New York City is considering the first changes to property taxes in 20 years.

A panel charged with recommending changes to the complex and arcane property tax system began work Sept. 4 with questions about its statutory elements.

The city Advisory Commission on Property Tax Reform, formed in May by Mayor Bill de Blasio (D) and the overwhelmingly Democratic-controlled City Council, is looking for revenue-neutral steps to make the system—which hasn’t been changed since 1996—“fairer, simpler, and more transparent.”

Its report, due in a matter of months, is intended to guide officials in crafting legislative proposals to present to the council and a newly elected state Legislature in 2019.

Scrutiny of the city property tax’s fairness has been rising since an April 2017 lawsuit filed by Tax Equity Now LLC, a coalition of civil rights groups and real-estate interests. The lawsuit claimed that outer-borough homeowners have an unfair burden compared with Manhattan condos and co-ops, and that valuation formulas are opaque.

Property taxes, the city’s largest revenue source, will provide an estimated $26.4 billion in the current fiscal year, or 45 percent of total revenue, according to estimates by the city Independent Budget Office.

‘Many Levers’ Interacting

While the initial focus has been on the system’s impact on homeowners and renters, the panel’s scrutiny will also extend to commercial real estate and large-scale residential holdings.

Panel members, in their reactions to a technical presentation by council Finance Division Assistant Director Emre Edev, underscored how the inquiry remains in its early stages.

They’re reviewing the options “as we contemplate what changes can be made and should be made,” commission co-chair Marc V. Shaw, a former first deputy mayor who is now interim chief operating officer of the City University of New York, said at the City Hall hearing. They’ll have to look at how to devise a better system “and the separate question of how to get there,” he said.

Any attempts to read the tea leaves appeared premature. “It’s impossible to say where this is going,” co-chair Vicki Been told Bloomberg Tax. “We’re looking at many levers and the complicated ways in which they interact.”

Been, a former city housing commissioner, teaches law and public policy at New York University and is faculty director of its Furman Center for Real Estate and Urban Policy. Questions from her and other panel members focused on identifying exactly where legislative changes might be needed.

Underlying Framework Unfair?

The question facing them as they develop their recommendations “is how to make a system fair and transparent” when the underlying statutory framework isn’t, Shaw said.

Selling the recommendations to state legislators will require demonstrating “that this isn’t the same city” as when they last changed the law, which was in 1996, panel member Carol O’Cleireacain told Bloomberg Tax. A former city finance commissioner and budget chief, she’s an independent consultant who also held economic posts in Detroit and New Jersey governments.

The panel’s recommendations will have to reflect changes in development patterns, property values, and population shifts, O’Cleireacain said. Stability and predictability are important property tax considerations for both the city and taxpayers, but the system “can’t be cast in stone,” she said.

The panel will next meet Sept. 20 in a closed session on pending litigation, and will then proceed to public testimony sessions across the city’s five boroughs.