The Real Deal New York

NYC treats real estate taxes as “golden goose for revenue,” city officials, real estate execs say

September 19, 2012 11:30AM

While the city has not raised real estate taxes in more than a decade, a convoluted appraisal process has allowed the city to effectively raise taxes — and city officials have gone to great lengths to ensure that the revenue stream from real estate taxes stays steady, the New York Observer reported.

The fact that property taxes never waned, even in depths of the recession, is evidence that “the city has come to treat real estate as a golden goose for revenue,” analysts told the Observer. “We had four years of falling prices, but real estate tax collections never fell,” said Robert Knakal, a chairman at Massey Knakal Realty Services. “How does that even work?”

A few years ago the city’s Department of Finance lowered valuations for some residential buildings, after noticing an irregularity, a source told the Observer. To even the playing field, the department decided to decrease its assessments across the board for the type of property in question.

Immediately after that decision, the concerned officials were called to Mayor Michael Bloomberg’s house and told, essentially, not to mess with the revenue stream, the source explained.

Others say the city is doing the best it can. “It’s a common-sense question: how is it possible from 2007 to now …  for building values not to have gone down?” said Allan Schwartz, a real estate tax attorney. “It’s because buildings’ incomes haven’t necessary suffered. And the city is using that income to calculate the values.” [NYO] — Guelda Voien

  • The Owners Rep

    This is a joke item. In NYC you can have a Town House (75 Bedford in the West Village) that you sold for 5Mil plus with an assessed value of 124K. When the numbers are so convoluted how can one say the values have gone down due to the recession when the values are bogus to begin with. The entire system needs overhauling and some mathematician to devise an appropriate formula that can work by percentages. In the last 4 years the City has diminished the assessor department. Limiting and removing seasoned employees who understood how to assess. Now we have Garages and Strip clubs that are somehow exempt. There needs to be a lot of work to fix this poorly run department.

  • M

    The assessment criteria must first be changed.

  • M

    I live in an11 unit building , that 1 unit over 10 makes it an unprotected category. Anything 10 units and below can only be raised a certain amount. Our 11 unit building is in an “all hell breaks loose ” category. We are at their mercy and are assessed and charged 52% increases! So we hire a certiorari atty to fight it every year and pay him 33% of what he saves us. That essentially wipes out our whole reserve fund. Every year. So matters such as pointing and elevators and upgraded fire alarms, etc, are now out of pocket expenses. The taxes are killing us and we can’t afford to support the tax machine and are losing our homes. Fix the system . Been waiting for some light on this inequity.

  • ddd

    Allan Schwartz should know better to say that building income has not suffered. In our buildings net is down by 5% while taxes are up 15% over the past 5 years which results in a net reduction of cash flow of 6.5%.

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