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Center for Policy Research

Property Tax Web Series

Coordination among Small Localities and Returns to Scale in Property Value Assessment: Evidence from New York State

Yusun Kim, Yilin Hou, John Yinger

October 2021

Abstract

This paper takes advantage of cooperative agreements among small tax-assessing jurisdictions to explore economies of scale in property valuation. New York State incentivizes neighboring cities and towns to unify their assessment function while maintaining separate taxing authority.

With administrative data for years 2003-2014, we estimate cost function models with control function and instrumental variable estimators to examine returns to scale in property assessment. We use information on jurisdictions’ border intersection and prior experience in sharing public service with neighbor localities to address potential bias in selecting coordination partners.

Our results show consistent evidence of economies of size. Our elasticity estimate of total assessment cost with respect to parcel count is -0.9. We also suggest that expanding an assessing jurisdiction’s size may save personnel, operational and contractual costs.

This paper was presented by Yusun Kim on October 29, 2021 as part of the 2021-2022 Syracuse Webinar Series on Property Tax Administration and Design.

This Syracuse-Chicago Webinar Series on Property Tax Administration and Design aims to gather insight and scholarship through domestic and international comparative studies with common threads to help reform and improve property tax administration and design in the U.S. and other countries facing similar problems.

For questions about the webinars, please contact Emily Minnoe. For questions about this paper, please contact the author or authors.

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