The New York Court of Appeals ruled on Tuesday to allow a lawsuit filed by Tax Equity Now New York (TENNY), an organization claiming that disparities within the New York City property tax system unfairly burden low-income and majority-people-of-color neighborhoods.
Judge Jenny Riviera, representing the court, ruled that the prior dismissal of the case by the Appellate Division for failure to present a valid claim was improper. Based on New York state law, a claim by a plaintiff must state a relief which the plaintiff is entitled to, allowing defendants the opportunity to motion for dismissal if a defect in the claim implies the plaintiff is ineligible for the relief.
Judge Riviera clarified that a claim under New York state law need only assert facts consistent with any legal theory in order for the lawsuit to progress. The judge also made clear that relief under the legal theory presented in the filing is possible, even if unlikely.
Judge Riviera stated that, although the TENNY’s complaint did not present clear claims against the State defendants, it did sufficiently argue cases against the City defendants under RPTL section 305 (2) and the Federal Fair Housing Act. The basis for these arguments was that the system is unfair, inequitable, and has a discriminatory impact on certain protected classes of New York City property owners.
The judge concluded that TENNY’s claims regarding the taxation of Class One and Class Two properties can proceed, although all other actions against the state of New York and the city of New York City were properly dismissed.
Not all judges agreed with the ruling. Judge Michael Garcia made a partial dissent, asserting that the majority disregarded TENNY’s failure to establish a direct link between the criticized tax policies and higher tax rates in majority-minority communities. Judge Anthony Cannataro also voiced dissent, echoing Garcia’s concerns that issues with the tax scheme are being dealt with outside of a legislative context.
This ruling followed a lengthy pre-trial process, which began with TENNY’s initial filing in 2017. The organization argued that the New York City tax system does not operate on the basis of fair market value–a point that they claimed violates the New York Constitution and RPTL. Both the state of New York and the city dismissed the case, contending that it fell short of the requirements under both state and federal law. Following further legal proceedings and an oral argument session on January 17 before the New York Court of Appeals, TENNY secured leave to appeal.
Researchers at New York University’s Furman Center, in their findings announced in January, shed light on a noticeable correlation between a neighborhood’s racial composition and its average effective property tax rate. This data supports TENNY’s lawsuit, showing patterns of tax disparities that could potentially continue to affect certain communities within New York City.