Hotel owners in the Big Apple have long argued that their property taxes are exorbitant. Now, in at least one case, a judge has agreed.
The owner of the Marriott Courtyard near the LaGuardia airport won a years-long challenge when a court ordered the tax assessment lowered by 85 percent. The hotel’s attorney argued that the city had overvalued the property.
The challenge, which is for fiscal years 2014-2015 through 2018-2019, reduced the hotel’s tax bill by more than $ 11 million.
“The city was using a valuation that referred to go-go days [for hotels]But the days of go-go are no more, ”said attorney Joel Marcus of Marcus & Pollack, who represented the 288 Keys establishment.
Marcus said the city overvalued the hotel because, rather than relying on the property’s actual expenses, it calculated what the hotel’s expenses would have been using a market average. The city also used builds for hotels in Washington and Boston, cities that Marcus says have little relevance to the New York market.
A representative for the New York City Department of Finance did not immediately respond to questions about the court ruling.
Rubicon Companies sold the hotel to California-based private equity firm ASAP Holdings earlier this year for $ 100 million.
When the hotel initially questioned the appraisal, the city offered to lower it. But Marcus said it wasn’t enough and decided against a deal – a strategy that he says owners don’t often follow, but which he believes may gain popularity after his client’s victory.
“Most property tax cases don’t end in trial,” he said, noting the cost of carrying out a years-long challenge. “To my knowledge, this is the first trial for a property tax case in more than a decade.”
The fiscal years covered by the challenge predate the pandemic, but it was not without challenges for the lodging industry, as the city’s hotel market was affected by an increase in new supply and rising operating costs. .
Homeowners long lamented that their property taxes continued to rise during the hotel-building boom after the Great Recession, even if their income wasn’t keeping up. Labor costs in hotels with unionized staff also increased.
If more homeowners question their assessments in a similar way, they could deplete the city’s property tax revenue, in addition to the effects of the pandemic. The Finance Department cut the appraised value of hotels by 21 percent citywide last year.