New York City's property tax assessment system has been unfairly milking the less-fortunate for decades, and it seems little has changed under the Bloomberg administration. A report by the Daily News shows that the city continues to undervalue homes in tony neighborhoods like Brooklyn Heights and the Upper East Side while overvaluing houses in less-affluent areas like East New York and Mott Haven.
According to the report, the Independent Budget Office determined that there are "wide disparities" in how the City Finance Department determines what "market value" means.
Take East New York/Cypress Hills, where 51% of residents received some form of public assistance in 2010 and crime has jumped 14% since 2011.
The median sale price for residential properties there is $249,000, but the Finance Department put the median estimated value there at $394,000, the budget office found.
Meanwhile, the city appears to undervalue homes in many upscale and middle-class neighborhoods, finding “estimated market values” that are less than actual sales prices.
This is true in the West Village and the Upper East Side, where property values never seem to diminish, as well as gentrifying neighborhoods like Fort Greene, DUMBO, East Williamsburg and Greenpoint in Brooklyn, the study found.
The problem is exacerbated by an annual 6% cap on property taxes, which punishes homeowners in neighborhoods where values remain stagnant, while property values in more affluent areas skyrocket faster than the city can keep up with them.
This creates a crazy scenario where a $462,000 two-family home on E. 86th St. that sits next to a truck depot in Canarsie pays $7,582—nearly $500 more than the owner of a newly renovated $2 million brownstone on Lincoln Place a block from Prospect Park in Park Slope.
A spokesman for the Finance Department points out that the cap is state-mandated, and claims that the agency does the best job they can with property assessments: “We’re pretty close...in almost every neighborhood…I’m sure you’re going to find some disparities. When you take a look at the whole, even by neighborhood, even by borough, we’re pretty close to the target ratio. We have good values."
Property taxes are the city's biggest source of income, comprising 40% (or $18.7 billion) of revenue in 2013 alone. But if we started taxing the affluent what they actually owe, would they still flock to New York to graciously become our Tax Base? (Probably.)