Crain’s New York Business: City’s property values are up despite pandemic—and so are taxes

By NATALIE SACHMECHI

January 21, 2022 1:52 PM

 

The total market value of all of the property in the city has been appraised at a whopping $1.4 trillion for fiscal year 2023, an 8.2% increase from the previous fiscal year and a 2.1% increase from fiscal 2021, before the pandemic, according to the city’s Department of Finance. 

 

The portion of that value that the city can bill property taxes for also rose, by 8.1% to $277.4 billion, representing real estate activity between Jan. 6, 2021, and Jan. 5 this year. During the previous fiscal year, the market value of properties dropped to $1.3 trillion, a 5.2% decrease from the year before, reflecting the impact of the Covid-19 pandemic on the market between 2020 and 2021.

 

Although the tax rate property owners are charged has remained the same, a higher assessed property value means that an owner’s tax bill also increases.

 

The market value for Class 1 properties, which include one- to three-family homes, has grown 7.5% since fiscal 2021 and 6.7% since fiscal 2022. The value of Class 2 properties—rental buildings, condominiums and cooperatives—has grown 8.7% since fiscal 2022 but is still 0.2% lower than before the pandemic. 

 

Landlords slammed the assessments, claiming they are still struggling from revenue lost during the pandemic. 

 

“If city elected officials want safe, clean, affordable housing, then they need to stop bleeding renters and their housing providers dry with outrageous property tax increases,” said Jay Martin, executive director of the Community Housing Improvement Program. Passing the “good cause” eviction bill, which would make it more difficult for landlords to raise rents or evict tenants, would make the situation worse, Martin added. 

 

“We need to be providing the people in these communities more help, not more costs that will lead to higher rents or worse housing,” said Ann Korchak, president of the Small Property Owners of New York.

 

But with home prices and rents rising again, the residential market is showing signs of recovery, city Finance Commissioner Preston Niblack said. 

 

Class 3 properties used by utility companies have reported the largest increase in value since fiscal 2021, at 13.8%.

 

Office, retail and hotel properties, which make up Class 4, had their assessments increase by 11.7% in the last fiscal year, though their value is still 7.7% below pre-pandemic levels. Hotel values were the hardest hit, at nearly 20% below prepandemic assessed values. 

 

Of all the boroughs, commercial properties in Manhattan had the smallest increase in value, at 8.7%.

 

The Finance Department acknowledged that the commercial real estate industry is still struggling.

 

“Office and retail leasing activity and hotel occupancies have picked up in recent quarters, but overall office occupancy remains down,” Niblack said. “The lack of workers and visitors means that retail stores and hotels continue to suffer.” 

 

Many hotels have not been able to pay their taxes, according to the Hotel Association of New York City. In May several City Council members and hotel owners wrote a letter to then-Mayor Bill de Blasio, pleading with him to suspend the 18% interest rate that hotels will be charged for late property tax payments. The coalition said paying the staggering interest would only make matters worse for hotels.