Lawsuit over New York City’s property tax system can proceed, court says

A lawsuit that could upend New York City’s property tax system was approved by the state’s highest court on Tuesday. The decision is a victory for housing groups who complain that the system favors owners of wealthy brownstones in Brooklyn and luxury apartments in Manhattan over tenants and owners in lower-income neighborhoods.

The 4-3 decision by the State Court of Appeals strikes at one of the most persistent elements of New York’s housing crisis: Nearly everyone agrees that the property tax system is inequitable and opaque and places a greater burden on lower-income people. But while many politicians have proposed reforms over the years, none have been able to implement change through legislative routes.

The lawsuit is against both the city and the state, with the goal of forcing change through the courts instead. The lawsuit was originally filed in 2017 by a group of property owners, tenants and other advocacy groups called Tax Equity Now New York, or TENNY.

TENNY’s lawsuit says homes with equivalent values ​​are currently taxed at different rates depending on where they are located in the city. The group’s complaint shows that a property in Canarsie, for example, is valued at “three times as much as the same property in Park Slope,” according to Tuesday’s court ruling. The lawsuit also points out that the city taxes rentals at higher rates than owners of more expensive apartments and co-ops, costs that are then passed on to tenants.

A lower court TENNY fired‘s complaint in 2020, on the grounds that the legislature could make changes to the tax laws. The case was even considered a gamble by many of his supporters. But Tuesday’s Court of Appeal decision allowed some of the original claims against the city to proceed.

Martha E. Stark, TENNY policy director and former Treasury commissioner under Mayor Michael Bloomberg, said there is no timetable yet. But she said the court ruling made clear that the city could and should take action to make the tax system fairer.

“The city has an opportunity here to fix its notoriously broken property tax system,” she said. “It has some of those tools in its own toolbox.”

At a news conference Tuesday, Sylvia O. Hinds-Radix, the city’s corporate attorney, noted that the court did not say the lawsuit was over, and that the case will go back to a lower court where “decisions will be made.” ”

Speaking to reporters on Tuesday, Governor Kathy Hochul called the decision a “quite dramatic shift,” adding that she still needed to unravel the implications of the decision and decide with Mayor Eric Adams what the “right solution” would be.