Yet another New York City mayor has left office without delivering on a campaign promise to reform the city's arcane and inequitable system of property taxation.
But in the final hours of his eight-year run as mayor, Bill de Blasio did, at least, pass the tax reform hot potato to his successor when the New York City Advisory Commission on Property Tax Reform released its final report. Entitled “The Road to Reform: A Blueprint for Modernizing and Simplifying New York City’s Property Tax System,” it recommends sweeping changes to the current system, with a particular emphasis on smaller residential properties — including cooperatives and condominiums — which are often cited as having the greatest inequalities.
Now we'll see how neophyte Mayor Eric Adams handles this decades-old hot potato.
The final report expands on the initial recommendations released by the commission on January 31, 2020, before its works was delayed by the coronavirus pandemic. It proposes making the system more equitable by adopting four reforms:
First, creating a new tax class for small residential property owners: co-ops, condos, one- to three-family home and rental buildings with 4-10 units, ensuring that rules are applied uniformly regardless of property type;
Second, valuing property in this new residential class based on sales-based market value, thereby ending the statutory requirement to value co-ops and condos based on comparable rental buildings;
Third, removing assessed value (AV) growth caps, widely recognized as one of the primary drivers of inequity since they resulted in lower tax bills for properties whose values had appreciated sharply; the shift to market-value assessments would be phased in over the course of five years;
And fourth, replacing the complicated class shares system with a simple, more transparent system where individual tax class rates are fixed for five-year periods, unless deliberately changed by the City Council and the mayor.
Commission member James Parrott notes that it's now up to city to sell the reforms to the state Legislature, which has the final say on tax reform. “While New York City’s property tax system has resisted reform for forty years," Parrott says, "this comprehensive package of proposals offers a realistic path forward that addresses deep inequities and responds to the realities of vast differences in ability to pay. I urge the city's state legislators to champion these reforms in Albany and show all taxpayers that government works in their interests."
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