Rye’s Golden Goose

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Can Rye’s real estate professionals do more to ease the RCSD budget burden?

Healthy real estate commissions and development margins are natural and in many ways, desirable features of Rye’s robust real estate market. In a well-planned and well-balanced community, economic incentives help keep the system rolling. But they are also kept in check, lest they cause hardships in the greater community. Real estate professionals, in adding hundreds of new bedrooms and upending the balance of school users and non-users, aren’t just just following the market, they’re driving up Rye City School District costs and creating hardships for long time residents and empty nesters.

While it’s true, development generates a nominal amount of building permit revenue ($1.4 million in 2014), and rising home values benefit all property owners, Rye’s real estate professionals benefit disproportionately. In 2014, this group made $33 million in commissions and development profit, almost 60% more than the city collected in property taxes. (Source: egovlink.com, nahb.org, zillow.com, realtor.org, City of Rye 2015 Annual Budget)

Given this windfall, and in the face of a school budget gap, is it time for real estate professionals, who have done so much to drive the increased school costs and enrollment, to give more back?

The RCSD budget gap and school overcrowding are symptoms of Rye’s outdated zoning and Master Plan. Looking forward, a master plan and improved land-use regulations will not only help address budget and school overcrowding issues, but also long term economic sustainability challenges.

Big Basement Sewer Sleuthing

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Ever wonder why sewage bubbles out of man holes in Rye after it rains? Monster basements are a large and growing part of the problem because they put stress on Rye’s fragile sewer and storm drain infrastructure. This in turn, causes pollution, unsanitary street conditions and exposes the city to legal risk and fines.

While it’s true, connecting sump pumps directly to city sewer and storm pipes is restricted, in practice, illegal connections are widespread and difficult for inspectors to monitor.  Some think “dry wells” are the answer, however, these passive structures only work after extended dry spells and fill up quickly in the spring and other times when the water table is high.

Better planning, and closing the basement FAR zoning loophole would help mitigate these serious issues.

Basement Water

Large basements put extra stress on the city's fragile storm and sewer system.


Small basements, above the water table, put less stress on city infrastructure

Large basement being built below water table in Rye. This basement is functionally equivalent to a well; one way or another, this water will end up being pumped into Rye's fragile sewer and storm drains.

Example of overflowing manhole caused mostly by sump pump outflow.

sewer pipe

Example of crumbling Rye sewer pipe uncovered in 2013.

Cracked sewer pipe uncovered in Rye, 2013. Rye's sewer and storm drain system is old and in disrepair.

Toilet paper and raw sewage flowing out of a manhole in Rye.

Basement sump pump discharge turns to sheet of ice.

Rye’s Basement Zoning Loophole

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Basement Zoning Loophole Gives Both Homes the Same Floor Area Ratio

Notice a lot of rock-hammering going on lately? That’s because under the Rye City code, basements do not count against floor area ratio (FAR). For example, in the illustration above, both homes have exactly the same floor area ratio even though Home “A” has approximately fifty percent more living space than Home “B”. This is the basement zoning “loophole.”

In specific Rye locations, the value of this “free” loophole basement space may exceed the cost of excavation — even when extensive rock chipping is required. If zoning rules were amended to account for livable basement space (in a similar way the attic rule was recently adjusted), this would help close the loophole and create less incentive for rock-chipping.

Rock-chipping is a symptom of Rye’s outdated zoning and Master Plan. Looking forward, a master plan and improved land-use regulations will not only help address rock-chipping issues, but also long term economic sustainability challenges.


Rental Property Companies, Unfair Burden on Rye Taxpayers?

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While rental properties are an important and necessary component of the Rye housing stock, some real estate companies may be taking advantage of zoning and assessment loopholes in ways that negatively impact the community.

For example, an Armonk based development company has amassed a significant rental home portfolio in the City of Rye. Currently this company is renting 20 family-purposed homes consisting of 66 bedrooms that can accommodate between thirty and forty school age children. This company pays approximately $125,891 dollars in RCSD school taxes annually, enough to cover only 5.7 children ( source: City of Rye Roll, egovlink.com, RCSD Budget, ryecityschools.schoolfusion.us).

