Assembly Member David Weprin (D-Richmond Hill, Glen Oaks) tonight pushed his legislation that would make all owner occupied co-ops and condos as part of Class 1 in regard to property taxes.
Currently there are four classes in property taxes. Class 1 is residential property that includes one to three units; Class 2 is residential property with more than 3 units including cooperatives & condominiums; Class 3 is utility company equipment and special franchise property and Class 4 is all other real property, including office buildings, factories, stores, hotels and lofts.
Weprin pushed his proposal as testimony during the New York City Advisory Commission on Property Tax Reform’s public hearing held at York College – Milton G. Bassin Performing Arts Center, 94-45 Guy R. Brewer Boulevard in Jamaica.
“As a seasoned public servant in the Queens community and as a homeowner I am familiar with the issues of the current property tax system. Property taxes are the largest single source and most stable source of revenue for New York City and must be protected to ensure our continuing prosperity. However, we can accomplish this in a manner more equitable than the current system,” said Weprin during his testimony.
“The four class property classification scheme, which has been in place since the 1980s, has resulted in some property classes bearing a disproportionate tax burden than other classes; and most significantly has led to a system where Queens and other outer borough residents are taxed more in proportion to the value of their houses than homeowners in wealthier areas,” he added.
Weprin said, for example, some condo owners in my district, some of whom contacted my office about their rising property taxes, are taxed at a rate of 200% to 300% more than the owners of some of the priciest residential properties in the city.
“While certain condo owners in my district pay an effective tax rate of 3% – 5% of the estimated market value of their property, we found that certain residents of One57, also known as ‘The Billionaire Building,’ pay no more than 1.54% of the estimated market value of their properties,” he said.
“This is inexplicable, not only is the City of New York losing massive amounts of revenue by not taxing the wealthiest property owners at rates comparable to middle class communities, but also effectively creating a subsidy for the owners of the most expensive properties on the backs of middle class property owners and renters. This is in large part due to assessment caps which keep the value of the properties from appreciating which in turn allows neighborhoods in Brooklyn and Manhattan with greater appreciation of value to have artificially low effective tax rates.”
Weprin argued that a large portion of the property tax burden is being shifted to Class 2 properties. A report from the Furman Center for Urban Policy found that Class 2 properties accounted for 36% of city property tax revenue while only accounting for 24% of city wide market value with areas in Queens have higher class 2 rates than Manhattan or Brooklyn.
In 2006, the NYC independent budget office found that condos and co-ops in Park Slope/Carroll Gardens were valued at 12.5% of their sales-based market value to those in Jamaica which were valued at 44.8%, he said.
Weprin said his bill in the assembly, A5101 which would classify owner occupied co-ops and condominiums as “class one” properties, will reduce the property tax rates of co-op and condo owners, who face significantly higher property taxes than their neighbors in single family homes.
“At the same time, it retains the “class two” property status for those coops and condos used as investment or rental properties. I am also a co-sponsor on another bill, A354A (Braunstein), which would create a new class for certain class two properties by moving all residential properties not classified as class 1 or 2 (i.e., rental properties) into a new class 5, making class 2 just residential co-ops and condos.
“Either of these solutions would bring us a step closer to a fairer property tax code by allowing for more uniform treatment for similar type properties.”
The commission is planning to hold public hearings in all five boroughs and then recommend reforms to make it fairer, simpler, and more transparent, while ensuring that there is no reduction in revenue used to fund City services.