The city's Department of Finance began using a new formula along with new computational software last year to calculate taxes for the city's vast swathes of co-operative housing stock last year. It resulted in huge new assessments for hundreds of buildings, according to The Journal, driving up some building prices nearly 150 percent. Queens was especially hard hit, where one-third of co-ops saw assessments jump by more than 50 percent. Part of the shock comes because the city didn't notify homeowners in advance of the changes.

Property taxes have shot up as a result, causing consternation among the political class in a year when many elected officials are promising not only no new taxes, but caps on automatic increases. The Department of Finance has sought a solution by capping assessments at 50 percent, but the pols remain unsatisfied, the Post reports. "Cutting assessed values on co-ops from 147 percent to 50 percent is like saying you don't have to drink a full cup of arsenic, you only have to drink a half cup," State Senator Toby Ann Stavitsky of Queens said. "Either way, it's poison--and so is this tax increase."

The city's solution would cap tax increases at 10 percent, but Council Speaker Christine Quinn has called for an increase of no more than 8 percent, according to the Post, while Stavitsky prefers a cap of 6 percent and has introduced a bill in Albany to that effect.

mchaban [at] observer.com | @mc_nyo

But, on Wednesday morning, Steve Spinola, president of the Real Estate Board of New York, the politically powerful landlord group, suggested an alliance should, and could, be in the works on the subject of property tax reform in New York City.

“We need to bring the renters into this,” Mr. Spinola said this morning at a Manhattan Institute forum on property taxes, “and for them to recognize not only, one, that they’re being punished, but that, two, that whatever our solution is, that they are going to get a reward or benefit from the change.”

The city’s property tax structure has long been viewed as highly inequitable, giving far lower rates to single-family homeowners than to commercial building owners; to co-op owners than to condo owners.

The structure, in place largely in its current form since 1981, was the subject of much criticism at Wednesday morning’s forum, taking abuse from not only Mr. Spinola but from the city’s finance commissioner, Martha Stark. (As she’s done in the past, Ms. Stark highlighted the inequities of the system but stressed that she was not recommending changes.)

A few numbers from 2008 in a new Manhattan Institute study illustrate some of the inequity:

Class 1 buildings, which are generally one- to three-family homes and vacant residential lots, make up 54 percent of the market value of property in the city, but are responsible for only 15 percent of the citywide tax levy.

Class 2 buildings, which include co-ops, condos and rental apartment buildings, make up 22 percent of market value of property in the city, but are responsible for 37 percent of taxes.

So if everyone agrees it’s unfair, why hasn’t there been a change?

A few reasons, the first being that single-family homeowners are a powerful political group in their own right, and clearly would resist changes that raise their taxes. Wealthy co-op owners, not quite as numerous, are powerful as well; and middle-income tenants that live in rental apartments aren’t bearing an extraordinarily high proportion of the tax burden, at least not compared to commercial property owners, for instance.  

And, as many noted at the forum, a recession is an awful time to try to get any changes in the tax system given that owners are already being squeezed relatively more given that incomes are falling, yet tax bills remain stable or are increasing.

Still, Mr. Spinola suggested landlords might have a few tricks up their sleeves, possibly including a measure that would inform tenants just what portion of their rent was going to taxes.

“One of the things that we’ve begun to talk with some of the owners about,” he said, “is maybe we ought to insist to our owners, when they send their rent bill to tenants, state, like ConEd does, only in much bolder print, that 20 percent of your rent is going to the City of New York in taxes.”