The unrecovered cost of these twenty homes to the Rye City School District is approximately $640,000 annually. Furthermore, while the company is only paying a small share of taxes, it is able to charge premium rents (approximately $1.6 million annually) due, in part, to the outstanding reputation of the Rye schools (source: zillow.com). Taken together, the Armonk based development company is costing the Rye community $640,000 annually, while capitalizing on Rye’s outstanding reputation.

Looking forward, a master plan, improved zoning and revised assessment guidelines may help mitigate the current imbalance and better ensure a sustainable community going forward.

Big Houses. High Taxes.

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Some active members of the community advocate for bigger houses and higher taxes to pay for bigger schools and growing city services.

Others in the community are questioning the “bigger is better,” approach and are hoping the City Council will update the master plan and take steps to help balance the city housing stock.

Unlike neighboring municipalities, Rye does not have a master plan so we don’t know if big decisions being made by the real estate community today are compatible with the city’s vision for the future.

One Step Back, One Step Forward

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UPDATE 12/18/14:

After extensive debate and public discussion, the City Council passed a resolution to amend local law Chapter 197. The resolution essentially restores the attic FAR rules to the way they were in 2006 before New York State created a loophole. While this is encouraging, the revised law does little to address the need for master planning and economically sustainable development.

Attic Regulation Workshop

November 19, 2013 7:30 PM

The Rye City Council is considering a local law to amend the City Zoning Code to change how attic space is included in the calculation of gross floor area for single-family residences. The proposed law is intended to address concerns about the bulk, mass, scale of housing.

This workshop was requested by the City Council and will be a facilitated discussion. The discussion will focus on the following four areas of concern that have been raised by members of the public at hearings conducted last month:


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Why Rye Needs a Master Plan

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By law, zoning depends on a “well-reasoned master plan.” The master plan is important because it promotes economic development and guides land use decisions compatible with the city’s vision for the future. Unfortunately, unlike most neighboring municipalities, Rye does not have a valid master plan; instead, special interests and federal agencies are planning for us.

Master Planning and Property Rights

Master planning and zoning are strongly rooted in property rights. An important goal of zoning and master planning is to extend individual property rights up to (but not past) the point where the rights of others are negatively impacted.

Nobody wants to be told what they can do with their property, but then, who wants a toxic landfill placed next to their home? We don’t want to be told we can’t replace a three bedroom, senior-friendly ranch, with a five bedroom, family-friendly colonial, but then, why should neighbors pay more school taxes and endure class-overcrowding when RCSD enrollment increases? Nobody wants to be told not to build near a stream, but who wants to increase the floodplain and hike public tax liability for flood relief? Master planning isn’t perfect but it’s a great way to help address these challenges and balance community needs.

Keeping Pace

Unfortunately, unlike neighboring municipalities, Rye’s master plan is obsolete and no longer valid.  By comparison, Greenwich, Bronxville, Scarsdale, and Mamaroneck recently adopted plans and Cappaqua/New Castle are very far along in the process.

Rye 1985

Rye's Master Plan was adopted in 1985 and is very old and obsolete compared to neighboring municipalities.

Many Rye residents are alarmed by the current pattern of land use and recognize the need for a coordinated vision for the future. Adopting a master plan is a great first step in addressing land use challenges for current and future generations of Rye residents.

(Sources: planning.org, ryeny.gov, RCSD, great-lakes.net)


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The bigger the home, the less likely empty-nesters will stick around after their last child leaves the RCSD. This turnover effect is likely a significant long-term driver of RCSD enrollment because large homes are more likely to be consistently occupied by heavy-users of the RCSD.

Surveys show empty-nesters and seniors prefer not to live in homes with lots of stairs and bedrooms; they also don’t like paying for extra utilities and upkeep. Instead, these non-users of the school system prefer homes that eliminate steps and provide a master bedroom on the first level. (source:National Association of Home Builders nahb.org).


Coincidence or Correlation?

