Real estate asks city for property tax mercy
A petition from REBNY, CHIP and New York’s NAACP seeks a break from cash-strapped City Hall
Developers and landlords are asking the city to freeze property taxes, slash late fees and allow monthly payment plans.
The groups calling for the immediate action include the Real Estate Board of New York, the Community Housing Improvement Program and the New York State Conference of the NAACP.
The Rent Stabilization Association, while not listed in the sign-ons, has also repeatedly called for a break on property taxes. Among the requests for relief, the groups asked Mayor Bill de Blasio and the City Council to halt increases to the property tax rate or increases to assessments.
The industry’s request is precisely the opposite of its response to the city’s 1970s fiscal crisis, when Lewis Rudin organized developers to pay property taxes. James Whelan, president of REBNY, which represents developers, said that period bears little resemblance to the widespread economic distress the city is currently facing as its residents continue to shelter in place.
“There wasn’t an issue of rent not being paid, for instance,” Whelan said of the city’s brush with bankruptcy more than 40 years ago. “It was a very different place, and property owners were in a position to do that. That’s not the case today.”
The petition’s suggestions are more moderate than some landlords’ proposals to withhold property taxes, which have circulated online but have not been endorsed by any real estate trade association. Instead, the industry’s petition requests leniency for property owners facing financial hardship as rent collection plummets.
“Freezing property taxes, reducing penalties, and setting up flexible payment plans are a necessary step towards helping the hundreds of building owners who are already distressed,” said Jay Martin, executive director of CHIP.
The petition calls for the city to reduce interest penalties from 18 percent to 3 percent, similar to a step the city’s Banking Commission recommended last week for properties assessed below $250,000 when it slashed the penalty rate to 3.25 percent from 7 percent for the first quarter of 2020. The commission also set up a new hardship exemption to eliminate interest on late payments on those properties if they have a financial hardship as a result of Covid-19.
But for properties assessed above $250,000, no accommodation was made. The interest rate on unpaid amounts for those properties remains 18 percent.
The petitioners also point out that property tax rates have risen nearly 50 percent since de Blasio took office. Real estate taxes account for more than half the city’s tax revenue and are its single largest source of funding.
It is unclear what reception the petition’s demands will have in City Hall, which is already coping with the loss of $7.4 billion in projected tax revenues over about 16 months because of the pandemic. The topic did not come up during a Zoom call Wednesday with de Blasio and more than 50 real estate and construction industry leaders, as part of his reopening advisory council, said Whelan.