An organization challenged New York City’s property tax system as unfair, unconstitutional and discriminatory. Tax Equity Now NY LLC, an association of property owners and renters, filed a lawsuit challenging the New York City property tax system. The owners and renters alleged that the City’s property tax system was unfair and results in racial discrimination. The association made several claims: the owners of one-, two- and three-family homes pay too little in taxes as a result of caps and low percentage valuations; condominium and cooperative owners pay too little because the units are valued as if they are rental properties; and that the condominium property tax abatement program is arbitrarily applied. The association also claimed that the New York City property tax system violated the Federal Fair Housing Act because it disproportionately taxes properties in minority communities at higher rates.

The Appellate Division, First Department, rejected the owners and renters complaint, ruling that the New York City tax system, as applied, was rationally related to legitimate government purposes. For example, temporary property tax abatements to condominium or cooperative units was intended to resolve an apparent inequity between condominium/cooperative owners and owners of one to three family homes, and to encourage ownership of apartments. Condominium and cooperative owners generally pay much higher taxes than comparably priced family homes.

The Appellate Division also rejected the owner and renters’ racial discrimination claim. The Appellate Division found there was not a causal connection between the New York City property tax system and any racial disparities in availability of housing, nor was there a causal connection between the tax system and the continued segregation of New York City neighborhoods.

Tax Equity Now NY LLC v. City of New York, 2020 N.Y. Slip Op. 01401 (U)

By: Jason Rogovich (Jason Rogovich is the CityLaw Fellow and New York Law School Graduate, Class of 2019.)