New York City Lowers Co-op / Condo Property-Tax Rates for Current Year

For single-family homes, the rates increased from 18.569 percent of assessed value to 19.191 percent.

Property in the City is divided into four classes. Class 1 is comprised of what is colloquially called "single-family homes," a shorthand term commonly used although the class includes one- to three-family homes, as well as most condominiums up to three stories tall and buildings containing small stores or offices with one or two apartments attached. Cooperatives and the remaining condominiums, as well as rental apartment buildings and four-family homes or larger, call into Class 2.

Class 3 includes property with equipment owned by a gas, telephone or electric company, and Class 4 is commercial buildings.

Valuations Up

Tempering this drop in the tax rate may be increased valuations of co-ops and condos. Department of Finance Commissioner David M. Frankel, in a January report announcing tentative property assessments for fiscal year 2014, said the total assessed value for Class 2 increased 6.6 percent to $59.6 billion. The report did not break out valuation increases by type of Class 2 property or by locations other than to say valuation for properties impacted by superstorm Sandy was ongoing.

"It's nice they lowered the rate, since they've increased the valuation," says Bob Friedrich, president of the Glen Oaks Village complex in Queens and co-head of the co-op / condo board-member group the Presidents Co-op Council. "There are two components of what the end tax payment is: the rate and the assessed valuation. So they can lower the rate a little bit but if Finance jacks up the valuations, which they've done over the last few years, even a lower rate may still result in a higher tax payment."

Additionally, and confusingly, the Council resolution includes a section stating, "After the final adoption of the Fiscal 2014 Budget, the Governor signed into law Chapter 134 Laws of New York 2013 [that] adds a new paragraph (y) to subdivision 1 of section 1083-a, Real Property Tax Law, which provides that ... the current base proportion of any class shall not exceed the adjusted base portion of the immediately preceding year by more than 1 percent."

Co-ops, Condos Capped ... in the Urban-Slang Sense

This does not, however, mean there is a 1 percent annual cap on tax rates going forward. As Glenn Borin, co-manager of the Tax Certiorari Group at the law firm Stroock & Stroock & Lavan explains, this was simply a legal technicality that needed to be included and applies to year only. The law allows a 5 percent annual change in tax rates, he says, "but in every year where Class 1 would be subject to the full 5 percent increase, the State legislature has adopted a one-year bill that limits the increase to a lesser percentage, usually to between 1 and 3 percent, although it was 0 percent one year."

That actually worked against Class 2 properties — as ironically well-named as ever. 

 "Last year’s Class 2 tax rate was 13.181 percent," Borin says. "Under the State legislation referenced [above], the maximum rate for the current year would be 13.313 percent. In fact, other provisions of the state law caused the Class 2 rate to decline to 13.145 percent. The 1 percent cap did limit the growth of the rate for Class 1, which of course is why the legislature passed the law." And as it happens, "The capping of the Class 1 rate caused the reduction of the Class 2 rate to be less than it would otherwise have been, so it was not helpful to the owner of co-ops and condos."

Property taxes are expected to account for roughly $19.6 billion of the city's nearly $70 billion budget for 2013/14, the Council said, though about $21.3 billion must be assessed to compensate for expected noncollectable amounts.

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