Muted response to property tax assessment.
According to data released by the Department of Finance in mid January, a tentative assessment of commercial real estate in the five boroughs shows that values rose on average by 22.26%, a jump far higher than last year's modest 5% hike. The increase would have a palpable effect on raising property taxes for the city's landlords, but most owners likely won't feel the sting, REBNY president Steve Spinola indicated, because the increases target mainly those who failed to submit the necessary income and expense data that the city uses to make its determination of property values.
Mayor Bloomberg's proposal to reduce the city's property taxes by 5%, which he announced during his annual State of the City speech last Wednesday, would also bring added relief.
"There hasn't been an uproar about the city's assessments, people aren't saying to me that they're getting killed," Spinola said. "Most landlords didn't see dramatic rises and will probably see no more than a 6-7% increase in value."
The Department of Finance values every property in the city individually and according to Spinola as well as sources within the department, made aggressive assessments for properties whose owners didn't provide the financial information. Landlords are required to present those disclosures in a filing with the city every September, but according to the Department of Finance, 24,000 property owners still haven't submitted their property's income and expenses.
Department of Finance spokesman Sam Miller, said landlords can challenge the city's tentative assessments before they are finalized just before the end of the fiscal year. Miller added that as many as 40,000 landlords challenge their assessment in front of the Tax Commission.
The mayor's plan to cut taxes would save real estate owners and would translate into $750 million in property taxes collected and possibly more if the cut is increased.
"Some council members have said that the 5% cut is not enough," Spinola said. "So we're hopeful that it could be even more, which is totally appropriate because the city to begin with has such a high tax base."
"I think that it sends a great message when the Mayor and the council do something like this because it says that taxes aren't a one way street and let's people know that taxes can sink as well, which spurs economic growth in the city.
"It also gives real estate owners the confidence to develop properties because they know they're not necessarily going to get hit with steep tax increases."