Challenge to Property Tax Rejected

The Challenged Provisions

Consider three of the provisions that provoked the challenge in the Tax Equity Case. The Real Property Tax Law divides real property into New York City into four classes — two for residential property, one for utility property, and one for all other real property. The first perceived equity is that the statute essentially preserves the relevant tax burden for each class of property, limiting changes in the percentage of total tax each class must bear. So, as the value of residential real property has increased relative to the value of commercial property, the tax burden borne by residential property has not increased proportionately.

Among "Class One" residential properties (one, two, and three family homes), the statute caps the increase in assessed value of any individual parcel. Assessed value may not increase more than six percent in any one year, or more than 20% over a five year period. Similar but somewhat larger caps apply to "Class Two" residential properties with ten ore fewer units. The result: properties that have appreciated rapidly are assessed at a smaller percentage of market value than those that have appreciated at a lower rate. Those who have bought in gentrified and gentrifying areas — typically the well-to-do – enjoy a tax benefit not shared by those in areas where values have not increased.