New York City’s Assessment Figures Show Where the Discounts Went

The largest reduction went to SL Green Realty’s 1.3 million-square-foot office building at 919 Third Avenue, which had $62.69 million slashed from its market value, saving New York’s largest office landlord over $2.87 million in taxes. Its bill was still more than $24.77 million. SL Green declined comment through a spokesman. 

The cuts made in 2024, however, are based on income and expenses not from 2023, but from 2022. And that was when the city was barely recovering from total lockdowns and work-from-home orders. The lag time is due to the city’s timelines, deadlines for correction applications, income and expense reports, and hearings on tentative assessed values.

During City Council hearings in 2024, the total property tax delinquency was revealed to be over $1.2 billion with another $1.3 billion owed in water charges — after which the city made efforts to collect on the water by waiving some fees. A lien sale for current property tax delinquents is now expected in May, but those that have a high debt to value and certain owner-occupied homes and other sites are never sold — perpetuating the nonpayment of taxes.

Still, for this fiscal year 12 office buildings received market value cuts of over $20 million each. Taking 45 percent of $20 million equates to a $9 million assessment, and multiplying by the Class 4 tax rate of 10.762 percent translates to $968,580 in tax savings — with another 30 buildings each getting reductions of over $10 million in market value or $484,290 in actual property taxes.  

But just one residential building made that exclusive high-cut club. 

The rental at 250 West 50th Street — Avalon Midtown West — which has a continuing 421a exemption as well as many affordable units, had $16.6 million sliced off its market value. Even with the abatement and cuts, it still pays over $4.6 million per year. Since 2019, records show the building has received $6.6 million in refunds for overpayments but also had higher operating expenses than the city’s initial estimates. 

Residential apartment buildings are getting the worst outcomes at the city Tax Commission hearings, according to analysts and attorneys. The commission is supposed to be an independent arbiter for those who want to challenge their tentative Department of Finance-assessed valuations, but critics say it is understaffed and not doing enough to help overburdened property owners. 

Tax certiorari attorney Jeffrey Golkin said because hearings are no longer in person, it is unclear if hearing officers are even looking at the evidence. “There seems to be more aggressive posturing on the part of the city to not settle cases, particularly in Manhattan, where they point to high rents based on [the Finance Department’s] computer model and not the reality,” Golkin said, referring to the Tax Commission hearing officers. 

His firm, in turn, is also now taking a more aggressive posture and hiring independent appraisers. It’s also uploading reports and leases to the Tax Commission prior to hearings. Even then, Golkin says, “They provide only token reductions,” with hearing officers claiming they “assess more broadly.”   

As thousands of rent-stabilized rental buildings struggle with vacant units they can’t afford to fix and fill due to the tenant-friendly state rent law changes in 2019, the Tax Commission said it received 17,079 applications from all four tax classes for 17,020 tax lots, representing $52.36 billion in value in 2014. 

But reduction offers were made to just 1,409 properties, with 1,221 accepting and reducing their overall value by $406.9 million. At a tax rate of 12.5 percent, this saved those buildings $51.25 million.

When it comes to rental properties that include subsidized housing and even some exemptions, Golkin said the city is still assessing as if all the units are getting market rents. 

“Vacant buildings are treated as if they are not vacant, and that is not the reality of what is going on,” Golkin says. “They are vacant because they can’t be rented at a market rent or the rents they can achieve won’t support the expenses of the building.”

As the Department of Finance and the Tax Commission maintain higher values to support more city borrowing and spending, the city’s very own taxpayers are being pushed into financial distress. In its own fiscal year 2023/2024 report released in March 2024, the Department of Finance said Class 2 — most residential buildings with more than three units — saw a 25 percent increase in the number of delinquent parcels and a 46 percent increase in total delinquent amount. In FY 2023, the number of delinquent parcels increased by 6,650, to 89,361 parcels, while the delinquent amount increased by approximately 23 percent to $132.9 million.

“If you spend too much on repairs and maintenance, the [Tax Commission] says you spent too much and will smooth out that number,” said Michael Johnson, communications director for the New York Apartment Association, a landlord group. “Unfortunately, owners have to spend a lot on older buildings, and it’s an unfair system for them. By spending more maintaining the building and keeping violations low and doing upgrades, they don’t get a benefit back with lower taxes.” 

To even get to a Tax Commission hearing, let alone receive an actual reduction in assessed valuation, property owners must leap numerous hurdles. 

Those whose buildings have an actual assessed value of $40,000 or more must file income and expense reports, or request an exclusion, by June 1 each year or face fines from $300 to $100,000, depending on the assessment and number of years of noncompliance. Not filing a report also means the property will not be granted a hearing.  

Local laws require buildings with storefronts on the first or second floor to file occupancy reports by June 1 while Classes 2 and 4 must file supplemental reports by Feb. 15 and Aug. 15 stating the store occupancy on Dec. 31 and June 30, respectively.  

The Department of Finance releases all tentative assessed values on Jan. 15 each year. At that time, owners can ask the department for a review — but experts say that it’s best if there is a difference in the square footage or other physical attributes. 

 All the information must be filed by telephone or “on paper” prior to the hearings — which since the pandemic are still being held only via Zoom. 

