Ryan Reval: Pendulum is an Understatement
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- Written by Brice Kirkendall-Rodriguez
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This article was sent to Scarsdale10583 by Brice Kirkendall-Rodriguez: Last week the Village of Scarsdale released a distribution chart on its website that showed percent change in total assessed value as stratified by neighborhood. In aggregate it appeared to show only modest differences in the valuation changes by neighborhood. However, that approach masked the substantial changes that have occurred with the J.F. Ryan revaluation at a more granular level. In multiple presentations to the Scarsdale Board of Trustees, others and I have pointed to the ill-conceived and unexplained decision to use a square root model for determining base home values from which multipliers are then applied as modifiers. Use of a square root model suggests that homes of 8,000 square feet should only be valued at twice the price of a 2,000 square foot home. This appears to be an industry assumption in mass appraisals and its economy of scale assumptions may be accurate when valuing commercial real estate or even many other residential markets. However, it is quite likely that Scarsdale is poorly suited to broad industry assumptions. Our housing stock spans over a century and there is an order of magnitude difference in the prices of our least expensive homes and those at the top of the scale.
Furthermore, the tear-down phenomena that is easily observed here is not common in most U.S. communities or even many neighboring communities.
In an effort to better illustrate the effects on Ryan's use of a square root model on total assessed value in Scarsdale, I decided to recreate the same chart furnished by the Village of Scarsdale but stratify it by home size instead of neighborhood. I took two additional steps not present in the Village of Scarsdale chart to eliminate data noise and improve clarity. First, I excluded homes that have changed in size from Tyler to Ryan. This eliminates valuation changes that would be expected with the application of any revaluation approach. Second, I highlighted the segment of homes that experienced no valuation change (0%). While the mass appraisal industry only attempts to be accurate to +/- 10% of home value, I think it is important for readers to see the exact position that differentiates valuation increases from decreases.
On April 21 of this year, John Ryan told the Board of Trustees that his goal was to create a uniform result. I say with great sarcasm, "mission accomplished." The result of Ryan's model is a uniform redistribution of tax burden based on the size of your home. We have a highly educated citizenry, and I suspect that no one here believes that this neatly staggered redistribution reflects the actual effects in nature of a more nuanced real estate market. As the chart above clearly shows, owners of homes less than 2,175 square feet have an almost 80% probability of being assessed upward and more than half of these home owners saw their valuations increase in excess of 10%. At the other end of this scale, more than 70% of homes greater than 4,400 square feet have been assessed lower.
When you see where 0% falls on the above chart you observe that there is a 50% difference in the proportion of increases versus decreases when comparing the smallest and largest quintiles of Scarsdale homes. This profound separation of winners and losers purportedly reflects market changes in just the last two years. However, such a stark redistribution was not even true with Tyler's revaluation based on 40 years of change. To prove this, I went back to earlier data for the same population of homes and examined the actual effects of Tyler.
The above chart does show greater valuation changes in the larger end of the Scarsdale home market. However, the position of the 0% change line is remarkably consistent for all but the largest quintile. Overall, 15% separates the balance of winners and losers between the quintiles with the greatest separation. This is a far cry from the 50% separation now present with Ryan. With Tyler, the majority of the community saw increases in assessed value regardless of home size. This is not surprising considering that the stratification of home value differences even among similar properties would be significant after not having conducted a mass appraisal in 40 years.
The greatest weakness of the Tyler model is the apparent overemphasis on increases on the largest homes. Some of this may have been warranted and some may have been overly exuberant as has been discussed at length two years ago following Tyler. However, nothing in the Tyler chart presented here suggests a giant giveaway to smaller homes that must now be corrected by Ryan.
When you study the combined effects of Tyler and Ryan, you find that the influence of Ryan's square root model overwhelms everything else.
The net combined effect of Tyler and Ryan is a total assessed value that disproportionately shifts the burden to smaller homes. This is the same effect achieved with Ryan alone which suggests that Ryan represents more than just a return to pre-Tyler valuations. Ryan leaves us in a position more extreme than before or after Tyler.
