Our city’s property tax system is overly complex, inequitable and unfair. After decades of inaction, another report was issued with some suggested reforms. Earlier this year, the New York City Advisory Commission on Property Tax Reform released a new set of recommendations that explicitly recognize the inherent inequalities at play.
After a year of deliberation and study, the commission unveiled 10 actions that New York City can pursue to reform this broken system, including reclassifying coops, condominiums and smaller rental buildings into a new residential-class; assessing each property in the residential class at its full market value and implementing comprehensive reviews of the system every 10 years. While it is important that the city acknowledges that the current system is broken, the report is, unfortunately, light on details. It also puts forward some suggestions that will lead to further inequities and stops short of calling for the changes that New York desperately needs.
The commission missed the chance to recommend broad, systemic reforms that would address NYC’s housing affordability crisis. The fact is that our property tax system does not align with our policy goals. The current property tax system discourages the creation and preservation of rental housing, and the reforms proposed do nothing to fix this misalignment.
New York is a city of renters. In many instances, a third of a tenant’s rent is paid to cover property taxes. Apartment buildings are taxed at a disproportionally high rate, which makes it extremely difficult to develop and preserve affordable housing. At a time when families are struggling to pay rent in the five boroughs, studies show that multifamily housing can be a viable solution.
Addressing our housing crisis means finding a way to reduce the tax burden on multifamily properties.
We believe that the report’s proposal to put single-family homes, co-ops, condominiums and smaller rental buildings into one property class and multi-family rental and commercial buildings into other classes will perpetuate continued inequities moving forward. Elected officials will favor the property class containing family homes, co-ops, condominiums and smaller rental buildings while continuing to punish multifamily rental and commercial buildings.
Going forward, there also must be a much closer examination of the way cooperatives and condominiums are treated. Any changes that are considered need to be phased in over a much more meaningful period of time to allow homeowners the ability to adapt to any significant changes.
Now that the commission has released its much-anticipated report, it is time for the real discussion to begin. The discussion needs to include the opaque and illogical manner in which commercial properties are treated. City officials have been discussing changes in the system for decades, but the release of this report represents a window of opportunity. We have the ability to introduce fairness and equality to the system — all while benefiting countless other New Yorkers.
REBNY hopes that a robust and widespread conversation across the five boroughs will follow about these proposed changes. We understand the process of reforming New York’s property tax system will not be simple. There will inevitably be many challenges ahead, but the commission’s report is the first step towards transforming the lives of New York taxpayers. We should seize the opportunity to implement the broad and systemic changes that New Yorkers deserve.
Real Estate Board of New York
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New York, NY 10022