NEWS RELEASE
One-Third of City Neighborhoods Are Unfairly Assessed, Finds Survey of 638,221 One-, Two- and Three-Family HomesThe New York Public Interest Research Group (NYPIRG) released a study today showing that nearly one-third of 213 New York City neighborhoods are unfairly assessed for one-, two- and three family home property tax assessments. NYPIRG attributed the unfair assessments largely to a state law that makes it difficult for city officials to maintain equitable assessments. The report — entitled A Taxing Problem — (click to see full report) reviewed assessments on 638,221 one-, two- and three-family homes in New York City from data supplied by the New York City Department of Finance, which administers the city’s property tax system. The report found that nearly one-third of 213 city neighborhoods are unfairly assessed. These areas are either overassessed (12.2% or 26 neighborhoods) or underassessed (18.8% or 40 neighborhoods.) (See attached maps and tables for neighborhood breakdown.) "Tens of thousands of city homeowners are paying more than their fair share of property taxes," said Gene Russianoff, senior attorney for NYPIRG.
Among the key findings of the report were:
The report included specific illustrations of assessment inequities, showing homes of widely different values with nearly identical tax assessments and property tax bills. (See photographs.) In a contrasting set of photos of Brooklyn homes, a three-family Cobble Hill home was shown valued at more than four times the value of a Bergen Beach one-family home — yet both had nearly identical assessments and paid nearly identical annual property tax bills. Another set showed a similar inequity between a Park Slope two-family home and a one-family in Sheepshead Bay. Russianoff attributed the inequities largely to state law. He noted that in 1981, the state legislature enacted major changes in New York’s property tax system. One key provision prohibits the city from increasing assessments on one-, two- and three-family homes by more than 20% in five years or more than 6% in one year. "While the Œassessment cap’ prevents rapid assessment increases on homes, it can also cause unfairness," said Russianoff. Homes in areas with fast rising values can find themselves increasingly underassessed, as assessments do not keep up with value, Russianoff noted. The report recommended that in the short term the Finance Department lower assessments on overassessed homes, noting this would likely require the City either to adjust the tax rate to make up for $127 million in lost revenue annually — or to forego this revenue. Longer term, the report recommended that the city make the property tax system more understandable for New Yorkers. Suggested reforms included moving from confusing fractional assessments to full market value assessments; providing homeowners with information on sales of comparable homes in their area; and consideration of replacing the five-year 20% assessment cap with a "circuit breaker" provision linking assessment levels to the family income of homeowners.
The methodology of the report called for comparing the ratios of assessments on homes to their full market value. Russianoff noted that the assessed value of a home is the figure on which the home’s property tax is based. The tax rate for fiscal year 2003 was $14.16 per $100 of assessed value; so a home with a $10,000 assessment had a yearly tax bill of $1,416 last fiscal year. (The median full market value for the 638,221 homes is $258,000, according to the Finance Department data.) In the report, a home was found to be correctly assessed if its ratio of assessment-to-full-market-value was within 10% of the 5.439% median ratio, according to a standard set by the State Board of Equalization and Assessment, a state agency that provides help and monitors localities administration of the property tax. Homes 10% above the median ratio were deemed overassessed; homes 10% below the median were deemed underassessed. The data was then broken down by city neighborhoods. The Finance Department divided the data across into 247 neighborhoods as defined by the New York City Department of City Planning. Neighborhoods with less than 100 homes were eliminated from consideration, leaving 213 neighborhoods for the report to study. NYPIRG’s Community Mapping Assistance Project produced a by-neighborhood map based on the data.
NYPIRG last conducted a major review of home assessments in New York City in 1983, when it released a report entitled City of Unequal Neighbors. That report found widespread inequities in home assessments and led to the reassessment of hundreds of thousands of one-, two- and three-family homes in New York City the mid-1980’s.
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