Landlord groups are disputing new city tax assessments that put the city’s property worth at $1.378 trillion.
The Rent Stabilization Association says it expects a major uptick in appeals from owners hamstrung by new rent regulations that they say have decimated their profits.
And the Real Estate Board of New York says the whole system needs to be reformed.
“The preliminary tax assessment highlights the need for property tax reform. Our current system is inequitable and lacks transparency. We urge all New York City residents to take a close look at their assessed values and make any necessary challenges before the roll is finalized in May,“ said Paimaan Lodhi, senior vice president, REBNY.
The New York City Department of Finance Commissioner Jacques Jiha last week announced the publication of the tentative assessment roll for Fiscal Year 2021 (FY21).
The tentative roll shows the total market value of all New York City properties for FY21 is about $1.378 trillion, an increase of $62 billion, or 4.7 percent, from Fiscal Year 2020. Seventy six percent of the increase reflects market forces while the rest reflects new construction and apportionments, according to the city. Citywide assessed values rose by 6.7 percent, to $273.8 billion in FY21.
“New York City continues growing, and this year’s roll confirms that construction activity remains strong across the five boroughs,” said Jiha.
According to the city, the roll reflects total citywide construction activity surpassing a record $14 billion in new market value, the highest level in the last 10 years. Rental apartments account for $4.4 billion, or 31.6 percent, of citywide construction activity. Collectively, Manhattan, Brooklyn and Queens make up the vast majority of all construction activity for rental apartments, at 92.7 percent.
This year’s assessment shows an increase of 4.3 percent in the value of the cityʼs Class A one-to-three family homes, with the biggest increases in The Bronx.
Commercial properties in the Bronx also saw the highest growth in assessed value, up 14.1 percent.
The value of Class 2 co-op, condo and rental apartment buildings rose to $349.3 billion in FY21, increasing by $20.1 billion, or 6.1 percent.
Joseph Strasburg, president of the Rent Stabilization Association, which represents 25,000 owners of the nearly one million rent-stabilized apartments in the five boroughs, said he expects a deluge of appeals from landlords this year, noting, “Tax assessments for Class 2 rentals are based on income and expense statements, so it follows that with zero growth in income as a result of the new rent laws passed last June by the state legislature that there should be zero growth in assessment.
“We are seeing the devaluation of property as a result of these new housing laws, as values based on sales are off by 35 percent.”
“The new laws are significantly restricting rental income and the financial resources that enable landlords to repair, maintain and upgrade their apartments and buildings. With tax assessments rising, and rental income flat lining, we expect to see an uptick in owners challenging their tax assessments.
New York City’s real estate industry generated $31.9 billion in taxes over the last fiscal year, representing 53 percent of the City’s tax revenue, according to a REBNY analysis.
Strasburg said, “The reduction in revenue from devaluation of properties will have a significant impact on the city budget, but City Hall and the City Council will have to make up the shortfall somewhere — and that may mean higher taxes for single-family homeowners and those with three unit or fewer structures.”
Commissioner Jiha conceded property tax hikes could present “challenges” for some residents, noting that the Department of Finance has created programs to help property owners, including PT AID – a tax payment deferral program – and the introduction of monthly property payments.
The release of the tentative assessment roll gives property owners the opportunity to examine and challenge the values before the assessment roll is finalized in May.
Owners who want to challenge their assessed values can do so with the NYC Tax Commission, an independent City agency. The deadline to challenge property values for Class 2, 3 and 4 properties is March 2; the deadline for Class 1 property owners is March 16. Forms and information are available on the Tax Commission’s website.