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A Brooklyn Pol's Frustrating Dive Into the Mystery of Property Valuations

Williamsburg, Brooklyn

Property taxes, valuation method, Class 2 properties, co-ops and condos, Emily Gallagher.
July 5, 2022

Emily Gallagher, who represents the north Brooklyn neighborhoods of Williamsburg and Greenpoint in the New York State Assembly, recently set out on a heroic, if not quixotic, mission. In an effort to untangle discrepancies in property valuations in New York City, Gallagher filed a Freedom of Information Law (FOIL) request with the city's Department of Finance (DOF), the Riverdale Press reports. Gallagher asked for a copy of the computer model the DOF uses to adjust the incomes and expenses of comparable rental properties that are used to establish the valuations of condos and co-ops, a key element in computing property taxes. (Class 2 properties include all rental buildings, condos, and co-ops, which together makeup 83% of the residential properties on which New York City collects taxes.)

The DOF declined to share a copy of the computer model. The department's website states: "State law requires us to value residential cooperative and condominium buildings as if they were rental apartment buildings. This means that we look at the income and expense statements of rental buildings with similar characteristics to determine your condo or co-op building's market value. Comparable properties are chosen based on the number of units, size, age, distance and number of stories. There is never a perfect match. To account for any differences, adjustments are made to the income and expense of the rental buildings used as comparables for your property. For example, if your co-op is older than the rental building that is the best comparable match in your neighborhood, we use a computer model to adjust the rental comparable to produce a more accurate value for your building.”

Last October, Bloomberg reporter Jason Grotto took a deep dive into Class 2 property taxes in New York City, seeking to find out how far the final assessed value of a co-op or condo might stray from its comparable rental property. His analysis found that “in any given year, the department derived as many as 100 different net operating incomes from the same comparable rental building,” and that on average these values differed “as much as 130% in any given year.”

At first the DOF extended its time to answer Gallagher's request, then extended it four more times over six months. Finally, on June 1 the department denied the request. It gave two reasons: "because the records you requested are exempt from disclosure under FOIL," and "after a diligent search of our records we do not have any items responsive to memoranda, directives or reports, as described in your request."

Gallagher appealed the decision on June 21. “I’ve heard numerous complaints from constituents about inexplicable inconsistencies in property tax bills across my district,” Gallagher says. “Taxpayers have a right to know how their tax rates are determined. And state lawmakers need access to critical information to provide oversight.”

John Paraskevopoulos, Gallagher's legislative director, tells Habitat: "I think the DOF doesn't want any transparency of the method by which it assesses co-ops and condos. It's a chaotic system. There's no excuse for such delays, and there should be more transparency."

The DOF has 10 days to respond to Gallagher's appeal.

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