Real Estate Weekly
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Debt & Equity

Prices, profits send property taxes north

GM Building: Facing $60M tax bill

By Sarah Trefethen

New York City’s bricks and mortar are worth $914.8 billion, according to the Department of Finance’s initial property value assessments for the 2015 fiscal year.

Property owners will have an opportunity to examine and challenge the value on the tentative roll before the numbers are finalized in May.

But as of now, the department calculates that the total market value of NYC property in 2015 is $914.8 billion, an increase of $56.7 billion, or 6.6 percent, from the 2014 fiscal year.

“This year’s tentative assessment roll increases are a reflection of higher sales prices and larger net operating incomes for property owners,” Beth E. Goldman, Department of Finance commissioner, said in a statement. “In addition, significant construction activity in the commercial and multi-family residential markets has created new market value, further expanding the City’s property tax base. I would like to acknowledge the extraordinary work of the Property Division at Finance in assessing more than a million properties for the annual roll.”

The total market value for Class 1, which consists primarily of 1-, 2-, and 3-family homes, rose 4.7 percent citywide to $415.5 billion. Ninety-five percent of this increase, or $17.7 billion, is due to increasing sales prices across the city for Class 1 homes.

The remaining Market Value growth was due to other changes, including new construction and physical improvements. Assessed Values for Class 1 went up 3.7 percent to $16.8 billion.

The total market value of Class 2, which consists primarily of co-operatives, condominiums and rental apartment buildings, rose $14.8 billion, or 7.3 percent, to $217.3 billion citywide.

Seventy three percent of this increase, or $10.8 billion, is due to market forces, with the remainder coming from other changes, including new construction and physical improvements, which accounted for 27.1 percent of the increase.

State law prohibits Finance from using sales prices to value condos and co-op buildings, which must be valued as if they were rental buildings. The total assessed value for Class 2 increased 7.9 percent to $63.6 billion.

Class 2 rentals saw a market value increase of 9.8 percent. Net Operating Income (NOI) rose this year based on information reported to Finance by landlords. Additionally, new construction and renovations accounted for $2.0 billion in new market value, over 28 percent of this year’s market value increase.
The total market value for Class 4 commercial properties increased $23.3 billion, or 10.1 percent, to $254 billion. Market forces accounted for $13.9 billion of the increase for non-utility commercial property, while new construction accounted for $5.6 billion of the increase. The total assessed value for Class 4 increased 8 percent.

Analysis of the assessment by the New York Post showed a handful of trophy properties will pay $50 million in tax bills under the new assessment.

The newspaper reported that the Time Warner Center, Stuyvesant Town and the General Motors Building will each face the milestone bills.

The GM Building, has an expected tax bill of $59.2 million while the Met Life, McGraw-Hill and International Buildings will all pay more than $40 million.

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