Property tax reform – The “Third Rail” of New York City politics?

In 2017, TENNY, a coalition of property owners, renters, trade associations and public interest groups, filed a lawsuit against the City and State of New York alleging that New York City’s property-tax system was inequitable, regressive, and imposed disproportionate burdens on lower income and majority-minority neighborhoods. The lawsuit made its way up to the Court of Appeals, New York’s highest court on procedural grounds, where it was remanded back to the Supreme Court for a decision on the merits of the case and a ruling is expected soon.

Issue before the NYS Supreme Court

• Did the City violate Real Property Tax Law (RPTL) 305(2) both in how it institutes statutory caps on increases in the Assessed Value of Class 1 properties and its assessment methodology related to condominium and cooperative properties?

If the Supreme Court holds that the City violated RPTL 305(2), it could necessitate significant revisions to the property tax system which has governed New York City for more than 40 years. Moreover, the line of argumentation suggested by the Court of Appeals in remanding the case could result in shifting the tax burden in ways that are at odds with existing reform proposals, such as those compiled in the New York City Advisory Commission on Property Tax Reform report published at the end of 2021 which recommended stripping out features that led to structural inequities.

The stakes here are enormous, especially given the City’s reliance on real estate taxes to help fund and support a budget of over US$110 billion (FY 2025). The Hogan Lovells Tax Certiorari team will continue to monitor this case, as well as other policy developments from the new Mamdani administration, and provide updates.

Authored by Susan Davidson and Adrian Diaz.