Are You Certain It's Certiorari? What to Know about the NYC Tax Commission
Aug. 16, 2012 — "Real estate taxes have suddenly become the highest line item in a co-op's budget, and that being the case, boards should understand the [appeals] process," says attorney Eric Weiss, a tax specialist and partner at Tuchman Korngold Weiss Lippman & Gelles. "And they should be able to participate in the process if they feel that's important. I think it is important, from a budgetary standpoint."
It's not just a tax attorney saying that. Bob Friedrich, board president of the 110-building, 10,000-resident Glen Oaks Village co-op in Queens, agrees. "I think it's very important that all co-ops understand why they must appeal the valuations assessed against their properties," he says. This is also true of condo boards, which file appeals on behalf of the individually taxed apartment-owners, and for the condominium association's property taxes.
And the New York City Tax Commission — less ominous than the name suggests — is where you go to do just that: appeal the property values that the city's Department of Finance assigns each year for tax purposes.
"The Department of Finance has to get out close to a million assessed values, a million tax lots," Weiss notes. "Finance is mass-producing these things, crunching numbers. And the tax commission is looking at them on a case-by-case basis."
Killer App
So, not surprisingly, most boards routinely file an "Application for Correction of Assessed Value" with the commission each year, just to be safe and keep all options open. "The filing of an Application for Correction of Assessed Value is a prerequisite to initiating an Article 7 petition proceeding in court," says Weiss. Or as Glenn Newman, president of the commission since 2002, puts it, "The Tax Commission applications result in a hearing to review an assessment. What I do is called tax certiorari [colloquially] but technically the certiorari takes place in the courts." A tax certiorari court proceeding "is also known as an Article 7 petition, which comes from Article 7 of the Real Property Tax law," he adds.
The process starts early each year in January, when the finance department issues tentative valuations for over one million separately assessed land parcels called "tax lots" for the fiscal year beginning July 1. Since condo apartments, which unlike co-op apartments are real property and not shares in a corporation, are each a separate tax lot, most condo boards do one certiorari appeal covering all of them.
March Right In
Boards have until March 1 to file a protest with the tax commission; there's a $175 fee applied to properties with assessed values of $2 million or more that are scheduled for hearing.
The hearings themselves run from April 1 through about October, says Newman. But since the finance department's tentative assessments "become final around May 25," says Weiss, "not a lot of the properties that have filed protests have had hearings. Most hearings occur after the final assessment rolls have been published" — meaning that in nearly every case, you're expected to pay a tax bill that may eventually be ruled higher than what you actually owe.
Boards make these applications through a specialized certiorari attorney, with your managing agent generally serving as liaison.
The commission can review four types of claims: (1) misclassification, in which the property is being is assessed in the wrong class of the four types; (2) excessiveness, in which a tax cap has been exceeded or a property fails to receive all or a portion of a partial tax exemption; (3) inequality, where assessed value is set at a higher proportion than that applied to all other properties in the same tax class; and (4) unlawfulness, which is principally that the property failed to receive a complete tax exemption.
"The Tax Commission will review a case and arrive at a proper value and either make an offer the taxpayer can accept or not," says Newman. "If it's not accepted, then the original assessment stays as is. If he accepts the offer, part of that settlement requires the discontinuance of pending Article 7 court proceedings for the earlier years. So a taxpayer has to make a decision: is the Tax Commission making an offer that's reasonable and the right value? If you're not happy with the tax commission, the next step is to go to court."
And that's a story for another time.
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