10% ASSESSMENT CAP ANNOUNCED

Frankel's announcement at the May 2 Finance Committee hearing chaired by Councilman Domenic Recchia Jr., came in response to a firestorm of criticism that the Department of Finance (DOF) has faced over the past several months because of extremely high potential tax increases at several hundred Queens cooperatives and condominiums.

Frankel had said earlier, and reiterated at the hearing, that the error was caused by a "computer glitch."

The finance commissioners seemed to recognize the mounting anger of a major portion of the city, and the 10 percent cap appeared to be a way to buy time while the DOF sorts out the problem. The move followed a 50 percent cap on assessments for some Queens co-ops and condos, which Frankel announced March 9.

He appealed to the public for patience while the DOF completed an internal review, with possible reform of the tax-assessment system in mind.

"Looking to the future, we are reviewing whether to recommend broader changes in real property tax law," he said. "This is an area where quick fixes might cause real harm, but a well-thought-out reform proposal could do a lot of good. The real property tax affects nearly every New York City resident and business, and yet it is so complex that making the connection between what the tax is based on and what people ultimately pay is too difficult to explain concisely and accurately. While a complex, confusing process is not necessarily unfair, if New York City property owners are not able to understand their property-tax burden, we have created a perception of unfairness."

The day after the hearing, councilmember Mark S. Weprin (D-District 23), founder of the City Council Co-op and Condo Caucus, called on City Comptroller John C. Liu to conduct an audit and investigation of the DOF's new computer system, following Frankel's testimony that his department has so far discovered over 100 flaws in its computer program.

Reaction from the Trenches

The tax-cap gesture left many of the protesters wary, however, including attorney Geoffrey Mazel, a partner in Hankin & Mazel, which represents many of the Queens properties that had faced extraordinary increases in their assessed values for tax purposes.

"The jury’s still out on this move," Mazel said. "There is a complicated formula to be applied, and the members of the Presidents Co-op Council [a group organizing the protest] is still reviewing the numbers."

"The 10 percent cap will be good for some people, but it’s just a finger in the dike,” said tax attorney Eric Weiss, a partner at Tuchman Korngold Weiss Lippman & Gelles. “The problem gets solved for this year but then next year we’re back where we started. It sounds more like a negotiation [than a tax policy]. It would seem like a better solution would have been to have used some correct comparables and come up with a value – as long as it's reasonable, nobody would have complained. To say 'a 10  percent cap’ sounds
good, but the job should be about determining proper values not about getting before an angry crowd and mollifying it. To focus on the cap takes away from the methodology and the mistakes that were made in the methodology.”

Less than 24 hours before Frankel testified at the City Council hearing, about 150 Queens co-op and condo owners gathered on the steps of City Hall, some wielding placards and all protesting the increases. (Image above; click to enlarge.) They were clearly worried.

"If these increases go through," said one co-op owner who declined to give his name, "we will all be forced into the street. It’s a terrible situation."

Read Commissioner Frankel's verbatim comments >>

Updated May 4, 2011, 11:28 a.m. to include Weiss comment, and at 12:08 p.m. to add Weprin paragraph and new subhead. Updated May 6 to clarify second paragraph with word "potential."

Photo by Tom Soter.

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