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Last week the RCSD announced 3,316 students are enrolling for the 2013-2014 school year — one hundred more than planned. Between 2006 and 2013, housing stock and RCSD enrollment increased by 629 expansions and 438 students respectively. Is this a coincidence or is there a link between the wave of residential expansion and increase in RCSD enrollment?

(Source Board of Architectural Review Minutes; RCSD)

Rye’s Twilight Zoning

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A Brief History of Rye’s Attic Loophole

This loophole hurt Rye taxpayers because it encouraged the development of high-turnover homes targeted toward heavy users of the RCSD while side-stepping assessments and school-taxes. Closing this loophole resulted in more precise floor area and habitable space calculations, more accurate assessments, and less deception.

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Is Rye Becoming More Like Scarsdale?

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Compared to Rye, Scarsdale has higher home turnover, higher enrollment per home and higher school taxes per home.

Is the current housing-stock transformation making Rye more like Scarsdale? More research and an updated City Master Plan is required to better understand the relationship between development, home turnover, RCSD enrollment and school taxes.

(note: There is approximately thirty percent faster turnover in Scarsdale compared to Rye. On average, homes turnover every ten years and seven years in Rye and Scarsdale respectively. Source Trulia.com).

(Source: trulia.com; scarsdale.com/assessorPortal Final Roll 2012; Rye Final Roll 2012)

629 Major Expansions since 2006

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Rye experienced 629 major residential expansions since 2006. How will this significant change in housing stock affect taxes, turnover, school enrollment and the number of RCSD “heavy-usersr?” Nobody really knows. More research and an updated Master Plan are needed to meet the needs of the present without compromising the needs of future generations of Rye residents.

Is Turnover Driving School Tax Deficits?

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Only a small percentage of households in Rye pay enough school taxes to cover the cost of two children in the RCSD. Even most large new homes do not pay enough taxes to pay for two students. The gap is the school tax deficit.

While it’s true, higher assessments on large new homes provide more school tax revenue, there’s reason to believe high assessments may also increase turnover and that this, in turn, creates a larger school tax deficit. In the case study below, a large home assessed at $50,000 has more than double the cumulative school tax deficit of a smaller home assessed at $25,000. A more detailed analysis is here.

An updated City Plan and more research is required to better understand the important relationship between home size, assessment, turnover and school tax deficits.




  • Cost per Student: $22,460/year
  • School Tax Rate: 529.68 per $1,000 of assessed value
  • Inflation: 2%
  • Children Age Difference: 2 years

Thank a Non-User

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Taxes and school budgets are complex but one thing is simple: “non-users” subsidize “heavy-users.” Seniors, empty-nesters and other non-users of the RCSD subsidize the education for heavy-users of the RCSD.

In today’s joint meeting of the City Council and the RCSD Board of Education there was a good deal of discussion about how to address the challenges posed by the Property Tax Cap. While tax cap overrides, private fundraising, issuing bonds and cutting programs are short-term tactics, City Planning may be part of the solution in the long run.

Fact is, if the City of Rye had a higher ratio of RCSD non-users to heavy users of RCSD, then there wouldn’t be a school budget problem. However, when this ratio reverses, the financial impact works in the opposite direction; funding becomes more burdensome for many, and intolerable for others and ultimately threatens curriculum standards.

There are many factors that drive this ratio and city planning is one of them. Rye’s Plan was adopted in 1985 and expired in 2000. Perhaps now is a great time to dust off our City Plan and make sure we’re doing everything we can to encourage real estate professionals to align our city’s housing stock with the long term needs of our community.

Fudging the Numbers?

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While it’s true the plans for this new home were approved without a variance, this advertisement touts the fact the house is more than 120 square feet larger than current zoning allows — enough for an extra bedroom.  How will this affect the city? Nobody really knows. More research is required to better understand how building bigger houses and adding more bedrooms on lots like this may affect resident turnover, RCSD enrollment, and school taxes.


(source: Trulia.com; ecode360.com)

Recent advertisements promoting major residential expansion in Rye:

"Ask your Realtor... how large a house you can build on your land."

"Ranch to Colonial in 1 Month"