Class Action Suit Slams City’s Property Tax System as Discriminating Against Renting Blacks, Hispanics

Corinne Lestch, NY Daily News, February 27, 2014

The city’s property tax system has long been criticized for favoring homeowners over renters, but a bombshell lawsuit filed Wednesday charges that it discriminates against blacks and Hispanics as well.

The allegation, if upheld, could force a radical overhaul in how property taxes are levied—potentially forcing homeowners to pay billions of dollars more each year.

“The state would have to alter the property tax system to address the disparities, which would change the distributions of property tax burdens,” said Doug Turetsky of the Independent Budget Office.

The class action lawsuit seizes on a long-documented imbalance: one-, two- and three-family homes account for 48% of the market value of all city property, yet generate 15.5% of property tax revenues.

Conversely, apartment buildings account for 23% of total market value, but pay 37% of all property taxes. When abatements for condo- and co-op owners are factored in, the share of taxes paid by rental apartment buildings is even greater.

The imbalance is deliberate, part of a decades-long effort by state lawmakers and City Council members to keep the city’s residential homeowners—at one point, considered the middle class—from leaving the city.

But the lawsuit says the imbalance amounts to discrimination, because homeowners are disproportionately white or Asian, while renters are disproportionately black or Hispanic, compared to the city’s population.

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However, shifting the tax burden away from rental buildings likely would trigger a political uproar by homeowners whose tax bills would soar.

The de Blasio adminisration said it would review the lawsuit.

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