Published: Autumn 2010

How can our property taxes keep going up? Well, it’s a side effect of our complex property tax system. In New York CIty, Class 2 multiple dwellings – including cooperatives and condominiums of 4 units or more, have assessment changes phased in over a five year period. In a rising economy, this is beneficial, since assessment increases are slowed by this process. In bad times the effect is inverted. Despite the down economy, this year’s property tax assessment actually consists of 20% of the assessment change for Fiscal Year 2010-2011, which may be lower to reflect current conditions, 20% of the assessment change for the Fiscal Year 2009-2010, when market conditions were quite dismal, 20% of the assessment change for the Fiscal Year 2008-2009, developed based on a snapshot in time on January 5, 2008, when all looked rosy, 20% of the assessment change for Fiscal Year2007-2008, when times were very good, and 20% of the assessment for Fiscal Year 2006-2007 – ancient history with excellent market conditions.

Assessments are, of course, only part of the story. The other component is the tax rate, which is set by the Mayor and the City Council in the course of adopting a balanced budget for the city for the coming fiscal year. The balanced budget is a legal requirement, so the City must bring in sufficient funds to cover its expenses. Property taxes are a chief source of these funds. Late in June, when it adopted the budget, the City set a tax rate of 13.353% for Class 2 properties for Fiscal Year 2010-2011, a modest increase over last year’s rate of 13.241%. Here are the new rates for key classes of NYC properties.

	Fiscal 2009-2010	Fiscal 2010-2011
Class 1 (1-3 family homes)	17.088%	17.788%
Class 2 (multiple dwellings)	13.241%	13.353%
Class 4 (commercial property)	10.426%	10.227%

But these rates were not established in time to be applied to our July 1st tax bills. The Department of Finance must send out those bills mid-June. Therefore, the Department of Finance applied last year’s tax rate (13.241%) to this year’s assessment on July and October 2010 tax bills. The shortfall will be made up on our January and April tax bills, which will reflect the new rate of 13.353% PLUS the additional 0.112% not billed in July and October. This should not be overlooked in budget planning (see page 5).

LONG CRUSADE FOR PROPERTY TAX FAIRNESS
In 1990, CNYC founded the Action Committee for Reasonable Real Estate Taxes to work for property tax fairness for all New York City tax payers. It has long been acknowledged that housing cooperatives and condominiums pay far more than their fair share of property taxes. In 1996, as an interim measure toward correcting this inequity, an abatement program was instituted providing qualifying home owners in New York City cooperatives and condominiums with property tax abatements of 25% for those whose homes are assessed at an average of $15,000 or less and 17.5% where the average assessment per unit is higher. Condominium unit owners receive the abatement directly via their property tax bills. In cooperatives, where the abatement is credited toward taxes on the entire building, the Department of Finance annually provides a list of abatements and exemptions which the cooperative must credit to the appropriate apartment prior to the end of the fiscal year.

This abatement program was designed to provide for interim relief while the City developed a permanent plan for property tax fairness. But to date this plan has not been forthcoming. Instead, the abatement program has been repeatedly extended and is currently in force through June 30, 2012.

At CNYC’s 30th annual Housing Conference on Sunday, November 14th, James Rheingrover, chairman of the Action Committee and tax attorney Eric Weiss will lead a midday workshop answering questions about property taxes. Consult the Conference Brochure..

The City will open its new tax rolls on January 15, 2011, publishing the tentative tax assessments for Fiscal Year 2011-2012. Taxpayers have a window of opportunity to protest these assessments. On Tuesday, February 3, 2011, the Action Committee for Reasonable Real Estate Taxes will hold a meeting to review the new assessments and remind participants of the process for protesting these assessments. And plans will be discussed for next steps in its long crusade for property tax fairness. CNYC urges all those interested in its success to be represented at this meeting of the Action Committee.