Bill de Blasio, who vowed to fix New York City’s dysfunctional property tax reform system eight years ago when campaigning to be the city’s chief executive, released recommendations in his final days in office that include creating a new tax class for small residential and condo owners.
The outgoing mayor, who ends his second term on Dec. 31, released a final set of recommendations Wednesday drafted by the New York City Advisory Commission on Property Tax Reform, that include:
- Creating a new tax class for small residential property owners: 1-3 family homes, condos, coops, and 4-10 unit rental buildings, “ensuring that rules are applied uniformly regardless of property type,” the city said in a statement.
- Valuing property in this new residential class based on sales-based market value, thereby ending the statutory requirement to value coops and condos based on comparable rental buildings.
The commission also recommended a tax break for those with incomes below $90,550 who pay more than 10% of their income on property taxes.
“For far too long, New York City’s opaque and unfair property tax system has led to vast inequities in New Yorker’s property tax bills,” de Blasio said in a statement. “The Commission’s recommendations represent the most significant structural reforms to the system in 40 years and would provide much needed relief for low- and moderate-income New Yorkers.”
But the recommendations are not binding, and now the overhaul is in the hands of the new mayor’s administration. Eric Adams, who takes office in three days, has vowed to make the issue a top priority.
“We need a fairer system. It needs to be done immediately,” Adams said during an interview in late October with Bloomberg Television’s Balance of Power. He pledged to tackle reform during his first year in office.
Other recommendations from the de Blasio commission include:
- Primary residents with incomes below $375,000 would receive a 20% property tax exemption based on sales-based market value. Those with incomes between $375,000 and $500,000 would receive exemptions between 4% and 16%.
- Primary residents with incomes below $375,000 would receive an exemption of up to 30% based on their home’s sales-based market value. The exemption would decrease for higher-valued homes and, for those with incomes between $375,000 and $500,000, the exemption would be further reduced.
- Replacing the “complicated” class shares system with a “simple, more transparent system” where individual tax class rates are fixed for five-year periods, unless changed by the city council and mayor. If so, all class rates would change proportionally.
The Covid-19 pandemic interrupted efforts by the de Blasio administration last year, leaving city officials with a raging health crisis and shuttering companies. In April, the commission relaunched its efforts, ending a 14-month postponement by announcing it would hold public hearings across the five boroughs in the spring.
But leaders have faced a series of other urgent priorities, including opening schools, combating new coronavirus variants that have threatened the city’s re-opening, and jump-starting New York’s sluggish economic recovery.
“There had been momentum before Covid—and Covid really threw a wrench,” said Ana Champeny, deputy research director for the Citizens Budget Commission, a nonprofit think tank. “If we had moved faster and it had been more of a priority and focus, maybe we could have done it.”
Tax Equity Now New York (TENNY), which had sued to change the city’s property tax system, called the recommendations too little, too late and compared the situation to what unfolded under former N.Y. City mayor David Dinkins.
“Issuing recommendations that are basically the same as what the Dinkins administration released 30 years ago, two days before the end of an eight-year term, demonstrates that the Mayor is complicit in a racist and regressive property tax system,” group spokesman John Gallagher said. “We are hopeful that Mayor-Elect Adams will pursue meaningful legislation, abide by any court determination and make changes within his power as mayor.”
Fears of What Comes Next
One of the constraints de Blasio placed on the commission was calling for any reform to be revenue-neutral to ensure that New York didn’t suddenly find itself on the short end of a plummeting tax stream. Property taxes account for nearly half of the city’s total revenue. The zero-sum approach means tax cuts for one group have to be balanced with increases for another group—places in Staten Island pitted against Manhattan, condo owners against investors, Brooklyn townhouses against renters.
“The current property tax system is getting more unfair with time,” the commission concluded in its report. “The road ahead will not be easy; it belongs to the policymakers who will evaluate our proposals and hear more from the varied interests and stakeholders. This report provides the data and the analysis, but we do not write the laws. That task should now be taken on. New Yorkers deserve nothing less.”
— Laura Nahmias with Bloomberg News in New York contributed to this report.