Residents Sue Suffolk County Over Property Fees -- Update

By Joseph De Avila Features Dow Jones Newswires

A group of Long Island residents on Tuesday filed a class-action lawsuit against Suffolk County in New York, claiming that county fees for filing real-estate documents are illegal and amount to unauthorized taxation.

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Filed in state Supreme Court by five Suffolk County residents, the lawsuit takes aim at fees that the county's real property tax service agency charges for verifying tax maps when filing paperwork related to mortgages and deeds. The county agency raised the tax map verification fee in 2015 to $200 a parcel from $60.

The plaintiffs argue that state law forbids fees from exceeding the cost of providing that service and have asked the court to declare the charges unlawful.

Based on county budget projections, the agency will generate more than $60 million in revenue over the year, primarily from fees, while the cost of running the agency is about $1 million.

"It's problematic for the county to be raising revenues through these fees," said Cameron Macdonald, executive director of the Government Justice Center, a nonprofit law center that is representing the plaintiffs. He said the fees are used to plug revenue shortfalls and hide budget imbalances from the public.

A spokesman for Suffolk County Executive Steve Bellone called the residents' complaint "a politically motivated lawsuit filed by Albany insiders who lack any understanding on how government costs are apportioned yet have no problem saddling taxpayers with the cost of fighting this completely frivolous complaint."

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In addition to declaring the fees illegal, the plaintiffs are asking the court to order the county to stop collecting the fees if they exceed the costs of providing the service.

The county executive's latest budget proposal forecasts the real property tax service agency will generate nearly $70 million in 2018, contributing about 2% of the county's $3.1 billion budget. Mr. Bellone's budget still needs to be adopted by the county legislature.

The agency generated about $10 million in revenue in 2015 before the county raised the cost for tax map verifications.

The suit also targets the county's new $300 agency verification free for mortgage-related paperwork filed with the county clerk's office. This change alone was estimated to bring in more than $30 million for the county.

The lawsuit notes that the fees are typically included in home-closing costs and would be impossible for buyers or sellers to avoid.

"The county knew that it had it home buyers and sellers over a barrel and that it would be unlikely that a home buyer would do anything but pay the verification fees," the lawsuit said.

Write to Joseph De Avila at joseph.deavila@wsj.com

(END) Dow Jones Newswires

October 24, 2017 14:10 ET (18:10 GMT)