Testimony of Assemblyman David I. Weprin on Improving the Property Tax System

Good Evening members of the New York City Advisory Commission on Property Tax Reform, I’d like to start by thanking you for convening these hearings throughout the city and giving the public a chance to voice their opinions on this important matter. Since 2010, I have represented the 24th Assembly District in Queens which spans from Richmond Hill to Glen Oaks encompassing all the different property tax classes. Prior to this I served in the City Council as the representative of the 23rd Council District from 2002 – 2009, when I chaired the NYC Council’s Finance Committee.

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. 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.

As an example, my office found that 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. For example, the owners of apartment 51C, ‘Golden Goose Enterprises LLC,’ pay an effective rate 1.54%; while the residents of apartment 89-90, the $100 million penthouse, pay an alarmingly low rate of 1.41%. 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.

In addition, a large portion of the property tax burden is being shifted to Class 2 properties, defined as all other property that is not in Class 1 and is primarily residential; meaning rentals, cooperatives and condominiums. 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%.

In response, I introduced a bill in the Assembly, A5101 which would classify owner occupied co-ops and condominiums as "class one" properties. This 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.

Thank you.