Chair Lee questions Comptroller on pied-à-terre tax revenue estimates
Lee asks about revised pied-à-terre tax revenue now that final legislation is public. Levine says the office is now confident the $500 million target will be met, potentially exceeding it, with a no-behavior-change estimate of $1 billion. He notes watching for impacts on sale prices and real estate market effects.
Okay, moving to pied-a-terre tax.
On April 15th, when the pied-a-terre tax was announced by the governor and mayor, the claim was this would raise $500 million for the city each year, starting in FY27.
And I think your office had put out a report finding that the revenues could actually be substantially less than that.
So the exact contours are now...
Public based on the legislation passed as part of the final state budget.
So now that we have the true outline of the new tax, can you tell us how much money you think it will raise next year?
So, Madam Chair, this is a moving target because you can define the rates.
But we don't know yet how many people will seek exemptions, how many people will contest their assessment, how many people will change their behavior.
Maybe they have a relative move into their home so that they're no longer considered a pied-à-terre.
And certainly if we look at other cities that have implemented this, that has happened.
Which is why when the initial proposal was released, we gave a slightly lower ask.
estimate for what we thought would come in because we assumed some of these factors.
But once the final language was printed in the bill, we can say with a little more certainty that we are actually quite confident that we will at least meet our baseline of 500 million and that potentially it could be much more than that.
If you assume no behavior change, we'd be at a billion, which we don't expect.
But we're confident enough that in, you heard me express doubts on some revenue in the budget.
We're actually not putting uncertainty on that.
We think that we're pretty confident that even with the change in behavior and people contesting, that we'll still hit the $500 million target.
Okay.
And I know some have raised concerns.
To your point, behavior changes, that this tax could negatively impact the real estate market and property values.
And so how much of this are you concerned with or what sort of is your thoughts on that?
Look, we don't know yet.
And we're going to have to watch what happens to sale prices and the number of sales.
I think it's...
It is logical to assume that you could have an impact on sale price if you have an additional cost, calling it a surcharge now, technically not a tax.
But we really won't know yet.
And that could have an economic impact.
And we certainly will be watching for that in the comptroller's office.
Okay.