2018 Advisory Commission on Property Tax Reform - Essay 1

Tax Inequity

Small Homeowners Group

To Quote: “To be the fairest big city, you need a fair tax system. For too long, New York City taxpayers have had to grapple with a property tax system that is too opaque, too complex, and just feels unfair,” said Mayor Bill de Blasio. “New Yorkers need property tax reform, and this advisory commission will put us on the road to achieve it.”


“This is an important first step towards addressing inequities in this city’s broken property tax system. It is crucial that we work to bring clarity and fairness to this process, which has long perplexed the public and left many feeling hoodwinked by the city government tasked with representing them. The Council looks forward to rolling up our sleeves and addressing this long-standing problem,” said Council Speaker Corey Johnson.


Transparency

What is the best way to make the tax system fair, we have to start with transparency.


See https://tax.tidalforce.org/ a simple tool to allow transparency for all the constituents in New York City. This allows everyone to compare tax payment history of their property and compare to their neighbors. It also can compare condominium units within a condominium. It does this using the NYC Department of Finance Assessment Roll and NYC Department of City Planning data. It makes the tax history very visible and easily shared amongst groups to help in the transparency process. Because without transparency there probably will be no change and no fairness. The truth is the ones that are profiting from the inequity probably do not want change and those that are paying probably do not know.


Here’s an example. Compare Bill DeBlasio’s home to Nicole Malliotakis. It is a simple link: https://tax.tidalforce.org/#search/3010230033,5051150015

It shows that Park Slope homes in Class 1 pay around $3,000 while Staten Island Class 1 pay around $5,000 or more. This is even true when you average all Class 1 property. The payments on average in area around Park Slope Brooklyn pay much less with much higher market values than areas in parts of Queens and Staten Island and even the Bronx. These higher paying areas usually have much lower market values.

Rate

Why is the Class 1 (small home owners in 1 to 3 family homes) property tax rate going to 21.861%


Action Item: Can this commission require that the calculation of the Class property tax rate be included in the Tax Fixing Resolution? Right now, New York State provides the Class Equalization Rate calculation. But the New York City Council only gives us the property tax rates with no calculation that can be found.


See https://www1.nyc.gov/assets/omb/downloads/pdf/methodology-2018-01.pdf there is methodology here but no numbers.


See http://legistar.council.nyc.gov/LegislationDetail.aspx?ID=3528088&GUID=AD75FEB8-2A62-46FB-88C3-EBF57670A515 The https version of this page does not even load in Chrome due to security errors on the NYC Council Web Server and misconfiguration.


Also the Tax Fixing Resolution is named “Res. No.pdf” when you download it from the New York City Council Website (if you can find it!) There is no video of this meeting and the transcript appears to show that no one even mentioned the ever growing tax rates.

This is amazing. Class 1 property tax rate is up to 21.861% it has nearly doubled since 2000






Depreciation

How does our tax system account for depreciation? For example, in many neighborhoods the Class 1 property is over 100 years old. Some of these houses have not be kept up. When a homeowner repairs their home -- which helps the entire neighborhood by removing dangerous and unsafe homes from our community, that person is hit with a large property tax increase. While a speculator that buys a home for many times the current price and does no repairs gets no property tax increase other than the constant 6% increase for Class 1 property. The former owner helps the neighborhood and lives in the home and gets a 120% or more property tax increase. How is this logical or transparent or fair? We make exceptions for the Sandy victims but there are many cases of repairs in 100 year old homes that are happening every day in our city.



Affidavit

In addition, how do we calculate the “improvement” which is actually a “like for like repair/replacement” in many cases. Action Item: Please request that the NYS RPT Section 1803 be amended to exclude repairs just like the law for Sandy victims. We use NYC Department of Building Cost Affidavits (PW3) Well, these are just estimates. This is not accurate and here’s an example of why: Let’s say you own a business and your co-worker goes to lunch on the company account and submits an estimate of the lunch expense for $10,000. You would say ok, let me see the receipts. That’s what we need in the assessment review process. We need at the very least a peer review system. Right now, there are probably many cases of inequality cost affidavits.


Council

Action Item: Finally, we need an ongoing Community Budget Council to help all New Yorkers to understand the budget and how they can review and make it more transparent and fair.

Appendix:

All One-, Two- and Three-Family
Residential Real Property 0.21861
All Other Residential Real Property 0.12690
Utility Real Property 0.11207
All Other Real Property 0.10402


Property Tax Rates for Tax Year 2017/2018
Class 1 - 20.385%
Class 2 - 12.719%
Class 3 - 11.891%
Class 4 - 10.514%

Archived Property Tax Rates 2002/2003 to 2015/2017
YEAR CLASS 1 CLASS 2 CLASS 3 CLASS 4
16/17 19.991% 12.892% 10.934% 10.574%
15/16 19.554% 12.883% 10.813% 10.656%
14/15 19.157% 12.855% 11.125% 10.684%
13/14 19.191% 13.145% 11.902% 10.323%
12/13 18.569% 13.181% 12.477% 10.288%
11/12 18.205% 13.433% 12.473% 10.152%
10/11 17.364% 13.353% 12.631% 10.312%
09/10 17.088% 13.241% 12.743% 10.426%
Average Annual
Tax Rate 08/09 16.196% 12.596% 12.137% 10.241%
08/09
3rd & 4th Qtr. 16.787% 13.053% 12.577% 10.612%
08/09
1st & 2nd Qtr. 15.605% 12.139% 11.698% 9.870%
07/08 15.434% 11.928% 11.577% 10.059%
06/07 16.118% 12.737% 12.007% 10.997%
05/06 15.746% 12.396% 12.309% 11.306%
04/05 15.094% 12.216% 12.553% 11.558%
03/04 14.550% 12.620% 12.418% 11.431%
02/03
3rd & 4th Qtr. 14.160% 12.517% 12.565% 11.580%
02/03
1st & 2nd Qtr. 11.936% 10.564% 10.607% 9.776%
01/02 11.609% 10.792% 10.541% 9.712%
00/01 11.255% 10.847% 10.540% 9.768%