Nassau County's historic attempt to reform its system of property taxation handed the largest individual savings and most favorable assessments to a small group of wealthy residents living in million-dollar homes along the North Shore waterfront and on sprawling, gated estates, a Newsday analysis shows.

It spread smaller tax cuts to the people who own Nassau's least expensive houses, some of whom had spearheaded the effort to change the system and anticipated reaping the most. But their homes still appear overvalued when compared to their recent sales prices.

And the reassessment walloped most people in the middle.

In communities where homes were valued largely between $300,000 and $1 million, taxes are likely to increase - dramatically, in some cases - to pay for the reductions that the wealthy and least wealthy residents will receive. And that does not include increases in county, town and school district tax rates.

Lois Sheehan, of Point Lookout, said she will manage an estimated $2,328-a-year tax increase, which brings her bill to $6,585, with disability payments and support from her siblings. Sheehan's hit was typical in her beachfront neighborhood.

"They assume everybody in Point Lookout is a millionaire," said Sheehan, 62, whose home was valued at $475,000. "I've been living here since I was a child. That's just not the case ... To go up 50 percent in taxes for anybody is crazy."

The successful drive to tear down Nassau's archaic, politically entrenched taxation system was led by a group of African-American homeowners who sued the county in 1997, saying uneven assessments had for decades forced people in less affluent minority areas to subsidize the rich. The old system, based on 1938 construction costs and 1964 land values, did not take into account the fluctuations of the real estate market, favoring higher-end properties that had appreciated the most.

In March 2000, the county agreed in a court-monitored legal settlement to switch to an assessment system based on the actual real estate market. At the end of last year, State Supreme Court Justice F. Dana Winslow, who oversaw the case, and the Nassau Board of Assessors accepted the new tentative values.

County officials estimate about 96,000 grievances over the new values have been registered, including commercial properties, with the filing deadline arriving tomorrow. The assessments become final in April and will be used for school taxes in October.

Newsday examined the new assessments and the estimated tax bills given to 330,000 of Nassau's 367,000 residential properties by Cole Layer Trumble, the Dayton, Ohio, company hired by the county to conduct the two-year mass appraisal for $34 million. Data was not available for the other properties, and the review did not examine commercial properties, co-ops, condominiums or utilities, which were also reassessed.

The review analyzed how the reassessment likely will affect tax bills starting in October in 135 residential communities designated by the census, assuming tax rates remained the same. The figures for each community reflect the predominant trends, though there will be some homes that go against the grain. For example, while taxes for expensive communities appear to be falling in general, some wealthy homeowners and neighborhoods will see tax increases.

For the 7,861 homeowners in communities with a median home value over $1 million - places such as Kings Point and Upper Brookville - taxes are expected to decrease by a total of $5.8 million, an average reduction of $738.

In communities such as Uniondale, Levittown and Franklin Square with home values under $300,000, taxes for the 132,229 homeowners likely will decrease by a total of $16.5 million, or $125 per household.

But for everyone else, taxes would go up. The greatest hikes occurred in areas including Oyster Bay and Roslyn Heights, where homes were valued between $400,000 and $600,000. Total taxes for the 41,104 homeowners in that group likely will rise $12 million, an average of $292 per homeowner.

To gauge the accuracy of the new assessments, the analysis also compared one key indicator of market value - sale prices in 2001 of 12,000 homes - with the values assigned them by Cole Layer Trumble as of Jan. 1, 2002. The comparison revealed that homes sold for less than $250,000 were given assessments that were on average 17 percent higher than their sales prices, while $1 million-plus homes were assessed 5 percent lower than their sale prices.

County officials argued that low-end homes appreciated faster than all other categories of homes, increasing their market value between the time of sale and the assessment date. So the assessments were set higher to reflect that.

Experts suggest the wealthiest homeowners profited from a tendency in mass appraisals - especially one done as rapidly as Nassau's - to underassess high-end properties, which are the hardest to value because they are uncommon and rarely sell. Owners of the most expensive houses also will see lower school taxes because those who have middle-value homes in the same districts will be paying more as their assessments rise.

Still, Eileen Weaver of Freeport, one of the homeowners in the suit that prompted the reassessment, was infuriated to learn last week that million-dollar homeowners appeared to have done so well. In North Hills, for instance, where the median appraised value is $1,034,000, 563 taxpayers are estimated to save a total of $2.7 million - more than the combined reductions of 18,386 people in Freeport, Hempstead and Roosevelt.

