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GlobeSt.com EXCLUSIVE: Real Estate Leaders Deny Industry Complicity in Assessment Scandal

NEW YORK CITY-Despite some insiders' belief that "owners will come away clean," sources predict that industry heads will roll when the valuation scandal spreads beyond the confines of the Manhattan assessor's office. Valuation discrepancies of up to 50% have been reported.

By John Salustri | Updated on February 26, 2002

NEW YORK CITY-The indictment Monday of 18 assessors on a total of 572 counts of racketeering, bribery and fraud–all revolving around the under-valuation of New York City real estate–is only the overture for what promises to be a major morality play, sources tell GlobeSt.com. While some industry leaders we spoke with expressed their disbelief that industry colleagues would participate in the scheme–which dates as far back as 1967–others express their doubt that building owners won’t be indicted down the road.

“It defies belief that property owners could not have been aware,” says one source who himself heard of valuation discrepancies as high as 20%. “Very simply, if you are a sophisticated property owner, you know everything about the properties that compete with you. Assessments are all a matter of public record. It’s hard to believe you would not be suspicious of an assessment lower than yours on a building situated similarly to yours.”

Another assessor who works in Manhattan says he’s witnessed valuations with discrepancies as high as 50%. “We’ve lost business over the years because we tried to do things the right way,” he told GlobeSt.com under condition of anonymity. “The city turned a blind eye toward the undervalued assessments but delayed legitmate firms that tried to work within the system.”

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