Of the many failed attempts to overhaul New York City’s unfair property taxes, Sam Stern’s comparatively small-scale campaign on behalf of Williamsburg’s ultra-Orthodox Jewish community may offer the most pointed illustration of why the task is so difficult.
Stern, a Hasidic community activist, set out in 2014 to discover why his neighbors were taxed at higher effective rates than people at pricier addresses. He learned that city officials were setting taxable values for the community’s plain, low-rise condo buildings by comparing them with much more valuable luxury properties. Stern persuaded the city finance department to choose more-relevant comparisons.
Then something bizarre happened. His neighbors’ tax bills increased, Stern said. Years later, he said the city has yet to provide a full explanation. A spokesman for New York’s Department of Finance said city officials were aware of Stern’s concerns, which were highlighted in a 2018 report published by the United Jewish Organizations of Williamsburg and North Brooklyn. The department didn’t respond to specific questions about that report for this article.
The tax increases that the UJO described reflect a citywide pattern of inaccurate valuations. For condos alone, faulty methods shift nearly $300 million in annual property taxes from the top 10%, by value, to the remaining 90%, according to a recent study. A Bloomberg News investigation this year found that city assessors are, in effect, making up the numbers they use to value condos—and the numbers they come up with shift the city’s tax burden from its wealthiest condo-owners to working- and middle-class residents.
Any serious effort to improve the system would make the burden more even, reducing taxes for some while increasing them for the political donor class, and that could present a significant challenge.
“It’s never a politically good time to do tax reform,” says Stephen Levin, an outgoing city councilman whose district includes Stern’s neighborhood. But he agrees that property taxes are “incredibly unequal.”
“I have constituents that are in Brooklyn Heights and Boerum Hill, downtown Brooklyn, who live in brownstones that sell for $3, $4 million, and pay eight, nine, $10,000 a year in property taxes,” Levin said. “Then I have people living in condominiums that are valued at $300,000 paying $20,000 in property tax.”
Mayor-Elect Eric Adams is the latest politician to pledge improvements, though he hasn’t yet announced a plan. Adams has said he supports a group of civil rights organizations, community activists and high-end developers called Tax Equity Now New York that has sued the city and state to try to force changes in assessments. After losing in a lower court, the plaintiffs have asked New York state’s highest court, the Court of Appeals, to hear the case. A decision is pending.
Evan Thies, a spokesman for Adams, was apparently referring to that case during an interview earlier this month when he said, “If the final product out of this court process is not sufficient, he will take steps to further reform” property taxes.
Nationwide studies and Bloomberg’s reporting show that residential property taxes, which will raise $500 billion this year, are beset with systemic unfairness: Officials tend to overvalue low-priced properties while undervaluing high-priced ones. One study found the same pattern in more than 70% of U.S. counties. While some local officials acknowledge the problems, improvements have been difficult to achieve.