City, state trade blame for NYC’s “broken” property tax system

The parties appeared in an Appellate Division court Wednesday

Bickering by the de Blasio and Cuomo administrations over who’s responsible for New York City’s “broken” property tax system enlivened a dreary afternoon in an Appellate Division court Wednesday.

“The city argues that their hands are tied by what the state’s done. And the state argues that everything they’ve done is fine, so it’s the city’s fault. It’s a little bit like a Marx Brothers’ movie,” said plaintiff’s attorney James Brandt in an interview afterwards.

“The problem is if you listen to both of them, nobody is responsible and, in fact, of course, they’re both responsible,” he continued.

New York City and state are defendants in a lawsuit filed by Tax Equity Now New York, a coalition of real estate and social welfare groups that alleges the property tax system violates state and federal laws and constitutions by disproportionately taxing low-income and minority homeowners and renters.

The suit was filed in 2017 and the city and state have been trying to get it thrown out. The matter before the court Wednesday was whether it would uphold the Supreme Court’s decision to let TENNY’s case proceed into discovery.

Broadly, the defendants’ position is that a solution to systemic disparities should be found politically. But which government should take action is up for debate.

The city’s lawyer, Joshua Sivin, blamed varying tax burdens on state legislation that caps annual increases of assessed property values at 6 percent. “The remedy is to go to the Legislature and change the laws,” he said.

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The state, represented by Seth Rokosky of Attorney General Letitia James’ office, argued that the state created a “rational statute” mandating the valuation cap but the city had misapplied it.

“That’s city conduct, that’s not state conduct,” he told the court, repeating the state’s position that it should be dismissed from the case.

For TENNY, Brandt argued that “the city and state admit time and time again that the system is broken,” and asked the Appellate court to let the case proceed so that “at least there’ll be a full record.” A decision is not expected for at least a month.

He later said that he expects discovery to yield “very direct quotes and very direct evidence that makes it perfectly clear the things we’re saying are not just in fact true, but known to them.”

“I think we’re going to find that they admit and acknowledge that it’s politically hard, you know, to change things that benefit rich people,” he continued.

Write to Erin Hudson at ekh@therealdeal.com