Anyone who thinks they understand how the city’s finance department determines the taxable value of co-ops and condos should call Assemblywoman Emily Gallagher who represents the 50th District comprising Williamsburg and Greenpoint.
She filed a Freedom of Information Law request with the finance department asking for a copy of the computer model it says it uses to adjust the income and expense of comparable rental properties in arriving at the value of condos and co-ops. Class 2 properties include all three categories: rental buildings, condos, and co-ops, which together makeup 83 percent of the residential properties on which New York City collects taxes.
The finance department website describes the process thus:
“You probably think of the market value of your co-op or condo as the price you could sell it for on the open market. However, state law requires us to value residential cooperative and condominium buildings as if they were rental apartment buildings. This means that we look at the income and expense statements of rental buildings with similar characteristics to determine your condo or co-op buildings market value.
“Comparable properties are chosen based on the number of units, size, age, distance and number of stories. There is never a perfect match. To account for any differences, adjustments are made to the income and expense of the rental buildings used as comparables for your property.
“For example, if your co-op is older than the rental building that is the best comparable match in your neighborhood, we use a computer model to adjust the rental comparable to produce a more accurate value for your building. You can view the comparable properties that were used to value your co-op or condo below.”
This explanation left Gallagher’s constituents miffed, which set the whole ordeal into motion.
“I’ve heard numerous complaints from constituents about inexplicable inconsistencies in property tax bills across my district,” Gallagher said. “Taxpayers have a right to know how their tax rates are determined. And state lawmakers need access to critical information to provide oversight.”
North Brooklyn residents aren’t alone. Last October, Bloomberg reporter Jason Grotto took a deep dive into Class 2 property taxes in New York City.
He wanted to know how far the final assessed value of a co-op or condo might stray from its comparable rental property.
Bloomberg’s analysis found that “in any given year, the department derived as many as 100 different net operating incomes from the same comparable rental building,” and that on average these values differed “as much as 130 percent in any given year.”
City comptroller Brad Lander has been calling for comprehensive property tax reform following the expiration of the 421a tax abatements earlier this month.
“A Better Way than 421-a” builds on findings circulated last December when the New York City Advisory Commission on Property Tax Reform published its final report.
At a press event last month, Lander suggested a few vocabulary words to describe the city’s property taxes: labyrinthine, arcane, inequitable.
As for Gallagher, she is so far not satisfied with the finance department’s response to her FOIL request.
First the department extended its time to answer to the request, then extended it again, and again, asking for an extension four times over six months.
Finally, the finance department denied the request.
Gallagher appealed the denial Tuesday and is awaiting the city’s reply.