Settlement Cuts NYC Reservoir Tax Burden in Mahopac

MAHOPAC, N.Y. — New York City—the owner of the West Branch and Croton Falls reservoirs along with acres of watershed land in the Mahopac School District—will contribute significantly less to the district’s tax base after a court-imposed settlement slashed the tax assessment on the city-owned reservoir properties.

The June 20 settlement ordered by Putnam County Supreme Court Justice Victor Grossman immediately cuts the reservoir lands’ assessed value by nearly $80 million. As a result, school district officials said the city would pay $1.667 million less in property taxes for the 2024-25 school year, with further reductions to come.

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As part of the settlement, the reservoir property assessment will be reduced in steps over the next seven years, falling to a little more than half of its 2023 valuation by 2032.

While the district will feel the impact most, the dispute was actually between the city—which owns the land—and the town of Carmel. The town will also receive less tax revenue from the city as a result.

“The town has been fighting this for seven years and in the end, we were forced to settle with NYC,” Supervisor Mike Cazzari said. “Sighting security concerns, NYC was able to keep us from getting our own experts to inspect the property for appraisal purposes.”

The dispute between the city and the town pre-dates both school Superintendent Christine Tona and Cazzari. In 2017, the city filed a petition agains Carmel and its tax assessors (named as co-respondents) to reduce its property assessment. Mahopac School District (along with North Salem, which includes parts of the Croton Falls Reservoir) was also named as a defendant. This left the school district with little control over the outcome while suffering the effects of any reduction in the city’s property tax payments.

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To make up for the shortfall for the current school year without having to raise taxes, the school board voted unanimously on Aug. 23 to transfer $1.667 million from its fund balance to this year’s $$142.5 million budget, which was approved by voters in May.

Tona said that the 2023 total assessment for the two Mahopac School District reservoir parcels was $233,088,034. After the settlement, the 2024 total assessment for those two reservoir parcels will drop to $155 million ($115 million for one, $40 million for the other). In 2026, the combined assessment drops to $148,750,000 and continues to get even lower before eventually falling to $128 million for the 2031-32 school year.

Tona said the school district’s previous administration had “fortunately started preparing early in the process and set aside money in case the city won its appeal.”

The district will now have to factor in a lower contribution from New York City when formulating its budget for the 2025-26 school year and beyond.

While the settlement was characterized as a “win” for the city by BOE President Jonathon Schneider, district officials said it could have been worse if the town had lost in court.

As part of the settlement, the district doesn’t have to refund any taxes the city paid between 2017 and 2023 or face any other penalties with interest. Had the town and the district lost in open court, they could have been liable for refunds with interest.

Schneider said that while the district had no control over the timing or outcome of the litigation, officials had planned ahead and set money aside in case the city got a favorable ruling on its petition.

“The drop in tax money has to be made up by the rest of us,” Schneider said. “We are working to ease the tax burden on us, but [the ability to draw on reserves] won’t last forever.”

Tona said the possibility of losing a chunk of funding from NYC had been looming in the background while planning annual budgets for years. While the settlement presents some challenges, having the decision before the school year gives the administration a clear idea of what to expect from the city before starting the budget process.

“With the city’s reservoir litigation now settled, for budgeting purposes, it is extremely helpful for the district to have the information about the future reductions in the assessed values,” Tona said. “As we begin to plan for the 2025-26 school year budget and beyond, we will be mindful of the impact on the taxpayers while continuing to provide the necessary support and opportunities for our students. It is always a balance.”

Had the board not voted to transfer the $1.667 million, taxpayers would have seen a significant bump in their bills. When it presented its budget for 2024-25, the district estimated a tax rate of $18.93 per $1,000 in assessed property value. Using $500,000 as the average home price, officials estimated the average homeowner would pay around $9,500. With the $1.667 million shortfall, had the district not contributed any reserved funds, taxpayers would have seen their tax rate jump to around $19.26/$1,000 in home value. Complicating matters is a change in the average home value, which rose to $525,000, increasing the average homeowner’s responsibility to more than $10,111.

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