Where Political Will Is Lacking, Property Tax Suit Presses On

De Blasio agreed that the system was unfair, allowing million-dollar homes in Park Slope, Brooklyn, to be taxed less than far more modest properties near Kennedy Airport in Queens. He asked the developers to give him time to fix things, according to two people with direct knowledge of the October 2013 meeting.

Then, for years, nothing happened.

Frustrated, some of the same real estate moguls who weighed legal action long before — including top-dollar political donors like Douglas Durst, Scott Rechler and Stephen Ross — decided to resurrect their plans to sue, hoping to lessen the high share of taxes borne by commercial and rental properties.

But, knowing many others also saw the system as unfair, they decided to try broadening their fight.

Calls went out to a former city finance commissioner and a veteran Albany lobbyist. They hired the law firm of Latham & Watkins, where the former chief judge of New York state, Jonathan Lippman, is a partner. They recruited overtaxed homeowners from each borough.

“The whole idea was a big-tent approach, even odd bedfellows,” Lippman said. “Everybody hates the system.”

By the time their lawsuit was filed in 2017, they had formed a broad and unexpected coalition of plaintiffs that included city landlords, urban planners, budget hawks and even the NAACP, which had for years complained of racial inequities in the property tax system.

“This is nothing new that just happened in the last two or three years,” said Hazel Dukes, president of the New York state chapter of the NAACP. “But we weren’t getting any traction.”

A year after the lawsuit was entered, de Blasio and the City Council formed a commission that recently proposed the first real reforms to the property tax system in nearly three decades.

The commission recommended that the city assess most homes, including co-ops and condominiums, at full market value and remove a cap on how much the value of a property can increase each year. Under that plan, many property owners can expect to pay less in taxes, but hundreds of thousands of homeowners may pay more.

Changing the city’s property tax formula would first require approvals from the mayor and the City Council, and ultimately the state Legislature and Gov. Andrew Cuomo.

Although many of those lawmakers have said that they generally support the notion of a more equitable property tax system, few seem eager to deal with the potential fallout of imposing the changes.

The forces behind the 2017 lawsuit, which is ongoing, say that political realities suggest that the report will not directly lead to changes in the property tax system; they believe that the only way to force change is through the lawsuit.

“The reason for the litigation is that the political will to do this does not exist,” said John Gallagher, a spokesman for the group, known as Tax Equity Now New York.

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It would not be the first time that a lawsuit paved the way for meaningful change in New York City policy: A court battle ended the overuse of stop-and-frisk tactics by the New York Police Department; a lawsuit also brought about the end of the city’s Board of Estimate.

Indeed, the property tax issue barely registered in Albany earlier this month, even for de Blasio, who has vowed to get property tax reform done before his term ends Dec. 31, 2021.

In private meetings with state lawmakers last week, de Blasio did not bring up property tax reform at all, or barely mentioned it, according to three people with knowledge of the discussions.

The subject did come up in separate state Capitol meetings last week between legislators and backers of the lawsuit, including Lippman, who were accompanied by Jacqui Williams, a veteran lobbyist. (Gallagher said the meetings were about the lawsuit and did not constitute lobbying because no legislation exists; no one is registered to lobby for the group.)

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Elected officials, even those supportive of change to the property tax system, said nothing was imminent.

“I am absolutely not optimistic that there will be legislation this session,” said Sen. Brian Benjamin of Harlem, one of at least three state senators interested in eventually carrying a bill to reform the system. “This is going to be an important conversation that you cannot rush.”

Benjamin this month introduced a more modest proposal that could raise property taxes for some homes after they are sold — and lower them for others. But even that could spark resistance from homeowners, he acknowledged.

Homeowners can organize locally and quickly, elected officials said, and they vote disproportionately. Already on online message boards like Nextdoor, debates have kindled over a proposal floated late last week by the city commission, which was convened by the mayor and the City Council speaker, Corey Johnson.

“Political Science 101 would tell you that people are much more likely to mobilize around a concentrated threat than they are around a small benefit,” said John Mollenkopf, a professor of political science at the City University of New York Graduate Center.

Mollenkopf added that, based on the last competitive Democratic mayoral primary in 2013, more Democratic voters live in areas with fast-rising home prices — meaning they pay less in taxes relative to the value of the home — than those whose home values have been going up more steadily.

“Half of the active Democratic electorate live in a place that could see a tax increase,” he said.

In Albany, state legislators from districts where taxes could go down sought to grab some modicum of momentum from the city commission; others, whose constituents stand to see their taxes go up, were more cautious.

“It’s problematic,” said Assemblyman Joseph Lentol, whose Brooklyn district is among the most undertaxed in the city relative to other neighborhoods.

Asked if he supported the recommendations of the report, he demurred. “We don’t have a bill. We don’t have anything to support. You can’t support a report,” he said.

Cuomo’s office suggested that city officials needed to figure out what they wanted to do first before the state takes action. “We will review the report along with any legislation the City Council chooses to pass in reaction to it,” said his press secretary, Dani Lever.

That may not happen anytime soon.

Johnson has said he would like to see any overhaul include rental properties, which the proposal does not address. And the coalition behind the lawsuit wants to include commercial properties and utilities as well.

“It’s not easy to do, and when you push in one button, another one pops out,” said Melissa Mark-Viverito, who as City Council speaker proposed doing a similar type of commission to address property taxes back in 2014. It went nowhere, in part because de Blasio did not support it, said a person with knowledge of the discussions. (A mayoral spokeswoman said he had other priorities at the time.)

That’s when the real estate figures and the coalition they had assembled began discussing whether to finally file a lawsuit, which they believe is their best hope of forcing the city to change the system.

“For so many years people had been waiting for the political process to fix it,” said Martha Stark, policy director of Tax Equity Now, who served as city finance commissioner under Mayor Michael Bloomberg. “But we needed the courts to step in.”

As private discussions begin among legislators in City Hall and Albany, some have looked warily to Nassau County, where changes to property tax assessments have recently sparked anger among those who saw their tax bills jump dramatically.

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Even de Blasio’s own deputy mayor for housing, Vicki Been, had expressed skepticism that reforms could be moved quickly enough to be finished on their watch.

“I don’t know that that’s realistic,” Been told Crain’s Business in September, before the release of the commission’s report. She anticipated starting a conversation so that “candidates for the next mayor have to confront those hard questions.”

City Hall quickly distanced itself from her comments, saying that the mayor’s intention was to move forward with reforms before he leaves office.

This article originally appeared in The New York Times .