Industry Argues New Property Values Don’t Add Up

By Al Barbarino

Unless the city decides to lower the tax rate, property owners can expect to pay higher taxes in 2013.

The taxable value of New York City real estate will rise to $845.4 billion in fiscal year 2013, an increase of 3.8 percent over the 2012 figure, tentative figures from the Finance Department show.

While the estimate is meant to reflect the improving market, increases within certain property classes don’t appropriately account for changes since the market’s heyday, some real estate officials said.

“Values today are significantly higher than they were at the peak of the market and that just seems to be inconsistent with where everyone in the industry thinks the market is,” said Michael Slattery, senior vice president for the Real Estate Board of New York. “It just doesn’t seem to jive with reality.”

Overall market values for Class 4, commercial properties increased $16.3 billion, or 7.92 percent, to $222.7 billion, according to the city’s finance department. Since 2008, when market values increased 19.03 percent to $173.7 billion, market values have increased 26.7 percent. Since 2007, it’s a 52.6 percent increase.

Market values for Class 2 properties, made up of co-ops, condos and rental apartment buildings, increased $6.8 billion, or 3.6 percent, to $196.3 billion. That’s an 11.7 percent increase since 2008 and a 39.3 percent increase since 2007.

Fluctuations in Class 1 and Class 3 properties weren’t as pronounced. Overall market values for Class 1 homes rose 1.91 percent citywide to $401.2 billion; Class 3, which includes property with equipment owned by gas, telephone or electric companies, increased 1.15 percent to $25.2 billion.

Queens co-op market values increased 9.04 percent – compared with 5.24 percent in Manhattan, 2.97 percent in Brooklyn and 2.44 in the Bronx – to $5.3 billion. Assessed values, tapered by transitional values, are set to rise 4.1 percent to 1.9 billion.

“I think you’re still going to hear some complaints from Queens co-op owners,” said Dan Margulies, the executive director at the Associate Builders and Owners of Greater New York, who also echoed a long-held concern among industry officials. “The increases in net revenues for many properties would disappear if the city counted property taxes as an expense.”

*this article appeared in the Jan. 25, 2012 issue of Real Estate Weekly