The city’s much-maligned property tax system could be headed for a major overhaul.
The New York Court of Appeals, the highest court in the state, revived a 2017 lawsuit from the advocacy group Tax Equity Now New York challenging the byzantine system in a 4-3 ruling issued Tuesday. Tax Equity, a coalition of property owners, renters and economic justice organizations, had argued in its suit against the city and the state that property taxes in the city place a higher burden on rental properties than homes, violating the state’s real property tax law.
The group also said that real estate in districts where most residents are people of color are overtaxed, violating the federal fair housing law. The Court of Appeals ruled that both of these arguments can proceed “on the general basis that the system is unfair, inequitable and has a discriminatory disparate impact on certain protected classes of New York City property owners.”
The state Supreme Court had previously dismissed parts of the case, and the Appellate Division then dismissed it entirely, a decision that was appealed. The Court of Appeals’ ruling should clear the way for the case to go to the state Supreme Court.
“Today is a great day for millions of New Yorkers who have been treated unfairly by the city’s unconstitutional property tax system,” Martha Stark, Tax Equity’s policy director and former commissioner of the Department of Finance, said in a statement. “The court’s decision means that finally, after decades of avoiding responsibility to fix a universally-acknowledged problem and a seven-year legal battle, city and state leaders will be required to create a property tax system that is equitable and just for millions of renters and homeowners in lower-income and minority communities.”
Representatives for the city and the state did not respond to requests for comment by press time. However, at Mayor Eric Adams’ media availability session Tuesday, Law Department corporation counsel Sylvia Hinds-Radix stressed that the Court of Appeals had determined only that Tax Equity had standing, or “the right to bring the lawsuit.”
“That does not mean that the lawsuit is concluded,” she said. “It goes back to the lower court, and then the determinations are going to be made.”
Still, the court’s decision will likely ultimately cause homeowners in parts of the city with more white residents to see property tax increases and homeowners in non-white areas to see decreases, said Benjamin Williams, an attorney specializing in property taxes at the law firm Rosenberg & Estis.
“The main issue is that the court is compelling the New York City Department of Finance to assess tax more uniformly as a percentage of market value,” he said. “Right now, the 43-year-old system fails to do this, so this decision is certainly a step in the direction of property tax equality.”
New York’s property tax system has faced severe criticism for years, including from former Mayor Bill de Blasio’s administration, which did not end up taking major steps to reform it. City Comptroller Brad Lander has also been an outspoken critic and an advocate for comprehensive reform, especially following the expiration of affordable housing tax break 421-a.
Eddie Small , 2024-03-20 16:59:56
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