While I think it is poor public policy to rely on the cost and emotional distress of a formal grievance process to fix errors and omissions in a mass appraisal, at least Tyler's over-statement of values for some high-end and other homes could be and probably were corrected with grievances. Ryan has extracted so much value from the Assessment Roll (I estimate as much as a half billion dollars) that a correction for overvalued homes through grieving the Ryan reval will leave Scarsdale with a significantly lower total assessment than we had a year ago. This will mean that homeowners largely unaffected by the Ryan reval will nonetheless be obliged to pay an increase in taxes that exceeds the percentages approved by the Board of Education or the Board of Trustees.
Where do we go from here? It is unlikely that homeowners already burdened with the costs of a grievance process will spend even more money on a legal challenge even if it would be justified under the equal protection clauses of the U.S. and New York State Constitutions. We could wait for another revaluation, but what Board of Trustees will be brave enough to propose it? Will Scarsdale fester with the disaffection of large swaths of its electorate that will defend themselves against even more tax burden by voting against upcoming bond initiatives and annual budget increases? While Scarsdale has historically been very supportive of the resources needed to fund our excellent schools, municipal services and public employees, there is precedent for a no vote campaign and a patently unfair distribution of tax burden makes the community ripe for this kind of response. I urge the Board of Trustees to reconsider their position against independent analysis of the Ryan revaluation. Given that J.F. Ryan received no oversight and submitted his results too late to allow for an informal period of public review, an independent review seems the least the Board could do to reassert itself into oversight of this process.
Brice Kirkendall-Rodriguez
Fox Meadow Road, Scarsdale
Trustees Ponder Grass Cycling and Pick-up of Grass Clippings
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- Written by Joanne Wallenstein
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A lively debate about the pros and cons of grass cycling took place at Village Hall on Tuesday night. A proposed code change would end the curbside pick-up of grass clippings from Village streets and proponents and opponents made their cases.
Advocates for grass cycling argue that leaving grass clippings on the lawn rather than picking them up and recycling them has benefits to home lawns and to the environment at large.
- The clippings maintain moisture
- They improve the health of the turf
- The clippings act as natural fertilizer
Furthermore, eliminating the need to truck these away would save fuel and reduce carbon emissions.
However, the Village currently picks up grass clippings, and it appears that the majority of landscapers pick up clippings rather than leave in place. Landscapers claim that clumps of heavy wet grass can rot and kill the grass. Furthermore, leaving it on the lawn does not appeal to some customers who seek a perfectly manicured lawn.
Several representatives form the New York State Turf and Landscape Association spoke against the proposal. Michale Iorio said that all the grass cannot be picked up and since they cannot use gas powered blowers, they cannot spread the clippings around. He said, "I would urge you not to take away another service that taxpayers receive. Landscapers will charge customers to take it away."
Michelle Sterling a co-chair of the Scarsdale Forum Sustainability Committee urged the trustees to see through Iorio's comments and recognize that he is representing the interests of the landscapers who don't want to have to charge their clients to pick up the clippings. She said, "our landscapers are taking away the clippings and their fertilizing effect and charging us to fertilize our lawns."
She said that the Scarsdale Parks Department has been grass cycling for years and that Scarsdale Schools have been doing this since the 1970's and she has "never heard about anyone complaining about grass clippings on fields."
She read notes from Renu Lalwani, Kaye Eisenman and Maggie Favretti in favor of grass cycling.
She asked the Trustees to exercise their leadership to do what's right, even if it does appear that the Village is taking away a service.
Darlene Le Francois-Haber, also a co-chair of the Forum's Sustainability Committee and a physician, spoke in favor of grass-cycling. She said her triplet daughters played on Scarsdale fields and favored, "Do like the pros, leave it after you mow."
