Property tax-deferral bills on City Council’s fast track
Rent relief also included; one member says owners’ interest would still be too high
Two new bills in the City Council would allow New Yorkers to defer their property taxes and tenants to put off their rent, too.
The first bill would allow property owners whose buildings are assessed at more than $250,000 to put off paying the full amount of their property taxes. To qualify, taxpayers would have to show the occupant of the building was affected by limitations on “seating, occupancy or on-premises service limitations” from an executive order by the governor or the mayor between March 7 and June 30, or experienced an “unexpected decline” in income for more than 30 days during that period.
Property owners allowed to defer their taxes due July 1 would have to pay a quarter of the bill by Oct. 1 and the remainder by May 1. The late interest fee on deferred taxes would match the interest rate set by the commissioner of finance on underpayments of general corporation tax, which is currently 9 percent, or half the usual rate.
Tenants would also get a reprieve from rental payments during the tax deferral period, and for three more months after the property owner becomes current on taxes and fees for municipal services such as water and sewer charges. The interest rate for the late rent would be no more than 25 percent of the late interest rate on the deferred taxes.
Under the bill, introduced by Margaret Chin, who represents lower Manhattan, property owners who get a tax deferral would need to notify tenants, so they can request forbearance. Landlords who do not let the tenants know risk paying the full interest rate for late payments, which is 18 percent for properties that are more than $250,000.
City Council member Kalman Yeger, who represents Bensonhurst, Borough Park, Midwood and Ocean Parkway in Brooklyn, called the bill “a start,” but said he has concerns about the interest rate. He compared the city to “loan sharks” and said a better choice would be to waive the interest entirely.
“It’s not forgiveness, it’s a deferral,” Yeger said. “It’s not a reprieve, it’s a reduction from the interest that would statutorily be charged.”
The deferral program option would allow property owners to pay their taxes on a later date, but the city would collect more overall because of the interest payment, said Benjamin Williams, a member of the property tax department at law firm Rosenberg and Estis.
Williams questioned whether “kicking the can down the road” would be helpful for property owners if their tenants don’t have to pay rent.
“The money has to come from somewhere,” said Williams. “But you don’t just get the break for free. The tenants get a break as well.”
The measure would be a boon for hotels, the attorney added, because they do not have tenants or lessees. Hotel occupancy has recovered only slightly from its initial plunge when stay-at-home orders hit and would-be travelers stayed home.
The second bill, introduced by Public Advocate Jumaane Williams, would defer property taxes on properties worth less than $250,000 without interest. To qualify, property owners would need to use the property as their primary residence, have experienced economic hardship as a result of Covid-19, and have a combined income of less than $250,000.
The bills are on the agenda for Wednesday’s remote hearing of the City Council’s Committee on Finance, and appear headed for a vote June 18.