New York City Property Values Surge Brooklyn leads way in...

New York City Property Values Surge

Brooklyn leads way in largest increase in values since ’08; taxes are set to rise

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Manhattan’s Time Warner Center, with its twin towers, is the most valuable mixed-use building at $2.02 billion, according to new city data. PHOTO: RICKEY ROGERS/REUTERS
By
JOSH BARBANEL
Jan. 15, 2016 8:23 p.m. ET
2 COMMENTS
New York has become a trillion-dollar city, according to city tax assessors.
New preliminary tax rolls released Friday show that with rising values for both residential and commercial properties, the total market value of taxable property rose to $1.072 trillion for the fiscal year beginning July 1, a 10.6% increase from the $969.4 billion reported this year.
It was the largest increase in market values in a decade, since the tax year ending in June 2008, when values computed by tax assessors soared 18.1%. That was shortly before the financial crisis and the crash of the city’s real-estate market.
By far the strongest growth in market value was in Brooklyn, which has become a destination of choice for many new to New York. The value of apartment buildings rose by 18.2% and the total value of real estate rose 16%.
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Manhattan and Queens also showed strong growth. In Manhattan, which pays nearly two-thirds of the city’s property taxes, values climbed 9.3%; market values were up 9.9% in Queens.
The increases come after a large run-up in residential rents and apartment prices, though brokers say the pace is likely to slow next year. The figures exclude valuations for government buildings, parks, schools, and religious and charitable organizations.
The average tax on a condo will go up 10.7% to $9,302, according to the tax roll data, while the average tax on a co-op will go up by 6.5% to $6,837. The average tax on single-family homes will go up 3.8% to $5,138. For rental- apartment buildings, the average tax will rise 9.4% to $4,236 an apartment.
City officials attributed 89% of the increase in market values to rising assessments of individual properties. Most of the rest was traced to booming construction, especially of apartment buildings in many neighborhoods across the city.
“This year’s tax roll is simply a reflection of New York City’s growing real estate market,” said Jacques Jiha, commissioner of the city’s Department of Finance.
He noted the construction of rental buildings rose sharply and now makes 36% of all construction activity in the city, and 55% of all construction in Brooklyn.
Because state law requires that increased market values be gradually phased in for most taxpayers, the surge in market values will translate into a more modest windfall for the New York City treasury this year, and more modest tax bills for New Yorkers.
For the city, the strong property values could mean hundreds of millions in additional tax collections on top of the $23.5 billion forecast for the fiscal year beginning in July in the city’s November 2015 financial plan.
That plan forecast a 4.8% increase from the previous fiscal year, but the new preliminary tax rolls show an increase of 8.1%.
Even after allowing for reductions in the rolls through an appeal process, the new roles indicate the tax receipts are likely to be at least $300 million higher at current tax rates.
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The increase comes as the city faces pressure from a state budget proposed by Gov. Andrew Cuomo that would shift hundreds of millions of dollars in costs from the state to the city.
But city budget officials say they project tax revenues conservatively. “We know revenues will not continue at this pace, so we must continue to maintain strong reserves to protect the City’s fiscal health,” said Amy Spitalnick, a spokeswoman for the city’s Office of Management and Budget.
In Brooklyn, despite a huge surge in market value of one-family homes, taxes on those homes rose only 4%. That is due to a state law that limits increases on assessments of one- to three-family homes to no more than 5% a year or 20% over five years. The average home was valued at $782,444, up 16.6% from $671,818 last year, but the average tax bill was $5,117, an increase of $197 from the current year, according to the preliminary assessment roll.
The most valuable office building, according to the new data, is the Bank of America Tower on West 42nd Street at Sixth Avenue valued at $1.7 billion. The most valuable mixed-use building was Time Warner Center at Columbus Circle valued at $2.02 billion.
The new property tax rolls reflect valuations make by the Department of Finance as of January 5 of this year. While market values for one-to-three family homes are based on recent sales, valuations of rental buildings are based on rent levels, while co-op and condos are based on rental income in nearby buildings.
Owners who want to challenge their assessments can appeal to the New York City Tax Commission. March 15th is the deadline for one-to-three family homes and March 1 for all other types of properties.
Write to Josh Barbanel at