"How could that be so?" said Weaver, whose taxes fell by about $57, to a total of $3,013. "If it's a million-dollar house, then they should be taxed according to the price and the wealth of the house. I was angry when I took part in the original demand for reassessment and I'm still angry because I don't feel the property taxes are being enforced any fairer."

Asked about the apparent tax cuts for the rich and increases for homeowners in the middle group, Nassau Assessor Charles O'Shea defended the revaluation and said it had made the county "one of the most equitable and accurate assessing areas, if not in the state, then the country."

"I certainly would love to have the opportunity to review that data and see for myself what it shows," O'Shea said. "Every statistical review that we had showed that we had a level of accuracy that Nassau County never had before in its assessments."

Nassau's old assessment system - an almost impenetrable maze second in size in the state only to New York City's - became a symbol for the fault lines dividing the county. Who won and who lost on taxes paralleled who got cleaner streets and better parking at railroad stations - in other words, who held political power. Republicans who had controlled Nassau, aided by state lawmakers, long resisted pressure to use assessments based on market values.

"The question always seemed to come up as to whether there was a political factor," said Fred Chasalow, 60, a former Glen Cove resident now living in Massachusetts who inadvertently became part of a prior challenge to the system in the 1980s, though he had only sought to reduce his assessment. "It was mostly the Republicans who would be hurt by it, because they're mostly the wealthy people, and it was the poor people who were mostly Democrats."

"It makes me feel good that they finally went ahead and did it," he said.

Even now, the actual impact on people's lives, for good or ill, is hard to predict with precision. According to Newsday's analysis, about half the county's homes are likely to see tax increases and half reductions if rates remain the same. While many will see only minor changes, about half will also experience increases or cuts of more than 10 percent.

Pearl Kamer, chief economist for the Long Island Association, said that what is significant differs for each family, depending on its assets and budget.

"The real impact will be that the reassessment comes at a time when we're going to see some really large increases in taxes to fund the schools," Kamer said.

Overall, low-income and minority communities saw the greatest reductions in their share of the county tax base, one of the key goals of the plaintiffs in the lawsuit. But their individual tax bills did not decrease very much because school taxes are the largest portion of the bill and cannot be transferred to other communities. So while Roosevelt's share of the county tax base fell 14 percent, its median tax reduction was less than 1 percent - or $26 a year.

Gloria and Yussuff Hamid of Hempstead learned over the summer that the reassessment would reduce their taxes by $187.

"That don't go too far," said Yussuff Hamid, 56, a clerk at the post office in Westbury, sitting in his living room one night last week after bringing home a dinner of take-out Chinese food. "Right now, I've got to fix my muffler in my car, and I'm pretty sure $187 wouldn't do the job."

Although the new assessments were to be based on market values, modest homes that sold between $100,000 and $250,000 were valued on average 17 percent above their sales price. More than 80 percent of the nearly 3,700 homes in that range were assessed higher than their sales price.

Because of rapidly escalating housing prices in Nassau, reassessment officials said they trended the 2001 sales prices higher to reach a more accurate value for Jan. 1, 2002 - the date they set for valuing all county properties. The average sales price in Nassau increased by 12.5 percent from January 2001 to January 2002, according to the Long Island Board of Realtors' Multiple Listing Service.

But some homes that sold just weeks before the cut-off date were still assessed much higher than their sales prices.

For example, a 75-year-old, five-room house on Thomas Place in Roosevelt sold on Dec. 5, 2001 for $105,000 but was given an assessed value three weeks later of $152,100.

Yet of 300 homes that sold for more than $1 million in 2001, more than half were assessed for less than their sales price. On average, the assessments on these expensive estates were 5 percent lower, or $21 million, below their total sales price. No other group of homes was assessed below its sales price.

Nassau Legis. David Denenberg (D-Merrick) said that based on those results, the county remains "a reverse Robin Hood. We're continuing to take money from the poor to give to the rich."

A 2.2-acre estate on Middle Neck Road in Sands Point sold in January 2001 for $4.5 million but was given a value nearly a year later of $3,223,500. A white colonial on Elderfields Road in the Flower Hill section of Manhasset sold for $3.25 million on Jan. 3, 2001. A year later, it was assessed at $1,648,600.

The owner of a home in Manhasset that was purchased for $1.6 million and assessed at $1.1 million called the low assessment "a double-edged sword."

"If I was to put my house back on the market tomorrow, I wouldn't consider myself fortunate," said the owner, who asked that her name not be used. She explained that a potential buyer might wonder why the value was set so low and hesitate to pay more.

But, she continued, "If it means my taxes are going down, then I would consider myself fortunate."

