One of the largest taxpayers in the Town of Carmel doesn't live there. New York City owns the West Branch and Croton Falls reservoirs and the watershed land around them, and it pays local property and school taxes on that land. Two settlements are now lowering what the city owes. The first was ordered by a court in 2024. The second was approved by the Carmel Town Board on October 7, 2026. Its cost has not been calculated yet, and Supervisor Mike Cazzari expects homeowners to see it on their September 2027 tax bills.
For anyone comparing Mahopac or Carmel with other parts of the Hudson Valley, this changes how to read a tax bill. Today's rate depends on who else pays into the same pot, and one of those payers is paying less on a schedule that runs into the 2030s.
The Taxpayer That Owns the Reservoirs
The city's Department of Environmental Protection pays property and school taxes at full assessed value on its land, reservoirs, dams and structures across about 230,000 acres in the watershed. Pipes and aqueducts that carry the water are tax-exempt. In its 2024 payment summary, published January 22, 2025, DEP said it paid more county property tax in Putnam County than any other property owner that year.
| What DEP paid in Putnam County, calendar year 2024 | Amount |
|---|---|
| County property taxes, on 484 parcels | $2,015,384 |
| School taxes, countywide | $17,672,085 |
| Town of Kent, on 297 parcels | $1,009,405 |
| Town of Southeast, on 24 parcels | $887,281 |
The same release lists 130 city-owned parcels in the Town of Carmel. School taxes are where those payments matter most. The bill is mostly school tax, and the reservoir land sits inside the Mahopac and Carmel school districts.
What the 2024 Settlement Already Locked In
The city first challenged its Carmel assessments in 2017. It filed against the town and its assessors and named the Mahopac School District, along with North Salem, as a defendant. According to Mahopac News, the case ended with a June 20, 2024 settlement ordered by Putnam County Supreme Court Justice Victor Grossman. It cut the assessed value of the two reservoir parcels in the Mahopac district by nearly $80 million right away.
The cut wasn't a one-time event. The same report laid out the combined assessment of those two parcels by year:
- 2023: $233,088,034
- 2024: $155 million, split into $115 million and $40 million
- 2026: $148,750,000
- 2031-32 school year: $128 million
That last figure is about 55 percent of the 2023 value. The reductions keep stepping down every few years, so the contribution from these two parcels shrinks further during the time a buyer closing this fall would likely own the home.
In the first year the city paid the district $1.667 million less, for 2024-25. The Mahopac school board covered the gap from its fund balance rather than raising the tax rate. Mahopac News reported that the district had estimated a 2024-25 rate of $18.93 per $1,000 of assessed value. Without that transfer, the rate would have been around $19.26. Board of Education President Jonathon Schneider told Mahopac News that "the drop in tax money has to be made up by the rest of us." He added that drawing on reserves "won't last forever."
The settlement also spared the district any refunds of taxes the city paid from 2017 through 2023, with no interest penalties. District officials noted that losing in open court could have left them owing refunds with interest.
A Second Settlement, With No Number Attached Yet
On October 7, 2026, the Carmel Town Board approved a second agreement. It resolves a series of lawsuits over the town's assessments on city-owned watershed property. Mahopac News reported that it covers multiple properties and tax years, sets revised assessments, and authorizes the town's counsel, Costello & Folchetti LLP, to sign the documents.
The paper reported that the settlement's financial impact on Carmel taxpayers had not yet been established. Cazzari told the paper he did not know the total revenue loss, but said it "would have to be made up elsewhere." He expects taxpayers to see it on their September 2027 bills. The 2024 schedule involved two specific parcels. The new agreement's relationship to them hasn't been spelled out, so the two settlements are best treated as separate events.
Why the Town's Rate Is Falling Anyway
On the same night as that vote, Town Comptroller Mary Ann Maxwell presented Carmel's 2027 tentative budget. It lowers the townwide rate by about 1.15 percent and stays under the state's 2 percent levy cap. The Somers Record reported that a home assessed at about $542,780 would owe roughly $2,171 in 2027 town taxes, $27 less than the previous year.
The lower rate comes from a growing tax base. Maxwell said the town's total equalized value rose $342 million in a year, to about $7.15 billion. She also cautioned that a lower rate doesn't necessarily mean a lower bill, because individual assessments keep rising.
So a buyer looking at the town budget this fall sees two things moving in opposite directions. Overall value is growing and pulling the rate down. Meanwhile the city's watershed assessments are being reduced by agreement, and the reported 2027 tentative budget figures make no mention of the October settlement. The town's piece is also the smaller part of the bill. For a typical taxpayer in the Mahopac School District, Maxwell's breakdown looks like this:
| Share of a typical Mahopac-district property tax bill | Percent |
|---|---|
| School taxes | about 60 |
| Town taxes | 14.4 |
| Water district charges | about 9.6 |
| County taxes | 8.2 |
The schools carry most of the bill, and they absorbed the 2024 reduction.
Reserves Are Holding the Rate Steady
Both school districts that serve the town have kept tax growth flat or close to it. Both have used reserves to do it.
Carmel Central School District adopted a 2025-26 levy of $102,149,794, up 0.74 percent. That budget drew $1.75 million from fund balance. The adopted 2026-27 budget cuts the tax rate by one-tenth of one percent. It uses $2.19 million in fund balance, including money from a tax-certiorari reserve, which is set aside for assessment challenges. Assistant Superintendent Kenneth Silver told Mahopac News in May 2026 that the district planned to use about 11 percent of its reserves for the year.
In Mahopac, voters approved a $148,369,090 budget for 2026-27 on May 20, 2026, according to the district. The Times Union's 2026 Putnam County school budget guide reported that spending rose 2.23 percent with no increase in the tax levy.
Using reserves is careful planning, and both districts set money aside before the rulings came down. But reserves get used up. Each year the city's assessment steps down, and each new settlement adds to the amount the rest of the tax base will eventually have to cover.
What This Means When Comparing Towns
A seller's current tax bill shows what the property cost to carry under this year's rate. Several things that will shape future bills are on public record now:
- The two Mahopac-district reservoir parcels are scheduled to drop to $128 million in assessed value by 2031-32.
- The October 2026 town settlement is expected to show up on September 2027 bills, and its effect on taxpayers has not been established.
- The 2027 town rate cut comes from a growing base. Maxwell said rising assessments can still push individual bills up.
- School taxes make up about 60 percent of a typical Mahopac-district bill, and both districts have used reserves to keep rates steady.
The same watershed covers parts of Kent, Patterson, Putnam Valley and Southeast, so the city appears on tax rolls across the eastern half of Putnam County. The Carmel settlements are the ones reported most recently.
Questions Buyers Ask
Does New York City really pay local taxes on reservoir land? Yes. DEP says it pays property and school taxes at full assessed value on its watershed land, reservoirs, dams and structures. Pipes and aqueducts are exempt. New York's Real Property Tax Law §300 makes all real property taxable unless the law specifically exempts it.
When will the October 2026 settlement show up on bills? Supervisor Cazzari expects it to appear on September 2027 bills. He said he did not know the total revenue loss.
Is the 2024 schedule final? As reported, the 2024 settlement set the reductions out to 2031-32 and said the city would get no refunds for 2017 through 2023.
This post is general information, not legal, tax or financial advice. Confirm your own situation with a tax professional or attorney.
If you're comparing what a home in Mahopac or Carmel will cost to carry over time, McGrath Realty can walk you through the public budget and assessment records for the town and school district you're considering, so you can see what may change after closing. Contact McGrath Realty to start that conversation.