She read a letter from Ron Schulhof in support of the proposed changes. He called the pick up of grass clippings an "Environmentally damaging, non-essential service," and said the "best place to dispose of clippings is the lawn." Schulhof said, "We can reduce out of county trucking and redeploy savings to other village needs." Dr. Haber said, "I often sit with individuals who think they can't change behavior which is clearly to their detriment. In the end you have to do the right thing. You are thinking about the health of our community and our environment. People need help and you're here to help them. I hope you come to a positive vote regarding the grass cycling effort."
Larry Wilson the Government Affairs Chair of the NYS Turf and Landscape Association told Trustees, "There is a certain aesthetic standard here. Some homeowners ask, what is this mess that you are leaving on my lawn? We live and die catering to the needs of homeowners. It is a bad climate to start discontinuing services here."
Susan Douglas said, "We have been doing grass cycling for three seasons. We had a dog die of cancer and that prompted us to examine the chemicals we were putting on our lawn. We now have an organic lawn, we leave the grass clippings on the lawn, they save water and trap moisture."
Lynne Clark, a realtor and longtime resident said she is a big recycler, but wants to make her own choices about what to recycle. She said, "Eliminating grass pick up has me on edge. Grass pick up is a valuable service to our residents. If residents cannot handle the removal of yard waste the new code creates an additional burden. Our village government should not be mandating what I do with my grass on my own property. To eliminate services now is not smart and not a boost for the spirit of our village....Educate our residents and let them choose for themselves. I want to cut my grass the way I want to."
David Fenigstein complained about the "choking smell of lawn pesticides," and said a healthy lawn requires less treatment. He said, "I think there are better things the town could do with its money than pick up grass....Let people pay for aesthetic standards themselves. Think about the long-term impact."
Lena Crandall said she has lived here since 1991 and grew up mowing the lawn. She said, "When grass clippings are long, all you have to do is go over them again and they disappear....If the landscapers mow over them more than once they will disappear even faster....Landscapers should educate their customers about what is good for their lawns...I hope you enact this change – it is a baby step in the right direction."
Merrill Clark, Lynne's husband said he had a long talk with his landscaper about the proposed code change. He said, "Our landscaper has invested in equipment that picks up everything on our lawn including twigs, clippings and leaves. He takes pride in how our lawn looks. There is no week in which only grass goes into the bag. He said we will not have a better looking lawn by leaving the clippings on the lawn. To be asked to buy new equipment and truck materials to the recycling center would be costly and added to the bills. My landscaper said not all his clients would go along with this – so I would be forced to drive the grass clippings to the recycling center."
Kelly Sperling said, "I want to support grass cycling. We practice it and the grass clippings go right back into the lawn. We have seen no downside to it."
Carol Silverman agreed. She said, "I have been here since Halloween of 1972 – 43 years. My lawn is not picture perfect – and a few years ago we started grasscycling and my lawn looks no worse."
Sterling also read a note from Tony Robinson, Commissioner of the Harrison Department of Public Works where they grass cycle by code. He said that "Education alone will not work.... There was no mass dumping." Sterling said, "The runoff from their clippings was going into their watershed and contaminating it so they had to make this change."
Deputy Mayor Marc Samwick said the code change will be voted on at the July 12th meeting of the Village Board of Trustees.
Appointments:
The Village will have a new fire chief. Thomas Caine is retiring on July 17th after nearly 32 years of service including 10 years as fire chief. A committee was assembled to interview the four candidates who applied for his position.
They named two finalists who were interviewed by the Mayor and the Village Manager. They selected Captain James Seymour to be the new Fire Chief of Scarsdale. The Scarsdale Fire Department will conduct a ceremony to appoint a new Fire Chief and a new Fire Captain on Tuesday July 12, 2016 at 1pm in the Scott Room at the Scarsdale Library.
Additional appointments were announced:
Michelle Sullivan Lichtenberg was named to the Advisory Council on Human Relations.
Marjorie Meiman and Ronnie Hirsch were named to the Advisory Council on People with Disabilities.
