A New York state appeals court on Thursday threw out a real estate industry-backed challenge to the city’s property tax system.
The group Tax Equity Now New York in 2018 filed a lawsuit claiming that aspects of the system resulted in discrimination. According to Tax Equity Now, the system undervalues homes in many wealthy neighborhoods while overvaluing properties in poorer ones.
In the suit, the group pointed to the effects of a 6 percent cap on assessment increases for many homes, tax abatements for condominiums and co-ops and subdivisions of the city’s four tax classes that have created de facto subclasses.
The city and state lost on their original motion to have the case dismissed and appealed to the higher court, which ruled that although those characteristics led to disparities between properties, they were “rationally related to the achievement of a legitimate governmental purpose” and therefore not arbitrary.
The judges cited the “deference we afford the legislature in the context of classifications made by complex tax laws.”
Tax Equity Now, however, argued that wasn’t grounds to throw out the case.
“New York’s courts have a deep and longstanding record of striking down government actions that violate state and federal constitutional and statutory guarantees,” a spokesperson said.
The decision comes just a few weeks after the city released a long-awaited report on its plans to reform property taxes, one that left Tax Equity Now unimpressed.
“The preliminary property tax commission report issued more than two weeks ago — after years of delay — coupled with recent comments from elected officials, make it very clear that the political will to change this system doesn’t exist and change will only come from the courts,” the group said Thursday. “We intend to appeal the court’s decision.”
An appeal would be heard by the state’s highest court, the Court of Appeals. But a favorable decision there would only mean the industry group could proceed with its lawsuit.
The battle between Tax Equity Now and the city and state dates back to 2017, when the group and the NAACP filed a class-action lawsuit claiming the tax system was inequitable and racially biased. The de Blasio administration has agreed that the system needs reform, but has said the matter should be left to city and state lawmakers.
Contact Rich Bockmann at rb@therealdeal.com or 212-673-5081