In this declaratory judgment action, we conclude that New York City’s Local Law No. 63 of 1986 (Administrative
Shortly after the ordinance was reenacted in December 1986, respondents, a group of real property owners and real estate industry trade associations, instituted this action. They moved for a preliminary injunction enjoining the enforcement of the local law; the City cross-moved for summary judgment declaring the local law valid and dismissing the complaint; and, during oral argument on those motions, respondents added their own cross motion for summary judgment. The trial court granted summary judgment to respondents and invalidated the ordinance and the Appellate Division affirmed on the opinion of the lower court (
New York City is a "special assessing unit” within which all real property is divided into four classes (Real Property Tax Law § 1802 [1]), each to be assessed at the same percentage of full value (RPTL 305 [2]). To comply with these State-wide mandates of the Real Property Tax Law, cities calculate real property taxes by determining the full value of each parcel, fixing the ratio of full value to assessed value in each class, and, finally, applying a uniform tax rate for each class of property to the assessed value producing the tax due
(see generally, Foss v City of Rochester,
Inasmuch as the accurate determination of the full value of the property to be taxed is the starting point for the assessor’s calculations, that foundation is critical to whatever formula or methodology is employed for ultimately arriving at the tax due. State law does not dictate a particular formula for determining the threshold of full value
(Matter of Merrick Holding Corp. v Board of Assessors,
In June 1986, New York City enacted a predecessor local law numbered 24 in order to formalize the procedure for acquiring such data. That law was invalidated, however, on the ground that a misprint in the City Record had caused improper notice to be given of the public hearing before the Mayor
(41 Kew Gardens Rd. Assocs. v Tyburski,
Local Law No. 663 provides that, with certain exceptions, owners of income-producing property in New York City must file a statement of "all income derived from and all expenses attributable to the operation of such property” (Administrative Code § 11-208.1 [a]). Statements reflecting the previous calendar year’s income and expenses were to filed by September 1, but the Commissioner of Finance could extend the date by 30 days (Administrative Code § 11-208.1 [a] [4]). (This court, in effect, stayed the effective date of this legislation by vacating the statutory stay inuring to the benefit of the City on its appeal from the lower courts’ invalidation of Local Law No. 63.) The law further exempts groups of small property owners from the filing requirement: (1) those whose property is assessed at $40,000 or less; (2) those who own residential property containing 10 or fewer dwelling units; and (3) those who own a property in class one or two, as defined by RPTL 1802, which contains six or fewer dwelling units and one retail store (Administrative Code § 11-208.1 [e]). Failure to file in the first instance is punishable by a fine of up to 3% of the property’s assessed value for the current year. Failure to file by a deferred date can result in a higher penalty of up to 4% of the assessed value; if the required statement is not filed for a second consecutive year, the penalty may reach as high as 5% (Administrative Code § 11-208.1 [d] [1]). A penalty can be imposed only after a property owner has had an opportunity to be heard (Administrative Code § 11-208.1 [d] [1]).
Concern has also been expressed throughout the court challenges to this local law, including during the City Council’s consideration of this legislation, as to whether and to what extent the Council could or should provide for the confidentiality or nondisclosure of the filed statements. The local law contains a provision stating that it is unlawful for the Commissioner of Finance or the Tax Commission to reveal any statement "[e]xcept in accordance with proper judicial order or as otherwise provided by law” (Administrative Code § 11-208.1 [f|).
Our analysis starts with the proposition that the State Constitution grants powers to municipalities by self-executing grants, which require no further State legislative implementation
(e.g.,
NY Const, art IX, § 1), and by indirect grants which require further legislation before a municipality may act
(e.g.,
NY Const, art IX, § 2). While the power to tax is vested solely in the State Legislature (NY Const, art III, § 1; art XVI, § 1), the Legislature has delegated to its municipal subdivisions the authority for them to assess and collect their own authorized taxes. Article IX, § 2 (c) (ii) (8) of the State Constitution expressly empowers cities to adopt and amend local laws including, but not limited to, the collection and administration of local taxes as authorized by the Legislature. Municipal Home Rule Law § 10 (1) (ii) (c) (2) is directly derived from this constitutional provision and it expressly grants to the City the authority to adopt local laws relating to "[t]he preparation, making, confirmation and correction of assessments”. The City’s authority to adopt a local law relating to the "preparation or making of assessments” may not be exercised in a manner inconsistent with the Constitution or any general law of the State
(see, Consolidated Edison v Town of Red Hook,
The property owners’ efforts in that regard, as gleaned from their complaint and as presented by the record and arguments in the various courts, may be condensed for our present purposes as follows: the City exceeded its limited authority to legislate in the area of real property tax assessment because Local Law No. 63 is vague, inconsistent with State law as an' unequal protection of law and as a discriminatory classification among real property owners; the State Legislature’s repeated refusal to enact specific legislation, sought by the City, demonstrated its intent that the City should not have the particular power exercised in this case; the purported confidentiality protection is illusory and in violation of the property owners’ constitutionally protected privacy rights; the subpoena power conferred by the local law is invalid and in conflict with State law and the Federal Constitution; and the penalty and limitation-on-administrative-review procedures violate due process rights.