Gas Main:
Village Manager Steve Pappalardo announced that Con Edison is replacing a high pressure natural gas main on Crane Road between Post and Stonehouse Roads. The work is expected to take 8-10 weeks and will result in traffic delays. Con Edison will provide advanced notice to homeowners when the line is changed and they expect service to be disrupted for no more than 8 hours. There will be a single reversible lane for most of the time of the project. A small part of the bottom portion of the Village Hall parking lot is being used to stage Con Edison's equipment. The Village is looking into hiring a private inspector to represent them. Pappalardo asked for residents' patience while the work is done.
At the end of the meeting Trustees Matt Callaghan and Marc Samwick made comments about the 2016 revaluation. Watch them here:
What is your view on the proposed change to end the pick-up of grass clippings? Please send us your comments in the box below.
The Revaluation Train Wreck Has Arrived
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- Written by Mayra Kirkendall-Rodriguez
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This letter was sent to Scarsdale10583 for publication by Mayra Kirkendall-Rodriguez:
A number of us have been analyzing the Scarsdale 2016 revaluation and have found significant flaws in how the revaluation process was conducted and how the model was created. Village management has not been transparent with the community as to how the revaluation was subcontracted. For months, Scarsdale resident, Robert Berg has correctly been highlighting the lack of transparency of in the revaluation process.
Model risk management was extremely weak. The consultant did not disclose to the public the inputs and assumptions to the model, what calculations were chosen and how they were done, and whether the model was tested and backtested. There is no evidence that an independent validator validated the assumptions and data; there is also no proof that someone independent of the whole process audited the model. All of this is essential to creating and implementing a model.
If Scarsdale residents believe that they have been erroneously assessed, please sign this petition.
Additionally, here is the link to all the documents that you need to grieve your taxes. You can make an appointment to contest the revaluation; there are various time slots on June 21st.
Having this type of opacity will lead to a tremendous uncertainty each year as to how much taxpayers have to pay. This uncertainty will adversely impact our property values. Who wants to move to a city where they have no idea how taxes are being assessed fairly? Uncertainty of future tax receipts will also make it difficult for the village and the Scarsdale school administration to forecast properly what their income and expenses can be.
Scarsdale Village Should Rescind Ryan's Voodoo Valuation
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- Written by Joanne Wallenstein
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This letter was sent to Scarsdale10583 by Nickolai Baturin and Brice and Mayra Kirkendall-Rodríguez:
We attended the June 14th Scarsdale Village meeting to present our qualitative and quantitative analysis to you, as our elected officials, and to our fellow Scarsdalians. We provided evidence that there are numerous flaws in J.F. Ryan's model. Additionally, we explained that the model governance was very weak, because the Village awarded JF Ryan a contract without requiring him to compete with any other firm, no one in the Village confirmed and documented J.F. Ryan's credentials, Ryan's data and assumptions were not validated by anyone who is quantitatively qualified, no quantitative professional audited the whole process and model, and the whole process and model inputs were not made transparent to Scarsdale residents until after the revaluation had been completed. Weak model governance means that the model is neither robust nor credible. Hence, this model is invalid for the purpose for which it was designed, which was to determine the value of Scarsdalians' homes. Using this model will push many people out of Scarsdale which will adversely impact both the village and school administration's budgets.
At the village meeting, we had opportunity to hear from other citizens with impeccable quantitative expertise. For example, Neel Daniels, who has a background in statistics and who conducts independent validation of models that are used by banks, explained that when validating a model, it is important to ascertain that the outcomes are reasonable. He concurred with our analysis that Ryan's model needed to have been tested to see if it would predict the value of homes and that the Ryan model should have been validated and audited independently. Also, David Han, explained in the meeting that in his analysis he found that the 'Ryan model is calibrated with the data from July 2014 and Sept. 2015 and the assessor claims the model has a very good goodness-of-fit, which is clearly an in-sample result but the out-of-sample tells a different story. The assessor used construction grade to manipulate the assessed value to match transaction price! The model calibration is inappropriate.'
