Court Ruling Will Speed Reform of NYC Property Tax System A 4-3 ruling by NY's Court of Appeals reversing a lower court's dismissal of a real estate industry-backed coalition's legal challenge to NYC's property tax system is likely to induce the city to change the system, experts say.The state's top court revived claims from a 2018 lawsuit filed by Tax Equity Now New York (TENNY) which alleged that the city taxes homeowners less than rental buildings and that NYC violates the federal fair housing law by capping assessments in neighborhoods with rising property values while over-taxing neighborhoods of color.In its decision sending the case back to NY's Supreme Court, the appellate court's majority chastised NYC officials who it said have admitted that the system is rife with "rampant disparities" while failing to take action to mitigate those disparities."TENNY's complaint describes in detail the City's real property tax system and alleges that the system is unfair, illegal and ever more inequitable with each passing year," the appellate panel ruling stated."The complaint recounts acknowledgements from City officials that these rampant disparities lead to inequality among similarly-situated property owners," the court said. "While these officials bemoan the situation, the City fails to act."Benjamin Williams, a real estate attorney who heads the property tax department of Rosenberg & Estis, hailed the appeals court ruling as "a giant step towards property tax fairness across the five boroughs."Williams told GlobeSt.com that he expects NYC's Department of Finance (DOF) to act to fix the inequities instead of trying to defend them by re-litigating the case in the state Supreme Court."I think DOF has always known the solution was to lower the Class 1 assessment ratio, and they will do that now, likely phasing it in to minimize sudden shocks to under-assessed homes, making continued litigation moot," Williams said."This decision will produce winners and losers. Some property owners will see their property taxes go up, especially homeowners in more white areas. Others will see them go down, especially homeowners in more non-white areas," he added.Regarding Class 2 tax assessments for cooperatives and condos, TENNY's lawsuit claims NYC uses inappropriate comparisons with rent-stabilized apartments to make these assessments. Williams said the appeals court ruling suggests that "luxury co-ops and condos could be assessed higher using market rent comps instead rent-stabilized rents.""The main issue is that the court is compelling the New York City Department of Finance to assess taxes more uniformly as a percentage of market value," Williams said. "Right now, the 43-year-old system fails to do this, so this decision is certainly a step in the direction of property tax equality."In 2022, an advisory commission appointed by Mayor Bill de Blasio recommended a series of reforms for NYC's property tax system, including the creation of a new tax class for co-ops, condos, one-to-three family homes and rental buildings with 4-10 units.The commission proposed valuing property in this new residential class based on sales-based market value, ending the statutory requirement to value co-ops and condos based on comparable rental buildings.The commission also proposed to eliminate assessed value growth caps that result in lower tax bills for properties whose values have sharply appreciated, shifting to market-value assessments that would be phased in over the course of five years.Net Lease Spring:Held April 16-17 in NYC, Net Lease Spring will bring together hundreds of dealmakers from the nation’s top firms. This year’s program will feature 5.5 hours of face-to-face networking and over 5 hours of content focused on micro and macro trends for 2024, being resilient through market volatility, how to serve your corporate tenant clients and much more! Learn more or register here. Multifamily Spring:Multifamily Spring is coming to New York City this April 18. This year’s program will bring together the industry's most influential and knowledgeable real estate executives from the multifamily sector for 5 hours of face-to-face networking and over 5.5 hours of can’t miss sessions. Learn more or register here.