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6 Years of De Blasio Dodging and Delaying Property Tax Reform


availability presser questions

Mayor de Blasio (photo: Demetrius Freeman/Mayor's Office)


Reforming New York’s property tax system has for decades confounded mayors, legislatures, and governors who have struggled with (or avoided) the technical and political consequences of changing a long-standing system commonly described as outdated and irrational. When Mayor Bill de Blasio finishes his second term at the end of 2021, there is a chance he will be leaving office in the same boat.

With the latest delay in recommendations from the city’s Advisory Commission on Property Tax Reform, formed by de Blasio and City Council Speaker Corey Johnson in 2018, it is becoming increasingly doubtful the mayor will be able to make a full-fledged push for reform in Albany, where much relevant power resides, before his final year in office. If history is any indication, lawmakers may take years to work changes through the halls of the State Capitol. That would leave the bulk of whatever reform is passed, if any, to be implemented after de Blasio has left City Hall.

Yet de Blasio has been discussing the need for a concerted reassessment of the property tax system since he first took office as mayor in 2014 -- when he appointed Jacques Jiha commissioner of the Department of Finance. But the first concrete public steps he took toward carrying one out only began in his second term, four years later, when he empanelled the advisory commission in partnership with the City Council, and only after a lawsuit was filed against the city alleging the system disproportionately burdened certain racial and other demographic groups.

Now, as the calendar turns to 2020, a series of postponements and delays are pushing the prospect of a city property tax reform agenda and essential accompanying advocacy in Albany closer to the periphery of de Blasio’s tenure.

When de Blasio appointed Jiha in April 2014, four months into his first term, the incoming commissioner was asked by a reporter if he shared the view that the city’s property tax system is unequal or unfair. Jiha said, “It’s a major issue. We have a lot of unfairness and inequity.” He promised, “[W]e’re going to look into every aspect of...property taxes in New York to see what can be done. It’s a big project...If there are discrepancy and inefficiencies within the system we’re going to have to try to minimize them.” Acknowledging action in Albany would be needed, he said, “But our goal is basically to try to minimize to some extent the – as best as we can, to try to minimize the inequities...equally situated people should not be treated differently. That’s our goal.”

De Blasio then called it “a big, sprawling area of concern” and promised, “we’re going to look at it very closely.”

“Part of why we wanted a finance commissioner with Jacques’ experience and insight is to take a whole look at the tax system of this city and look at ways to make it clearer, more transparent and more equitable,” the mayor added. Jiha is a veteran economist of city and state government, who most recently served in the private sector as COO and CFO of Earl G. Graves Ltd., a multimedia firm.

“Some of that we can achieve locally. Some of that can only be achieved with Albany’s help. But first we have to come to an analysis of what is going on and what’s a better way to approach it. And then when we feel we’re on that firm ground, then we’ll start discussions with Albany,” de Blasio said then. The Department of Finance under Jiha has been preparing to assist in such an analysis by building models and cross-referencing datasets, according to a spokesperson.

Around the same time as Jiha’s appointment, then-City Council Speaker Melissa Mark-Viverito announced a Council commission to look at the issue, which quickly transformed into a task force on commercial tax breaks. Two members of the task force told Politico in 2016 they believed the de Blasio administration pressured Mark-Viverito to abandon property taxes. “My sense is the administration said that that was something that really needed its own conversation, that they'd work with them on, and haven't,” one of them reportedly said.

Property owners and tenants alike have lamented the system for years as they’ve observed real estate taxes fluctuate inconsistently across neighborhoods, property types, and tenancies.

The city’s property tax system is multifaceted and dizzying. Some aspects are controlled by the city, but many others are dictated by the state. State law determines the method for valuing different properties, while the Mayor and City Council have discretion over the tax rate. The city’s Department of Finance calculates a property’s assessed value based on the state’s methodology using data gathered by the city. Experts, elected officials, and everyday city residents have sought changes to each of these stages to make the system more fair and transparent.

Despite its complexity, the city did not move quickly to begin evaluating the issue and by the end of the mayor’s first term, he was only promising action in his second. “This one's exceedingly thorny and it has to be navigated. The pieces that can be decided administratively and legislatively at the city level, plus the pieces that have to be decided in Albany – that's a very careful balance that has to be struck,” he said in April 2017, adding shortly after, “I think it's something that has to be addressed, but it's not realistic to address it this term.”

