Links of Interest:
Will NYC Property Tax Reform Raise Your Taxes? | Hauseit (note that this article does not incorporate homeowners’ exemptions)
Broad Citywide Coalition Convened by NYC Comptroller Brad Lander Calls for Comprehensive Property Tax Reform as 421-a Sunsets : Office of the New York City Comptroller Brad Lander
New York City Property Tax Blueprint an Incomplete Solution | Insights | Holland & Knight (hklaw.com)
Statement by Comptroller Brad Lander: Property Tax Reform : Office of the New York City Comptroller Brad Lander (nyc.gov) Here’s Mr. Lander’s answer to “How would property tax reform affect me?”: Depending on what kind of property you own now and what reforms ultimately are adopted, property tax reform could lower or raise your taxes. It is important that throughout the process of reform, policymakers hear from New Yorkers who are currently affected by our broken system, and who have a stake in making sure the reforms are fair and affordable. However, Mr. Lander offers no details about how the proposed reforms would affect individual homeowners. And while this site endeavors to answer that question for owners of one to three family homes, it is impossible, as noted in the first article above, to quantify how the reforms would affect individual owners of coops and condos, who would find out only AFTER the proposed new framework was adopted and their new valuation revealed, what the implementation of these proposed reforms might mean to them.
Statistics of Interest:
Per the Preliminary Report of NYC’s Property Tax Reform Commission (Preliminary Report - Property Tax Reform (nyc.gov), there are currently 703,206 1-3 family homes in the five boroughs, containing 1,095,061 units (Report, page 26). In Brooklyn, which would be among the boroughs most impacted as it contains 27% of the total properties, and many of the appreciating areas), there are currently 191,058 1-3 family homes (Report, page 48).
In the event that homeowners (who may well also have mortgages, and be responsible for utilities) in the five boroughs are unable to bear the new tax burden on these properties after the contemplated Reform is implemented, many of these properties would probably be sold - most likely to be delivered vacant. Many of the units in these properties are currently renting for below what might now considered market rent, as they may be in older properties without amenities that trigger higher rents. Individuals living in these properties may be family members of the owner, with low income jobs in NYC. How would NYC address the displacement of renters in even 10% of the over one million units contained in these properties? Moreover, the most likely purchasers would be developers and investors, as there is no rent regulation on units in one to three family properties.
Thus, while Comptroller Brad Lander discusses “equity” and “protecting the vulnerable,” the fact is that many homeowners (particularly seniors and low income homeowners in communities of color that have recently seen steep increases in Market Value due to ongoing speculation) might see their property taxes increase dramatically.
Bear in mind that Mayor de Blasio convened the Property Tax Reform Commission in 2019 in response to litigation claiming NYC’s current property tax system discriminated against tenants….but that litigation is being funded by developers, who are likely not very concerned about the financial burden on tenants. So who would benefit if a large number of one to three family properties go on sale simultaneously? Their prices would most likely be at least temporarily depressed, making it easier for developers and investors to acquire them at a discount for cash, then renovate and raise rents (while potentially seeking tax breaks for creating “affordable housing”). Or alternately, they could simply demolish, seek rezoning, and build denser apartment buildings. Thus, the Property Tax Reform Commission (now a/k/a the NYC Advisory Commission on Property Tax Reform) has presented a proposal that might, whether intentionally or not, produce the same consequences for small homeowners – and only accelerate the commodification of housing in NYC as a luxury good.
Displacement of homeowners and conversion to investment properties: The higher property taxes would mean that fewer individual buyers would qualify for mortgages on one to three family homes in appreciating areas of the City; and the trend away from mortgage financing in NYC since the Great Recession has been documented for years. By 2017, 62% of affordable single family home purchases in New York City were to investors. By 2020, cash sales made up about 40% of NYC’s home-purchase market. The already-existing trend of resales to cash-flush developers or institutional landlords might well be increased by the recommendations in the Report.
Disparate Impact on Senior Homeowners and Communities of Color: Senior and minority homeowners, who would be most affected by the potential tax hikes triggered by the recommendations in the Report, would be most at risk. How could the City ensure that vulnerable homeowners would be notified of the new tax regime and assisted with processing necessary paperwork for homestead exemptions, Senior Citizen Homeowners’ Exemptions, and circuit breakers? Who would assist those without computers, and aid them in collecting and submitting tax documentation to qualify for those programs? As unaffordable property taxes forced homeowners to sell, investors would be the most likely candidates to buy their homes at depressed prices and then either seek spot rezoning to demolish them to build larger, denser, and more lucrative rental properties entitled to City tax breaks (in the name of “affordable housing”), or simply convert the existing houses to 100% rentals or condos.