The City’s central contention, with which we agree based on the plain language of the State statutory authorization and its implementation in Local Law No. 63, is that the home rule provision (Municipal Home Rule Law § 10 [1] [ii] [c] [2]) supplies the express authority to enact Local Law No. 63 because the filing of income and expense statements relates essentially to the "preparation of assessments”.
The pertinent response of the property owners is that the filing requirement is far more than just the "preparation of assessments”. They urge that the City’s enactment is an exercise of impermissible in personam taxing jurisdiction over individual property owners and is inconsistent with the so-called in rem nature of the real property tax as defined by the State Legislature
(see,
RPTL 304). It is in this particular
Notably, these data are of the type customarily required of real property taxpayers as a prerequisite to certiorari challenges to reduce assessments and taxes in particularized instances
(see,
NY City Charter § 163 [e]; §§ 164-a, 164-b;
Matter of 749 Broadway Realty Corp. v Boyland,
The filing requirement of this local law does not relieve a municipality, as an assessor, from its statutorily imposed nondelegable duty of determining the value of the property to be taxed, nor on its face does it unfairly or inappropriately shift the burden of doing so to the real property taxpayer. The required information serves instead to assist the assessor in the valuation process and in the preparation of the assessment, according to prescribed law and procedure. We have no occasion here to pass on infringements in cost or otherwise which may wrongly burden a taxpayer, because this local law by its terms goes no farther than requiring the filing of otherwise available income and expense data.
The property owners’ further contention that the City’s enactment conflicts with Real Property Tax Law § 1802 fails because article 18 of the Real Property Tax Law deals exclusively with methods of assessment and, as has been pointed out, Local Law No. 63 deals with preassessment valuation information. While Local Law No. 63 does create new and different classes, those classifications are drawn for purposes of gathering distinctive, productive information related to the valuation process and not directly for the assessment itself, as the property owners claim. There is no conflict between the two enactments; rather, they complement one another. Indeed,
Parker 86th Assocs. v City of New York
(
Another aspect of the authority-to-enact issue warrants passing comment. The property owners argued strongly that there could be no
implied
authority for the City to act because of the State Legislature’s failure, after many years of effort by the City, to enact express authorizing legislation
(cf., CPC Intl. v McKesson Corp.,
We turn now to the property owners’ broad contention that the local ordinance is inconsistent with the State Constitution on equal protection grounds. We reject this argument for the same reason that it fails on the asserted inconsistencies with article 18 of the RPTL. While Local Law No. 63 distinguishes between taxpayers based on the size or value of the property, that does not per se render an enactment unconstitutional unless there is no rational basis for the classifications
(Trump v Chu,
65 NY2d
20,supra).
As with the general presumption of constitutionality, the rational basis prerequisite presents a heavy burden to those challenging the legislation
(id.; Maresca v Cuomo,
Local Law No. 63 is not unconstitutionally vague; it might more aptly be described as all too definitive. Moreover, "[d]ue process requires only a reasonable degree of certainty so that individuals of ordinary intelligence are not forced to guess at the meaning of statutory terms”.
(Foss v City of Rochester,
We hold that Local Law No. 63 is facially valid. Thus, no inferences should be drawn concerning the validity of the implementation and application of the several enforcement mechanisms of this ordinance because it would be premature to speculate on the outcome of any appropriate proceedings instituted to challenge and to review penalties, or other enforcement mechanisms, including entitlement to administrative procedural safeguards, which are distinct and sever-able from the core filing requirement itself (see, Local Laws, 1986, No. 63 of City of New York, § 5).
Similarly, the issue of whether the data from the filings may be made available to third parties is premature. The local law itself in conjunction with existing State law provide independent procedures and protections within which privacy claims can be adjudicated (see, Public Officers Law §§ 87, 89).
Accordingly, the order of the Appellate Division should be reversed, with costs, and the City’s cross motion for summary judgment declaring Local Law No. 63 constitutional should be granted.
Chief Judge Wachtler and Judges Simons, Kaye, Alexander, Titone and Hancock, Jr., concur.
Order reversed, etc.