Another resident, Kai Tang, whose background is in research and development as an engineer in semiconductor development for over a decade, explained that 'Ryan's assessment doesn't pass the sanity or the smell check.' Mr. Tang is correct. The changes were massive in Ryan's revaluation in comparison to Tyler's. 1 in 5 homes had a total assed value change of over 20%. The changes in house AVs were even more extreme; 25% of house AVs went up more than 18% and another 25% went down more than 31%, while 25% of land AVs went up more than 24%.
We cannot emphasize enough that history is littered with cases where weak model governance and invalidated models have had dire financial and economic consequences. For example, flawed and invalidated residential and commercial real estate models were one of the main causes of the 2007-2008 financial crisis, which negative effects are still being felt across many parts of the US and globally. More recently, a congressional inquiry determined that one of the reasons that JPMorgan lost over $7 billion dollars in 2012-2013, in what is known as the 'Whale Scandal' was improper model usage and changing from one model to another, when derivatives traders did not like the results of the first model.
The exchange between the mayor and village attorney and the citizenry on Tuesday has left us with even more questions than when we first started reverse engineering the Ryan model on June 1st.
We pose the following questions and respectfully request a public answer, since transparency is a cornerstone of democracy.
1. Who is the village official or officials who selected JF Ryan to be the monitor for the Tyler revaluation and when?
2. What metrics were used to select Ryan to be a monitor? What does a monitor do? Who in the Village ascertained that he performed well?
3. Who decided and why that a new revaluation should be conducted?
4. What village official selected Ryan to conduct the 2016 revaluation? On what basis was the decision made and where is that documented? Did anyone ask for referrals or recommendations attesting to Ryan's expertise either as an appraiser or as a modeler and was that documented?
5. Did Ryan disclose all inputs and assumption to village officials before he embarked on the revaluation process? If so, where is this documented?
6. Thus far, we have not found evidence that J.F. Ryan has modeling qualifications. Did the village verify that Ryan has modeling expertise? If so where is that documented? Did village officials ascertain where he has used models before and who validated them? Was Scarsdale the first time he used his flawed model largely based on a drive by methodology?
7. Through our research thus far, we have found, that Ryan appraised residential and commercial properties in New Canaan, Stamford, and Sherman, Connecticut. In those appraisals, he conducted on site visits. Why did Scarsdale officials not require onsite visits be part of the Ryan model?
8. What fiduciary duty do you have to the Scarsdale citizenry in respect to conducting revaluations?
9. Have you given consideration to the very important remarks that resident Robert Berg stated at the village meeting, 'The Ryan revaluation calls into serious question whether the time has come to replace our non-partisan system of uncontested elections for Village office with something else, where voters have a choice, and where candidates have to let the voters know their positions on important issues in town – like another revaluation or historic preservation?'
10. Have you taken into account that using Ryan's flawed model will hurt the Scarsdale School Administration's capital plans and budgets, which in turn will anger even more residents?
It is important for Scarsdale village officials to establish a standard of how often it will conduct revaluations and utilizing what methodology. If village officials are going to be changing models randomly, this will perpetually be another example of weak model governance. If you change models, you will need to establish and document why a model is going to be changed, what are the differences in the model, and what are the limitations of the new model. Moreover, because you will have different methodologies, any comparison that you make of how property values have changed or any predictions of how they may change in the future would be invalid. Citizens, the village, and the Scarsdale school administration will not be able to create valid forecasts of what taxes might be to different methodologies. For the sake of Scarsdalians, the Scarsdale school administration's budget, and our village's reputation, we urge the honorable mayor and trustees to invalidate Ryan's voodoo valuation.
Is Your Child Over-Coached?
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Its spring time again! And kids are outside playing, often on organized teams. It ought to be fun, but sometimes issues arise. Here are your questions about sports and coaching with answers from Backyard Sports.
