New property tax math squeezes outer boroughs

By David Freedlander, amNewYork Staff Writer
More stories | dfreedlander@am-ny.com

9:57 AM EDT, March 28, 2008

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A new method of taxing properties is forcing many outer borough New Yorkers to pay more -- and sticking the city with a yawning budget gap, according to some tax lawyers and assessors.

"This is like the snowball rolling down a hill -- eventually it becomes an avalanche," said Peter Blond, a tax lawyer at the Long Island law firm of Meyer, Suozzi, English & Klein. "It is becoming more and more evident that outer boroughs are footing the bill for Manhattan big business."

Moreover, he said, the new system puts a tighter squeeze on mom-and-pop businesses because commercial landlords are forced to seek higher rents to meet the bigger tax burden.

The new formula, called Gross Income Multiplier, doesn't take into account expenses when calculating how much a building is worth, forcing older buildings in poorer areas to pay more and letting newer buildings in nicer neighborhoods off the hook.

For example, a nearly century old 30-unit rental building on the Upper East Side last year saw a drop in its assessment this year, from nearly $2.7 million to under $1 million. At the same time, a building of similar scale and age in the Kingsbridge section of the Bronx almost doubled in value, from $1.4 million to nearly $2.8 million

David Moog, president of the city's assessors union, likened the new proposal to a "flat tax," where everyone pays the same rate but forces those on the lower end of the scale to proportionately dole out more.

But even worse, he added, taking assessors out of the assessment process creates inaccurate tax bills that must be challenged in court.

"Everyone pays a lot in taxes but one thing we should get for free is a proper assessment," he said. "They've switched methods to reduce personnel. The city is being penny-wise and pound foolish."

Projecting from last year's data, Moog warned that the city could lose about $100 million in tax revenue from owners of rental buildings simply by switching to the new system.

"This is funding that would go to schools, and police, and firemen and all the basic city services that a city needs," he said. "We're not talking about raising taxes, but just collecting taxes as they should be."

The new, streamlined system was instituted this year after several assessors were indicted as part of a wide-ranging bribery scheme in 2002.

The Department of Finance contends that the GIM is an improvement.

"The old system was not consistent and not transparent," said Sam Miller, a department spokesman. "There may be increases or decreases for an individual building but the overall impact [on revenues] will be minimal."

Frank Ricci, director of government affairs at the Rent Stabilization Association, said if landlords start to feel the pinch the board may pass along higher rent hikes.

"Only looking at the amount of gross rent that comes into a building and not looking at the expenses is really diminishing the amount of affordable housing," said Ricci. "The reason rent keeps going up is because expenses keep going up and it's the city that's driving that."

The city's new method of assessing properties makes it unique among municipalities around the country and throughout the region.

Lloyd Tasch, the top assessor in White Plains, and a former New York City assessor, said the GIM method was the "quick and dirty way to do property assessment. "For the GIM, you just multiply by a certain factor instead of using income and expenses to determine a property's worth. You need to get sufficient data to make GIM effective."