It was at a news conference on an unrelated topic during his reelection year, and de Blasio was responding to questions about the scant action on property tax reform in his first term. “We didn't do it because we had to work on a lot of other priorities that were crucial and necessary and available to be acted on, versus this, which I knew would be a very involved, difficult process that would take the energies of our budget director, our first deputy mayor, our finance commissioner, and a whole lot of other people,” he said.

That year he was harried by a lawsuit, filed that April by a coalition of finance experts, civil rights groups, and development associations, challenging the city and state taxation practices as unconstitutional, alleging they disproportionately harm New Yorkers in less affluent neighborhoods. One of the most serious problems the coalition points to is the state’s method of assessing co-ops and condos, based on estimated rental income rather than sales price -- often vastly undervaluing some of city’s most expensive property and leaving others to foot the bill.

De Blasio also faced mounting pressure from his Republican challenger, Assemblymember Nicole Malliotakis, who made real estate tax reform a central issue in her campaign.

While calling such an undertaking a “huge, huge effort” and tempering expectations of a “quick fix” the mayor told reporters at the April 2017 news conference, “I'm telling people I'm going to do it. And if you look at my batting average of what I say I'm going to do, I do what I say I'm going to do.”

Just one day before voters elected him to his second term, on November 6, 2017, de Blasio appeared at an Association for a Better New York event, where during an audience question-and-answer session, then-president of Citizens Budget Commission Carol Kellermann asked de Blasio about the lawsuit and his plans to address property tax reform in his all-but-certain second term.

If reelected, de Blasio said, "we’re going to get to work on this in a very big and focused manner...there is no question that this current property tax system is broken in many ways." He criticized the push to put property tax reform into a judge's hands through the lawsuit, adding, "I’ve said it very clearly, we’ll gather all the stakeholders. It will probably take a year or two to complete this work. It will certainly take both city and state legislation. But here are the ground-rules that I see going forward: a wildly inconsistent system has to be made more consistent. I hear from people across different neighborhoods how blatantly unfair their property tax bills are and literally the way they change from neighborhood to neighborhood that makes no sense per se. Obviously people live in condos, co-ops versus single-family homes, the disparities there. There are so many issues that we have to get under the skin of that are really thorny, and really difficult."

"But were going to have to be blunt about it, we’re going to have to really be open about some of the tough choices, and then further we have to protect our revenue levels," the mayor continued.

He said that at a number of town hall meetings he had held, New Yorkers had raised the issue of property taxes to him, "Usually from a homeowner point of view."

"I say to them look, it’s going to be a massive undertaking," de Blasio recounted. "We will come up with a more consistent, more transparent, more fair system. But I want to put a caveat on it. We can’t reduce our revenue substantially. If we do that and I look at people in the eye and say if we’re going to reduce our revenue substantially it might feel great at first. But then we can’t have the same number of police officers, or we can’t sustain early childhood education, or we can’t provide the same sanitation services. Do you want that?...They say no, I don’t want to lose of those services."

He went on to say in closing, "I am ready to do it, it will take a lot of time and energy but I am ready to do it. And it’s not the kind of mission a lot of people want to take on in public life. But I’ve said it, because I mean it. And I will just say this one personal plug. When I say something that definitively, I mean it. I said we’d do pre-K, I said we’d do 200,000 affordable apartments; you know, I said we would bring down stop-and-frisk. You name it we’ve done it. We will create a property tax reform that will end up with a better and fairer system for this city." 

Commission Formed, Report Delayed
Another six months later, in May 2018, a reelected de Blasio and still-new City Council Speaker Johnson announced the advisory commission to look at every dimension of the issue and recommend changes to balance the system without reducing city revenue. Its mandate is to issue a preliminary report and a final report with recommendations, gathering feedback at public hearings.

When de Blasio and Johnson announced a handshake agreement for the next city budget the next month, Johnson intimated that the commission’s goal was to have recommendations by the state legislative session beginning in January 2019. “The work will continue throughout this year and hopefully we’ll be able to bring a product to the state legislature in next year’s legislative session with some recommendations on fixing the property tax rebate,” he said at the June 2018 press conference.

