Want Tax Reform? Be Careful What You Wish For

Most residents of co-ops and condos in New York City feel, justifiably, that they are treated unfairly when the city computes the assessments that are the basis of every annual property tax bill. So it was understandable when many shareholders and unit-owners applauded the recent news that a group calling itself Tax Equity Now New York (TENNY) has filed suit in state Supreme Court claiming the city’s real estate tax system is both racially discriminatory and unconstitutional.

For the city’s millions of reform-hungry homeowners and landlords, we offer a six-word caveat: Be careful what you wish for.

“There is no reasonable relationship between the value one pays and the value of the property,” Martha Stark, former finance commissioner and director of policy for TENNY, tells the New York Post. TENNY’s backers include giant landlords Related Companies and the Durst Organization.

The city has until May 15 to respond to the group’s lawsuit, though Mayor Bill de Blasio wants to table the conversation until after the November election. His reasoning is understandable. Tax reform, as Manhattan Borough President Gale Brewer put it so nicely in 2015, “is just too political.” For every winner, there’s sure to be at least one loser. Tax reform is not the sort of issue that gets mayors re-elected.

Stark crafted TENNY’s lawsuit with former state chief judge Jonathan Lippman, who tells Crains: “This is about fairness and equity. We’re asking the court to take the bull by the horns and say, ‘This is illegal. Fix it.’ ”

If their wish comes true, many co-op and condo residents and small homeowners – including de Blasio – are likely to suffer, because current laws have kept their assessments artificially low. If TENNY’s lawsuit gets the intended tax relief for landlords, co-ops and condo will probably have to pay more.

You think people are angry now? Wait until the politicians – or the courts – “fix” New York City’s byzantine property tax system. Be careful what you wish for, indeed.