NYC Property Assessors Misreport Property Values to Tax Unfairly

By Yehudit Garmaise

Bloomberg just released an investigative report that explains that the city's inexplicably uneven property taxes are the result of property assessors' routine overvaluations of lower-priced properties, such as those in Orthodox Jewish neighborhoods, like Boro Park and Williamsburg, while undervaluing higher-priced buildings.

Unlike most nationwide property assessors, who determine the values of condos by looking at the recent sales prices of units that are similar and comparable, New York City officials “adjust the numbers in ways that defy market reality,” Bloomberg reported.

In fact, Bloomberg News found that city assessors are, simply “making up the numbers they use to value condos: and the numbers they come up with to shift the city’s tax burden from its wealthiest condo-owners to working- and middle-class residents.”

“I have constituents that are in Brooklyn Heights and Boerum Hill, downtown Brooklyn, who live in brownstones that sell for $3, $4 million, and pay $8,000, $9,000, and  $10,000 a year in property taxes,” said Stephen Levin, an outgoing city councilman who represented the city’s 33rd district, which partly covers Williamsburg, and called the assignation of the city’s property taxes, “incredibly unequal.” “Then, I have people living in condominiums that are valued at $300,000 paying $20,000 in property taxes.”

Williamsburg activist Sam Stern, who, in conjunction with the United Jewish Organization (UJO), has been trying to uncover, since 2014, why residents of his neighborhood are taxed at higher rates than New Yorkers who live at pricier addresses. 

Not only have city officials told Stern that they do not have to share the formula that determines their property valuations that determine taxes, but after Stern began his inquiries, the property taxes of his Williamsburg neighbors strangely increased: a phenomenon that the city has yet to explain, Stern said.

“We have no idea [how the city determines property valuation], and they’re still not saying what their adjustments are based on,” said Stern, who has since learned that city officials set taxable values for the community’s plain, low-rise condo buildings by comparing them with much more valuable luxury properties, instead of relevant comparisons.

Bloomberg reported that New York has “an odd state law that has led officials to create hypothetical income estimates for condos and coop units: even though such residences typically don’t generate any income.”

Mayor Eric Adams, who has said he wants change, included on his transition team Stern and Martha Stark, a former city finance director who serves as policy director for Tax Equity Now New York (TENNY), which is a group that is suing the city, which the group's website says, “shifts the tax burdens away from wealthier homeowner and onto the backs of lower-income property owners and tenants.”

“We must have a fairer system, and I believe it should be done immediately,” Adams has said. “It is my desire to get this resolved within the first year. “Let’s put together a task force that sits down and comes up with real recommendations and solutions.”

However, Mayor Bill de Blasio, released on Dec. 29, just days before he left office, the report of a task force he created that spent the last three years studying the city’s skewed methods of property valuation.

The report recommended, “sweeping changes to the current system, with a particular emphasis on smaller residential properties, which the public and subject matter experts most often cite as having the greatest inequalities.”

Just last week, the former mayor’s New York City Advisory Commission on Property Tax Reform reported that instead of solely basing properties’ valuations on their fair market values, property assessors skew their valuations by including hypothetical and potential revenue streams that units could generate. 

In fact, since 1993, at least three citywide commissions and task forces have investigated ways to improve the city’s methods of valuing property, however none of the data gathered by the city’s many task forces and reports have resulted in any change, and it is time for action. 

It won’t be fair to property owners and to the general public, if commensurate action does not match extensive thought that has been put into property valuation in the city, said Carol O'Cleireacain, a member of the latest task force who previously served as New York’s finance commissioner. 

“We strongly feel that ending the unfair adjustments is a no-brainer and should be dealt with separately from any larger tax reforms,” UJO Executive Director Rabbi Niederman told Bloomberg. “However, it's too early to say whether the incoming administration will finally tackle this injustice.”