Falling Behind: Assessing New York City’s Property Taxes

This year, New York City Mayor Bill de Blasio’s tax bill on his $1.41 million Park Slope townhome will total nearly $2,900. A few miles away in Borough Park, the owner of a home similarly valued at $1.42 million will have to pay more than $15,000—over five times as much as the mayor.

In Manhattan, Borough President Gale Brewer will be taxed $16,261 on her $4.82 million brownstone, for an effective property tax rate of 0.34 percent—a relative bargain. In other neighborhoods like Kingsbridge and Spuyten Duyvil in the Bronx or Jackson Heights in Queens, the rate is nearly three times as high.

And in rapidly growing North Williamsburg, owners of one-, two- and three-family homes enjoy some of the lowest tax rates in the city. In the further reaches of Brooklyn, the city takes a much bigger share from homeowners.

“I’m paying high taxes now, and I’m not happy about it,” Jaime Archeta, a longtime homeowner in Canarsie, complained. 

Archeta’s home, which he has owned for two decades, is currently worth $462,000, according to the city. His tax bill this year? Almost the same as the mayor’s—$2,951.52, compared to $2,894.43 for de Blasio—even though Archeta’s property is one third the value.

“Some people like me, we’re not complaining because we don’t really know where to complain in the first place,” Archeta said. “Somebody has to correct this issue. Somebody has to move and do something to put equality in every section in Brooklyn.” 

If the figures seem confusing, it’s because they are. New York City is notorious for its outdated and complex system of assessing property taxes, which experts say is one of the worst in the country. 

To begin with, there have long been questions about how accurately the property values are assessed, although the city’s performance has improved on that front. By statute, different types of properties—commercial versus residential, cooperatives versus condominiums—are also assessed at varying levels. Even within a single property class—in this case, residential properties with one to three units—the tax bill can vary wildly from one neighborhood to the next. Yet at the same time, the law mandates that property taxes be equitable across the city. 

“There’s an overall objective of equity, but the law also has all these particular requirements about how you do it, and some of those produce inequity,” said George Sweeting, the deputy director of the New York City Independent Budget Office. “It’s a conflict in the law.”

In fact, the inequities are actually the result of an effort to inject more fairness into the system. It all dates back to a 1981 state law, which includes a provision that caps the growth in property tax assessments at 6 percent a year in order to protect against rapid changes in homeowners’ tax bills.

But while well-intentioned, the law created new problems. In neighborhoods with quickly rising property values, the assessments have not kept pace. The tax bill continues to rise for homeowners in such areas, but it makes up a smaller and smaller share of a home’s market value—leading to stark disparities from one part of the city to the next. 

“They chose to offer that protection in a way that makes it difficult for the city to actually adjust taxes fast enough to keep up with the growth in market values,” Sweeting said. “You wind up with neighborhoods in which there’s been appreciation over the years and they’ve got a tax burden—not the actual tax, but tax as a percentage of the market value—that is a quarter or a third of what it is in neighborhoods where there isn’t much change.”

For example, in a neighborhood where values are skyrocketing, going up perhaps 10 or 12 percent a year, the amount that your tax is based on can’t go up more than 6 percent a year, Sweeting said. So in gentrifying areas like Williamsburg and Park Slope, the rates are a fraction of what they are elsewhere in the city.

Elected officials do not dispute that there are serious problems. Mayor Bill de Blasio has acknowledged the flaws with the way the city assesses property taxes, which makes up a major portion of the city’s revenues, and the concerns were echoed by Finance Commissioner Jacques Jiha when he was appointed last year. The matter also has been discussed internally at City Hall since the mayor took office in 2014, although there is no evidence that the administration is taking concrete steps to overhaul the system. The de Blasio administration declined to comment for this story. 

In April of last year, New York City Council Speaker Melissa Mark-Viverito went so far as to call for a commission to study the system and propose reforms, saying it would be launched “soon.” However, a spokesman for Mark-Viverito told City & State that instead of following through, the Council was moving forward with a different commission on economic development subsidies. The spokesman declined to comment further on the issue. 

The last time that an effort to fix the system gained much traction was in the early 1990s under Mayor David Dinkins, who set up a commission that developed a set of in-depth recommendations. But Dinkins lost his reelection bid to Rudy Giuliani, who largely ignored the report after taking office.

Of course, there are any number of obstacles today to changing the system. Reforms could raise property taxes for some constituents, a dicey proposition for elected officials. For de Blasio, other initiatives like universal prekindergarten and rent regulations have been higher priorities. Changes would have to be made at both the city and state level, and the mayor has had mixed success getting Albany lawmakers to support his policies. 

The system itself is also so opaque and complex that it would take substantial time, resources and political will to change it. And each part of it is so intertwined with the others that altering the rules for one property class impacts all the other classes, making it virtually impossible to make minor tweaks.

Brewer, the Manhattan borough president, said that despite the challenges, it is critical that the city and the state take action to address the inequality in the system—even though it would likely mean higher property tax bills for herself.   

“It would be a huge effort, but it has to be done,” Brewer said. 

This story was reported in partnership with PIX11’s Marvin Scott, who is airing a version of it at 10 p.m. on Thursday, Feb. 26.