O'Shea and executives with Cole Layer Trumble acknowledge that there may be a need for improvement at the high end and in other categories of homes. But they note that two years was a short time to complete the project and say remaining shortcomings can be rectified as the county tries to continue updating its assessment roll this year.

James Culver, the county's reassessment consultant, said there is a tendency in the computer modeling process used to conduct mass appraisals "to undervalue the upper end. It's a natural tendency. You're developing one model for a neighborhood."

But Culver said that in Nassau, even if high-end home values are "on the low side, it was definitely acceptable from the methodology standpoint."

Bruce Nagel, president of Cole Layer Trumble, said different neighborhoods appreciate at different rates.

"In this market, because it's being driven by low interest rates, a lot of people are buying a home that they could not afford before," Nagel said. "So you're seeing a very rapid appreciation" on the low end.

Not everyone agreed with the explanations.

Dick Netzer, a professor at the Wagner School of Public Service at New York University who has studied property taxes for more than three decades, said sales of unique, expensive properties are rare, making it difficult to produce accurate values. So officials err on the side of underassessment.

"Anybody who is setting up a system of assessment practices has to start by saying that overassessment is going to get us into trouble," Netzer said. "We're going to be sued. It's going to mess us up."

Homeowners in the wealthiest communities will also be paying less taxes than before. For taxpayers in places with median assessed market values higher than $1 million, the share of the tax base declined slightly after the revaluation. But their total taxes will decrease more than that.

In areas of the North Shore, communities such as Sands Point, Matinecock and Old Westbury will see taxes go down because they share school districts with less pricey communities where assessments jumped. So within the school districts, taxes will rise on the middle-value homes and fall for the ones on the highest end.

Ten of the 16 areas with median homes valued higher than $1 million will see net tax reductions. While taxes in those areas will decline at the same rate as in the county's least expensive communities compared with their total property values, as individuals, the wealthier will save more. That's because there are fewer people holding more valuable properties.

Whereas a nearly 4 percent tax reduction meant $598 in Oyster Bay Cove, with its $1.2 million homes, a cut of the same proportion amounted to only $118 in Island Park, where property values are five times less.

Homes in the middle ranges took a double hit. Taxes shot up due to both county and school taxes in places like Port Washington.

In the Terrace section, with its small, old cottages, Floyd and June Mackey live on fixed incomes and say they don't spend much money. They say they'll have to rely on more of their savings to handle the estimated $783 tax increase, and total bill of $5,584, after their five-room ranch was assessed at $447,000.

As they've watched old homes be torn down and replaced by McMansions, they said the skyrocketing real estate prices have not been so wonderful for long-timers who can't afford the new taxes.

"We don't really care what the house is worth," said Floyd Mackey, 79. "We expect to live here for the rest of our lives."

Nagel, of Cole Layer Trumble, said he was not surprised that high-end homes are seeing their taxes decrease at the expense of those in the middle ranges. While low-value homes were the most commonly overassessed, he said, there was no strict rule; Nassau's old approach was so haphazard it contained mistakes across the board.

"Our findings were that there was not some insidious purposeful overassessment of low-valued property or underassessment of high-valued property," Nagel said. "It was the cumulative effect of 60 years of random error."

Lawyers who originally brought the case against Nassau also said they believed the system to be better than before because it provides fairer values across the spectrum, but it must still be improved.

"We destroyed a very bad system and the result needs to be constantly monitored," said Leon Friedman, a Hofstra University professor of constitutional law and the case's lead attorney. "But we certainly destroyed a horrible system that adversely affected our clients and the people they represent."

Stacey Altherr contributed to this story.

Reassessment Highlight

Newsday's analysis of Nassau County's reassessment of residential property found that:

Total taxes will decrease in 10 of 16 communities where the median home value exceeded $1 million, including North Hills, Sands Point, Kings Point and Old Westbury.

Of the 300 homes that sold for more than $1 million in 2001, more than half were assessed for less than their sales prices. The new assessments on those homes were 5 percent lower than their total sales price.

Homes that sold in 2001 for between $100,000 and $250,000 were valued at 17 percent above their sales prices. More than 80 percent of the nearly 3,700 homes in that range were assessed higher than their sales price.

Communities with median home values between $300,000 and $1 million will pay more total taxes. Overall, their assessments increased, especially in the $400,000 to $600,000 range.

Low-income and minority communities saw the greatest reductions overall in their portion of Nassau's total assessment. But that spread relatively small cuts in county and town taxes among a wide group of people.