The commission held its first public meeting in July 2018 and nine others over nine months, though the mayor didn’t sign the executive order formally empowering the body until December.

Since then, the commission has postponed releasing recommendations several times. While officials say they are getting closer, several steps remain before the administration sees the recommendations, puts its own stamp on an agenda, and takes it to state lawmakers.

Spokespeople for both de Blasio and Johnson told Gotham Gazette in May that the commission would be holding more public hearings in the second half of 2019 and produce a final report with recommendations by the end of the calendar year. A spokesperson for the mayor’s office confirmed last week that the additional public hearings had not taken place and wouldn’t be scheduled until a preliminary report was published. Commission Chair Marc Shaw told Gotham Gazette on December 4 that the preliminary report would be “out soon,” without specifying a new timeline.

“This is an enormously important issue for our city, and we want to get this right. We have made significant progress on the majority of the issues we believe are needed for reform, but a few do remain. Those issues need to be resolved before we release any report,” Shaw said.

“We expect to have a preliminary report out soon for the public to review,” he said. A spokesperson for Johnson said on December 16 that that projection was still the case, without giving a specific date.

At a press conference before the last full-body Stated Meeting of the year for the City Council three days later, Johnson said, “It’s not going to happen before the end of this year. It’s my hope that it’s going to happen in January. I actually feel pretty comfortable with where things are and I continue to talk to the commissioners.”

Once the commission releases its recommendation, there remains the task for city officials to mold them into a viable policy agenda. “After the Commission shares its report with the Mayor and Speaker Johnson, they will both review the report and its findings, and will decide how to best advance reforms,” said Marcy Miranda, a de Blasio administration spokesperson, in May.

Postponing the report’s release will have implications for the prospect of reform in Albany. The state legislative session only lasts from early January to early June this year, and is typically dominated by the state budget, as well as a long list of priorities from Governor Andrew Cuomo and the two legislative majority conferences. If the city property tax commission doesn’t hold public hearings on its initial report until 2020, which is now the earliest it can, it will push the city’s advocacy efforts later into the session leaving any wishlist items from the advisory commission on less sure footing.

“There’s been a constant pushing of the timeline. We get one timeline and we try to make decisions around that. Then that gets pushed off. Then we keep hearing it’s coming soon...I don’t know the definition of ‘soon,’” said state Senator Brian Benjamin, a Manhattan Democrat and chair of the Senate’s committee on budget and revenues.

Assembly Member Sandra Galef, a Westchester Democrat who chairs the Assembly’s committee on real property taxation, believes some of the recommendations will be controversial and will have to be negotiated through multiple committees, which can delay them or seal their fates if the discussions start too late.

The session ends in June and it is not typical for lawmakers to return to the Legislature later in the year outside of exceptional circumstances, leaving any outstanding items to be taken up in 2021. Because many experts, including some members of the commission, have agreed some of the most drastic but necessary reforms will have to be phased in over a period of years, it is likely many of the potential state-level changes will be implemented under de Blasio’s successor.

“I think it’s highly unlikely it will get fixed this legislative session because the issue is so complicated, but there is a possibility that it can be tackled during the 2021 legislative session,” Johnson said Thursday.

Independent of the constraints of Albany’s political calendar, the de Blasio administration says it has been making strides to improve some of what it can control, including the precision with which it values property.

“Under the leadership of Commissioner [Jacques] Jiha, the Department of Finance has made significant investments in staffing, data analytics, and technology to improve data collection and ensure the agency is using the most accurate data to provide fair valuations,” wrote Miranda, who now represents the city’s Department of Finance, in an email.

The DOF under Jiha has for years been preparing its analytical infrastructure for the eventuality of a comprehensive, system-wide evaluation, which has dramatically enhanced the advisory commission’s ability to explore solutions, according to a person with close knowledge of the commission’s work.

“These improvements have been made with New York City residents in mind, as the agency works to create efficiencies and increase accuracy and transparency in residents’ property tax values,” Miranda wrote.

***
by Ethan Geringer-Sameth, reporter, Gotham Gazette
     

Read more by this writer.

Ben Max contributed to this article.



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