Question: Our son is in elementary school and he loves playing basketball with friends in our driveway. We encouraged him to join the basketball program at school, but it's not quite what we expected. There are a lot of coaching drills, but little "free-play" and this is frustrating our son who just wants to play. Do you think our child may not be ready for an organized team sport?
Answer: It's a great question. The truth is, we need to approach coaching in the reverse order. When kids are young they should be exploring. That's the time when they should be developing creativity. As a child reaches the upper grades, especially high school, and wants to take his sport skills to the next level, that's when you really need a coach. That's when the value of a coach's guidance is key, because he can bring the athlete's ability to a level that could not be achieved alone.
The main reason why parents are so critical of coaches when their child is in high school is because our sports model in the US involves so much coaching from the get-go. The idea of an iconic coach doesn't exist anymore because kids have had so many coaches over a long development process.
Here's an example: Although it's popular internationally, soccer has never broken through to an elite level in the United States the way it has in Europe or South America. Why not? Because in the US we put too much emphasis on drills and coaching. Conversely, in Europe and South America, the kids are not coached; they are left to basically dance with a soccer ball. The idea of watching an American youth program play freely or play with that sense of exploration and creativity doesn't exist. Our kids are thrown into laps and lines at a very, very young age and they don't know how to play naturally.
The Big Takeaway: Sports is about playing freely and bringing a group of individuals together cohesively. The coach is responsible for creating that environment. The players' job is to learn to love the game and athletically express themselves at a very high level.
Question: My child is very shy and we thought that joining a team sport might be a way to get her out of her shell. Can a shy, introverted child flourish in a competitive sports environment?
Answer: First we need to understand that a team is comprised of young players with differing levels of ability and unique personalities. The model of a successful team is one where all those unique individuals can come together in harmony. Not everyone is going to be a leader. Not everyone is going to be a superstar. Not everyone is going to have that kind of flamboyant take charge personality. There's room on teams for kids across the temperament and personality spectrum.
I think more than anything, the notion of a shy child being unsuccessful on a playing field is a manifestation of skewed parental observations. Parents see attention and accolades going to the assertive or extroverted kids or to players who are scoring the goals and lose confidence in their shy reserved child's ability to compete. But not everyone is a goal scorer. We have role players on teams. It takes those role players to make a team successful.
That said, a great program or a great coach will recognize shyness in a young player. The right program and coach will shepherd that kid so she finds HER role and makes her feel successful in the environment, which aligns with who she is and what her ability level is.
The Big Takeaway: Once the child is accepted among her teammates and sees firsthand that she can play this sport, interact with other kids and do well in her own way, it's a wonderful benefit for the child. That's the success of the playing field. That's where we see the skills learned between the lines positively affecting a child's life outside the lines. The idea of getting out of ones comfort zone without fear of making a mistake translates to so many other aspects of a child's life. They are going to remember that lesson and apply it to their schoolwork, their relationships and their career. They're going to have more confidence in themselves.
Question: My daughter plays basketball and her team recently added a new coach. The change has been difficult because the new coach has a style that is incompatible with my daughter's personality. She often feels berated and alienated. How should we deal with this?
Answer: Nothing can inhibit a child's experience more than a difficult relationship with a coach. In a previous generation, we had our fair share of Little League Dad's who, through their inexperience or gruff behavior, made the exercise miserable for everyone. However, at that time, the consequences weren't as severe, because we had a chance to play ball on our own the other six days of the week. Today, given the extended commitment of sports and lack of "free play," the relationship with a coach takes on an added degree of importance.
What is a parent to do when the child feels compromised, alienated, or worse, bullied by a team coach? I recently read a post by John Sullivan on his Changing the Game blog about this specific situation. I admire and support the manner in which Sullivan turns this issue into a positive conversation that can be addressed both with the child and the offending coach. I recommend reading the post and taking initiative on his concrete steps for arranging a meeting with your child's coach, as well as setting realistic expectations on the outcome of the conversation.
Click here for more FAQ's and answers from Backyard Sports.
