United Riverhead Terminal to receive over $6M in assessment reductions for seven tax years

Riverhead Town has agreed to reduce United Riverhead Terminal’s property tax assessments by $6.66 million for the tax years 2020-21 through 2026-27, according to last Tuesday’s settlement in Suffolk County Supreme Court. 

Although these reductions were released in a public court filing on Aug. 18, the settlement in this long-running tax litigation between URT and the Riverhead Town Board of Assessors had not been addressed by the Town Board during its meeting that same evening. 

However, Councilman Kenneth Rothwell acknowledged at the Town Board meeting last Tuesday that he received a number of concerns from residents about how the settlement will impact their tax bills, which has yet to be determined. 

Suffolk County calculates the final property tax refund amount. Under the Suffolk County Tax Act, the monies spent by the county on the refunds are then charged back to Riverhead Town on a separate line on residents’ tax bills.

He said the Town Board is looking into how they can work with Suffolk County to extend the payment schedule so that “it is not a one-time hit,” like what happened with the Friar’s Head settlement.

“These are the court battles where we are seeing where we potentially have agreed to settlements, and we just want to be fully transparent with everybody,” Mr. Rothwell said at the Aug. 18 Town Board meeting. “Obviously everybody pays a different fee based on the assessment of your house, but we’ll try to get a figure that will give what the average taxpayer in the town of Riverhead will be assessed on.”

Residents fumed after seeing a roughly 160% spike in the “New York State Real Property Tax Law” line on their tax bills this past spring, which they later learned stemmed from a $6 million in court-ordered refund tied to the town’s long-running legal battle with Friar’s Head Golf Club. 

The main criticism was over the lack of forewarning and transparency about these chargeback dollars from town officials. In her guest column published by RiverheadLocal on Aug. 21, town assessor Laverne Tennenberg set the record straight with the URT settlement. 

“Opinions and accusations can be rampant and misguided,” Ms. Tennenberg said in her column, which she shared with the Riverhead News-Review. “That happens when facts are not in the public domain.” 

United Riverhead Terminal is a 286-acre petroleum bulk storage and distribution facility located on Sound Shore Road in Northville. The company’s CEO, John Catsimatidis, purchased the terminal from Houston-based company Phillips 66 in 2012 for just over $24 million. 

Similar to Friar’s Head, United Riverhead Terminal sued the Riverhead Board of Assessors for “unequal,” “excessive”and “unlawful” assessments of nine parcels for tax years 2020-21 through 2025-26.

The problem was the URT properties’ assessment were equalized by using an over 15% ratio to reflect the sale price back in 2012, and those rates never changed, Ms. Tennenberg explained. 

An equalization rate is calculated by dividing a municipality’s total assessed value by the state-estimated total market value. A town uses this formula when it does not update assessments to 100% of market value every year. It is determined largely, but not entirely, on the sales of residential homes in a given period, Ms. Tennenberg said. 

“As home sale prices increase, the equalization rate decreases,” she said. “Buyers and sellers are making the market … assessors are not.” 

The last time Riverhead conducted a townwide reassessment was 1980, when it brought all values to 100% — a factor officials say makes valuations more difficult to defend as market conditions shift.

Market values have increased since 1980, widening the gap between assessments from over 45 years ago and those of today. Ms. Tennenberg said what was once 100% of market value has dropped to just below 8%. 

“Since the Town of Riverhead does not conduct reassessments, assessments in the town generally remain static unless there are physical changes to a property,” she said. “The $24 million market value of the Terminal in 2012 ballooned to a current market value of $49 million, without any change to their assessments, due solely to the drop in the equalization rate to less than 8%.”

Appraisals on both sides validated the notion that United Riverhead Terminal’s properties were not worth $49 million. Riverhead settled on a reducing assessments to conform to the $24 million sale price using the 2012 equalization rate.

Ms. Tennenberg described assessors as “municipal appraisers” because they estimate the value of properties. She stressed the assessors’ job is not to raise, create or collect taxes, send tax bills or determine refunds. The role of a town assessor is to assess property, maintain physical inventory, approve or deny exemptions, maintain property ownership records and produce assessment rolls.

“Every property owner is entitled to a fair and equitable assessment, such that they should only pay their fair share of taxes. United Riverhead Terminal is entitled to that same equity,” the town assessor said. “Many homeowners are solicited by companies and attorneys to lower their assessments, and many have availed themselves of that process; United Riverhead Terminal is no different.” 

John McAuliff of Roanoke Landing criticized the lack of transparency in the United Terminal lawsuit at last Tuesday’s Town Board meeting, saying the settlement number should have been presented to the public “from the get-go.”

“I found it a little bizarre that we can’t get the numbers of how much was involved in the legal settlement that we’re all going to have to pay for, and exactly what it covers,” Mr. McAuliff said. “That ought to have been in the first piece of paper, not hidden behind some kind of legal process that is not explained.”