to $1.2 billion for the current tax year.

That assessor for weeks resisted pressure from higher up to change his appraisal, agency sources say. A supervisor then stepped in and cut the appraisal to $827 million, which was the figure the city posted last January.

Agency computer logs show the dispute over vastly different assessments centered on how to value more than a quarter of the 2 million-square-foot building that Google itself occupies for its own employees.

The assessor judged it to be worth $92 per square foot, while his supervisor claimed comparable rents in Chelsea were just $42 a square foot.

But those same records also show the supervisor listed as one of the “comparables” a private three-story brownstone six blocks away from the huge Google office complex.

“It’s against our department’s policy to use a different class of property as a comparable, and no appraiser in their right mind would do that,” said another veteran assessor who asked not to be identified.

“While your source was able to provide you with internal documents that list ‘comparable’ properties, that does not mean they were used,” Stone said.

But if they weren’t used, why include them in the agency’s official computer log justifying a tax reduction for Google?

That reduction, by the way, was worth $12.6 million in tax savings.

“This is a very highly valued property for its building type and its neighborhood ,” Stone insisted.

Of course it is. That’s why somebody needs to investigate fully what happened here. And I don’t mean by simply Googling it.

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