Worse, according to Golkin, when more than one attorney is representing a building — such as where different entities own different portions like the retail, garage, apartments or offices — not even a Zoom hearing is allowed and evidence is examined only on the submitted papers. 

According to a new Real Estate Board of New York (REBNY) report, Classes 2 and 4 — basically property that’s not a single-family, two-family or three-family home — accounted for 82 percent of the city’s taxable billable value. And the city is spending as fast as it comes in. The FY 2024 tax levy was $35.340 billion, but only 93.1 percent  — $32.914 billion — was collected. 

REBNY says Class 2 multifamily residential properties — from luxury condominiums to apartment buildings and four-family homes — paid $12 billion in real estate taxes. Tax Class 4 — which includes all commercial property from office buildings to hotels, warehouses, factories and retail stores — contributed $13.1 billion.

Although everyone thinks their own real estate taxes are too damn high, out of 1,105,509 city parcels, last year the Tax Commission received only 57,304 applications for reductions for the current fiscal 2025 that covered 261,272 separately assessed tax lots with a total tentative assessed value of $274.09 billion. But this was 88 percent of the city’s entire tentative assessed value — $299.8 billion — as most larger properties file an application each year to maintain certain legal rights.

Of those applications, 21,276 either declined a review or did not provide requested information. Those granted reviews, whether via Zoom or on paper, are charged $175 on their real estate tax bill and, if the fee goes unpaid, the Tax Commission will not review the case the following year. 

Of the 57,304 applications filed, 30,815 were reviewed and granted assessment reductions of $3.79 billion for the 2024-25 tax year.

During the 2024 hearings, the Tax Commission also granted reductions of $1 billion for the 2023-24 tax year.

“We hear from our members that they don’t understand the rhyme or reason why a tax challenge is accepted or denied,” Johnson said. 

The Tax Commission’s report shows the vast majority of reduction offers, made to 30,735 tax lots, were less than 10 percent of the tax bill and, of those, 27,087 accepted the reduced assessment. Offers between 10 percent and 20 percent were made to 10,660 tax lots with 9,608 accepting. Just 1,962 tax lots got offers between 20 percent and 30 percent with 1,565 accepting; and 578 lots had offers of 30 percent and above, with 470 accepting. 

Hearings were requested by 3,726 Class 4 office properties representing 3,691 tax lots worth $71.46 billion ($1.117 billion in offers were accepted and for office condos, of 3,622 applications $555.55 million worth of offers were accepted.) 

Similarly, retail store owners filed 8,192 applications for 8,090 tax lots worth $15.35 billion. Just 729 received reduction offers on 1,239 tax lots for $423.4 million in total reductions. Hotels accounted for 812 applications for 807 tax lots worth $9.57 billion. Only 72 were offered cuts with 63 accepting a total of $80.64 million in reductions.

As Tax Commission hearings drag on into the fall, those that get offers of reduction after the July bills are due still have to pay their taxes on time and then await a refund. To maintain legal rights, those that do not accept offers must file with the court in October.  

The most recent Finance Department report with data as of June 30, 2023, revealed that Class 4 delinquency increased — as the department put it — by “only” 4 percent to $217.9 million, while the number of parcels delinquent declined by 18 percent to 12,898. Likely due to the public money paid to house undocumented migrants, hotels had a nearly 40 percent decline in the amount delinquent — to $25.2 million. 

Charts revealed 5,488 Class 2 walk-ups owe $95.7 million, for a delinquency rate of 3.9 percent, with 550 elevator-equipped buildings owing $88.8 million, a delinquency of 2.3 percent. Some 18,883 individual condominiums owe $96.8 million at a delinquency rate of 3.4 percent, and 1,510 residential multi-use buildings owe $17.2 million, a delinquency of 5.1 percent. 

The same Finance Department report noted that nearly all Class 4 property types other than hospitals recorded delinquencies. Delinquent balances for office buildings rose by 2.3 percent (581 owe $27.8 million) while stores increased by 8.2 percent (1,824 owe $45.8 million) and commercial condos rose by 15.2 percent (5,722 owe $35.6 million).

A total of 89,361 parcels in all classes were delinquent, including 49,390 Class 1 homes of three units or fewer, 21 utility properties, 12,898 in Class 4 and 27,052 in Class 2, with the total for all $708.5 million past due. 

Starting in 2023, Finance stopped counting interest owed, so none of those delinquency numbers include the interest owed, parcels in payment plans or previous year delinquencies.    

To maintain their rights going forward, properties that did not receive or accept Tax Commission offers will likely file court petitions by Oct. 24. Those now cost $210 with attorneys also charging fees to compile the information and file with the court. 

“We are finding more and more cases with substantial corroborative evidence are not settled,” Golkin said. 

The Tax Commission only has jurisdiction over cases stretching back one year. As a result, if no offer is accepted, those paying the taxes must then interact with the Corporation Counsel, which means more accountant fees, more appraisals and more years of waiting. Very few cases ever get in front of a judge.  

After 10 years of dueling appraisals, Golkin finally settled one case on the courthouse steps. “Most taxpayers can’t sustain that delay nor do they have confidence in the process,” he added. “They need to give the agencies more resources.”  

Requests for comment to the Finance Department and the Tax Commission and the Comptroller were not returned.