Do-or-die: Group files final appeal for property tax reform
Real estate–backed TENNY seeks support of defendants: the city and state
Nearly two years after a mid-level appeals court tossed a suit that calls New York City’s property tax system discriminatory, the advocacy group behind the case is asking the state’s top court to rescue it.
Tax Equity Now New York filed a petition Wednesday asking the New York Court of Appeals to hear the case. The lower court had found that fixing the tax system was up to the state legislature, not the legal system.
Martha Stark, a former city finance commissioner and now policy director for the industry-backed group, said a favorable ruling could come in one of two ways.
A grand slam would be if the Court of Appeals not only overturned the Appellate Division’s decision but went a step further and ruled on whether the property tax system violates state law and the federal Fair Housing Act. The plaintiffs say it does, by placing a heavier tax burden on households of color. So far, hearings have focused on whether TENNY has sufficient evidence to even bring a suit.
A more likely victory, said Stark, would be for the court to overturn the decision and kick the suit back down to the trial court to hold a hearing on the merits of the case. Stark said getting the case before the U.S. Supreme Court is not on her to-do list.
“It’s always fun to have a case go to the Supreme Court,” Stark said. “But the goal for us has always been that we think the highest court in New York should opine about the property tax.”
TENNY’s arguments are extensive: Its petition is 113 pages. Its key position is that the New York City property tax system taxes communities of color at “substantially higher rates than properties in white neighborhoods,” an imbalance that shoulders those households with “hundreds of millions of dollars of additional taxes.”
The filing says doing so makes it more difficult for those New Yorkers to buy, own and maintain homes and perpetuates segregation.
This will be TENNY’s second shot at the Court of Appeals. Stark likened the appeals process for the state’s highest court as the chance to take two bites of a proverbial apple.
One bite is a claim that the court should take the case because it deals with a substantial constitutional issue, Stark said.
That’s the route the group took last fall; it resulted in a dismissal.
The other option is to pursue an appeal on the basis of discretion — that this is a case the court should hear.
“We’re using our second bite at the apple to tell the court that this case is of significant importance to New York City’s viability and fiscal ability,” Stark said. “And that it’s of statewide importance that the city of New York has a property tax structure that is fair and equitable.”
Standing in TENNY’s way are the city and state, who are defendants in the case.
Mayor Bill de Blasio favors tax reform but has been against the suit since its inception. Law360 reported in 2018 that the mayor said the courts were not the way to solve the problem with property taxes, noting that a solution could not “fundamentally change” the revenue the city receives. Property taxes are the city’s largest single source of revenue.
After TENNY’s suit, de Blasio did convene a property tax reform commission to investigate the system. But the report it produced was panned for sounding the same alarms reformers had already identified.
This summer, in a Citizens Budget Commission hearing on the report, Ana Champeny, director of city studies for the nonprofit, noted that the recommendations “largely align with prior CBC testimony and recommendations.” In other words, it was nothing new.
Stark noted that de Blasio, who owns property in Park Slope, one of the areas where single-family home owners pay significantly lower taxes than working-class owners in the Bronx, for example, has benefited from the city’s property tax system. In February the mayor said he would restart hearings to address issues with the system and planned to produce recommendations before the end of his term.
Stark is doubtful anything will come out of that promise.
“Nothing has happened on this issue in the eight years he’s been mayor,” Stark said. “And how many days does he have left — 29?”
TENNY does have hope that a changing of the guard might pull more support for the suit, though.
Mayor-elect Eric Adams has voiced support for property tax reform. He told Bloomberg a few days ahead of last month’s election that the city needed a “fairer system” and he hoped to resolve inequities “within the first year.” He also said he would create a task force to recommend solutions.
New York’s attorney general presents another obstacle, however. The state pushed to have all of TENNY’s claims dismissed, arguing, in part, that the group should not be involved in the suit because it did not have a role in the property tax system, Stark said.
“Which is kind of interesting, because the property tax structure for New York City is set by the state,” said Stark.
In a brief filed with the Appellate Division, Attorney General Letitia James argued that TENNY had failed to identify any conduct on behalf of the state “that is utterly unreasonable or arbitrary, as the law requires.” It added that a higher court had already recognized the state laws in question as serving the “eminently reasonable purpose of stabilizing year-to-year changes in the value of real property assessments.”
TENNY sees the attorney general’s repeated tries to dismiss the group’s suit conflicting with a very different position the office took on property taxes two decades ago. In a 2000 suit, the office argued that the property tax system in Nassau County, which assessed homes in communities of color at disproportionately higher values than those in white neighborhoods, violated the Fair Housing Act and state law.
The state’s dismissals seem to TENNY like a reversal of that position.
“To have the state attorney general, who’s the people’s attorney, actually saying that it’s okay that this system may treat Black and brown people differently and have them pay higher taxes as a percent of their value … it’s an interesting position,” Stark said.
The office of the attorney general did not comment on its position regarding the Nassau County suit in light of its efforts to have TENNY’s case dismissed.
TENNY is working to get Gov. Kathy Hochul on board with the appeal. In October, Stark sent a letter to the governor imploring her to ask the attorney general to support the group’s appeal so that the court might have the opportunity to review the city’s property tax system.
Stark says the lieutenant governor acknowledged receipt of the letter, but so far, she has not heard from Hochul.
“Maybe she’ll call as soon as we hang up,” Stark joked.