A New York state appeals court on Thursday effectively 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 property tax system resulted in discrimination. According to Tax Equity Now, the current system undervalues homes in the city’s wealthy neighborhoods while overvaluing properties in the poorer communities.
In the suit, the group specifically pointed to 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 defacto subclasses.
The city and state lost on their original motion to have the case dismissed and appeal to the higher court, which ruled that while those characteristics led to disparities between properties, they were “rationally related to the achievement of a legitimate governmental purpose” and therefore not arbitrary.
“In view of the deference we afford the legislature in the context of classifications made by complex tax laws,” the appeals panel wrote.
A spokesperson for Tax Equity Now, however argued that wasn’t grounds to throw out the case.
“New York’s courts have a deep and long standing record of striking down government actions that violate state and federal constitutional and statutory guarantees,” the spokesperson said.
The decision comes just a few weeks after the city released a long-awaited report on its plans to reform the property tax system, 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.”
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.
Contact Rich Bockmann at [email protected] or 212-673-5081.