Caren Chesler - freelance journalist

Look Mom! I Bought a Brownstone

Part 3: The Tax Man Cometh

WWS Exclusive

By Caren Chesler

4/29/2005

Note from the Editors: It's been a while since we last heard from our brownstone-buying friend. Things have been progressing apace: the renovations are complete and all's calm in uptown Manhattan…Well, sort of.

I was sitting at my desk on a snowy January afternoon when my friend Line (pronounced LEE-nah), who, like me, owns a brownstone in Harlem, called. "Have you looked at your tax bill?" she asked, in her clipped Norwegian accent.

"I didn't get one," I said. As she waited on the phone, I looked up my bill online. The second I saw it, I felt sweat begin to form on my brow and I stammered, "This can't be right."

According to the figures, my taxes were slated to rise from $1,700 a year to nearly $19,000 -- a 1006% increase. I thought for sure something must was wrong with the math. Line was saying something about market values and percentages and how she hadn't even finished her construction, but I couldn't hear her. I was too busy recalculating over and over again. Maybe I had added incorrectly. Was the decimal point in the right place?

It wasn't a mistake. The city's finance department -- embarrassed when scores of assessors were arrested for taking bribes to ignore property improvements -- was now trying to save face by targeting people who had made substantial home renovations. And, as it turned out, most of those people were in Harlem. They were people like me, investors who'd bought dilapidated boarding houses and turned them into four-family homes, living in one unit and renting out the others to pay the mortgage. Some 91 four-family homes in Manhattan faced tax increases of more than 100% this year. 84 of them were in Harlem -- and one of them was mine.

It was of little comfort that I wasn't alone: One woman in East Harlem would see her taxes rise from about $1,600 to $29,000, a jaw-dropping 1,739% increase. A man who bought a house on West 119th Street with his brother was facing a tax increase from $2,000 to $36,000. How could this be when New York state law prohibits city officials from raising your assessed value more than 8% a year? In its zeal to make good after the assessor scandal, the city finance office found a decades-old, largely ignored law that says the cap does not apply if you've done construction.

For me, it meant I was probably going to have to sell my home. But worse, because the tax hike was only hitting those who had renovated, there were still hundreds of brownstones in Harlem that didn't have a $19,000-a-year tax bill. According to several realtors, because of the increased annual tax liability, my house had lost about $400,000 in value overnight.

This could not be happening. It took me six months to buy the place and another nine months to renovate it -- along the way I lost two contractors and had to finish the job myself. The plaster dust wasn't even out of my hair when I was forced to evict my first tenant. And how was I supposed to afford an extra $1,500 a month to cover these taxes? I was already operating on a shoestring budget, accounting for every penny on an Excel spreadsheet from the moment I decided to buy in Harlem.

Maybe I could organize: I tried to find other homeowners who were affected. I posted a message on an online group for Harlem homeowners. A woman named Meyghan responded. My property tax thread with the subject line "ASTOUNDED" circulated on the message board for two weeks. I called for a meeting one Friday evening at Lenox Lounge. The only one who showed up was Meyghan.

In the meantime, a friend of mine tipped off a reporter at The New York Times, which resulted in a cover story about our plight for the Sunday real estate section. Soon a woman named Amy, who also appeared in the article, joined our group, and now we were three.

I called an ex-boyfriend, a corporate lawyer, to find out about filing a class action suit. "It's unconscionable. It's unfair. They simply can't do this to us," I told him.

"That's not a valid legal argument," he said.

Amy, Meyghan and I went down to the New York City Tax Commission, which was hosting informational sessions in each of the five boroughs. We hoped they'd look at us in horror when they heard the magnitude of our increases. They were unmoved.

"Unfairness is not a valid argument for an appeal," one official said.

Since the unfairness factor didn't work in court or before the Commission, we brought it to a forum where it would: the media. We weren't stupid. We knew the mayor was up for re-election, and many of our local representatives were seeking higher office. The idea that people's taxes were raised as much as 2000% made for damaging headlines, particularly when those homes were in Harlem.

We were interviewed by Fox, CBS, NBC, and a little-known cable television program called the Larry Parks Show. We started out a little green, but by the end we'd developed our own sound bites. "I went to sleep with my rent at $1,000 a month, and woke up to rent of almost $3,000 a month," I heard myself say over and over again. I started wearing shiny lip gloss and blush. I got calls and e-mails from people I hadn't heard from in years, saying they'd seen me on the news. People contacted my mother in Florida: "Sandy, I saw Caren on the news last night. She looks won-der-ful," wrote cousin Eleanor from Long Island.

We called another meeting at Meyghan's house and sent out flyers and press releases. Nearly 100 people showed up, including a member of the New York City Council, Bill Perkins, who was running for Manhattan Borough President. Perkins called the City's Finance Commissioner, Martha Stark, and asked her to meet with us. She agreed. That meeting was held at the Adam Clayton Powell State Building on 125th Street. This time, nearly 300 people showed up. The room was so crowded and hot, someone fainted. The event prompted another flurry of stories in the newspapers and on TV.

The result? The mayor's office appears to be backing down. His finance commissioner is looking at a temporary fix for us, which is expected to reduce our tax bills by thousands of dollars. In the meantime, they suggested we lobby legislators in Albany to change state law.

We actually have a good shot. A local assemblyman, who is running for Manhattan Borough President, has introduced a bill that would remedy our situation. Another assemblyman, also running for Manhattan Borough President, has held hearings this month and also introduced a bill. And we met with a state senator last month who says he, too, plans on sponsoring a bill in the Senate.

I met several weeks ago with an Assistant Commissioner in the Department of Finance, Dara Ottley-Brown, to ask some follow-up questions. When would they be finalizing their temporary fix? When will they be ready with a permanent solution? What kind of legislation will her office suggest to the Assembly? I looked out her office window as she spoke and saw the buildings of downtown Manhattan and smiled. I thought to myself, "You can fight city hall -- if you yell loud enough."

Caren Chesler is a freelance writer living in New York City. She writes about education, politics and finance. Her work has appeared in The New York Times, Investor's Business Daily and Bloomberg.