In a letter written to New York City Mayor Bill de Blasio, Council Member Joseph C. Borelli (R – South Shore) and Minority Leader Steven Matteo (R – Mid Island) addressed three major concerns they and their constituents have regarding the overall fairness of property tax assessments on Class One properties throughout the city. This letter is the result of months of extensive research by the council members, which had uncovered gross inequities in the assessment of properties in borough to borough comparisons, which is an effect of the city inaccurately assessing Class One properties for decades by using a formula based on statistical data, instead of an actual in-person assessment by a qualified assessor, as mandated by state law.
In an effort to resolve this matter outside of the courts, the council members have advised that the most pragmatic approach would be for the Mayor to convene a Property Tax Reform Commission, a bipartisan taskforce that would include members of the City Council, the state legislature, taxpayer groups, and a representative of the Administration. The last time a similar commission was convened was under then-Mayor David Dinkins in 1993. The commission would be empowered to investigate these claims of inequities in the property tax system further, and offer recommendations as to what legislative options are available that could overhaul the assessment of Class One properties, thus potentially reducing the economic burden on one and two family property owners across the city.
According to the New York State Real Property Tax Law, properties assessed for real estate taxes must be assessed by a qualified assessor who determines the value of the property, including actual condition. In other communities throughout New York State, taxing authorities rely on qualified assessors to determine the value of property; however, in New York City, Class One properties are not actually assessed – instead the Department of Finance uses a calculation based upon a statistical model which analyzes similar properties to determine a value. In all of New York State, one and two family homes in Staten Island, Brooklyn, Queens, the Bronx, and Manhattan are the only properties being assessed without anyone looking at the actual house, determining the actual condition of the property and calculating the actual value of the property upon which the real estate taxes are to be determined. To solve this issue and make assessments fairer, the council members have recommended that the Mayor explore the possibility of allowing qualified assessors conduct an actual examination during the assessment process of one and two family homes, at least every four years and upon the transfer of any such real property triggered by the filing of a deed.
The final issue, however, is beyond the control of city government, and causes great differences and unfairness in the calculation and assessment of real estate taxes against Class One properties. One statute of the New York State Real Property Tax Law prohibits increases of more than 6% on Class One properties throughout the state; while the intention of this provision is noble, it has resulted in a significant underpayment of real estate taxes for those Class One properties, including when the property changes owners. Through their research, the council members had discovered great disparities in the real estate taxes paid when comparing homes sold in Brooklyn and Manhattan to homes sold in Staten Island. Brooklyn and Manhattan properties, which sold for two and three million dollars, were paying real estate taxes less than those paid by homeowners having an assessment and actual worth of just $450,000. The council members hope that, with support from the mayor, state lawmakers can amend the New York State Real Property Tax Law and find a solution that would overhaul our real estate tax law so that it is fairer and less burdensome on middle class families.
“The Mayor, himself, has admitted the need for real property tax reform in the past and we hope he will join us as a partner in delivering real tax equality across the five boroughs. Championing a fair, understandable, and affordable tax system could be one of his greatest accomplishments, and could help maintain a vibrant middle class in the outer boroughs. We believe the administration starts off on the wrong foot each year by levying more than the City Charter allows, which causes property owners to pay a share of the city’s tax base greater than what was intended. This is a notion shared by former Commissioner Martha Stark. Additionally, we believe the laws, policies and procedures which the Dept. of Finance use to calculate bills are unfair, and result in inequity across disparate communities. A million dollar house in Queens should be assessed just the same as a million dollar house in Brooklyn. That’s equality,” Council Member Borelli.