Cadwalader and Citizens Budget Commission Support New York Court of Appeals Revival of Constitutional Challenge to New York Property Tax System

March 26, 2024

On March 19, 2024, in a widely publicized decision, the New York Court of Appeals found that the Appellate Division, First Department erroneously dismissed claims asserted by Tax Equity Now NY LLC (TENNY) against New York City challenging the city’s property tax system for its unlawful discrimination against low-income and minority homeowners.

The Court held that TENNY’s allegations were pled with sufficient particularity to state a valid cause of action as to violations of RPTL § 305(2), which requires all “real property in each assessing unit” to be “assessed at a uniform percentage of value (fractional assessment).” The Court also held that TENNY’s allegations regarding violations of the Fair Housing Act (FHA) also survived the motion to dismiss stage. Specifically, the Court found that the allegations citing data showing that the city over-taxes majority-minority communities compared to white communities, that the tax rates between these communities differ, and that tax rates increase in accordance to the shortage of affordable housing in the city were enough “particularity” to plead valid claims under the FHA.

Cadwalader is serving as counsel for amicus curiae Citizens Budget Commission (CBC), a nonpartisan, nonprofit civic organization founded in 1932 to achieve constructive change in finances and services in New York state and city governments. The CBC has long advocated for changes in the property tax laws. Cadwalader filed amicus curiae briefs on behalf of the CBC in support of TENNY’s opposition to the defendants’ motions to dismiss, and all subsequent appellate briefing, including the most recent appeal to the Court of Appeals that resulted in the Court’s March 19 landmark decision. The CBC's briefing, based on the CBC’s decades of research into New York City and State property tax law and regulation, aimed to provide the courts with historical context and background about the current inequities in the system. 

A copy of the decision is available here.

The Cadwalader team includes litigation partners Jason Halper and Ellen Holloman and special counsel Sara Bussiere.