Coalition plans to bring class-action suit challenging city’s property tax system

Advocates blame 6% assessment cap for inequities in minority neighborhoods

Mayor Bill de Blasio (credit: Getty Images) and Judge Jonathan Lippman
Mayor Bill de Blasio (credit: Getty Images) and Judge Jonathan Lippman

A coalition of tax-reform advocates including the NAACP and former New York State Court of Appeals Chief Judge Jonathan Lippman is gearing up to bring a class-action lawsuit claiming the city’s property tax system is racially biased and tipped in favor of affluent homeowners at the expense of working- and middle class New Yorkers.

Tax Equity Now NY’s lawsuit is based on data compiled by former Bloomberg administration Department of Finance Commissioner Martha Stark, the New York Daily News reported.

State law requires the city to base property assessments on sales of comparable properties. But the coalition’s data show homeowners in predominantly minority neighborhoods are over-assessed by $1.7 billion. They pay $376 million – or an average of $844 per homeowner – more than they would if their properties had been accurately appraised based on comparative sales.

“This is an insidious sort of economic oppression that doesn’t seem sexy, that doesn’t seem to pop up,” said Bertha Lewis, president of the Black Institute, which is part of the coalition. “The more we looked into this, it’s just outrageous these inequities — from neighborhood to neighborhood, community to community being taxed at different rates.”

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The inequity stems from state rules that put a 6 percent annual cap on increases to assessments that can climb no higher than 20 percent within five years, according to Patrick O’Connor, the former head of the Department of Finance property division in the 1990s who now runs Texas-based O’Connor Consulting.

Because more expensive properties climb in value faster, they hit the cap when actual sales prices rise. But less expensive home values tend to stay flat, so the 6 percent hike often drives their value above actual sales value, O’Connor said.

“The higher value areas were going up faster until the caps. The higher value neighborhoods have benefited from the cap more than the other areas of the city,” he said. “That’s what the problem is.”

Mayor Bill de Blasio last week promised to tackle the inequities in the property tax system, but only if he is re-elected later this year.

“It’s because it is something that is going to take so much effort and so much of the administration’s time and energy that it’s just not a thing we’re going to do now,” he said. [NYDN] Rich Bockmann