New York's Cooperative and Condominium Community
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Changes in the 421(a) tax abatement
With tax abatement 421(a) due to expire in 2004, board member Elana Roberts is working overtime to help her condo explore other tax abatements available.
Elana Roberts is obsessed. And the object of her obsession has resulted in saving some of her neighbors thousands of dollars. A board member at the 599-unit Towers on the Park condominium on Manhattan's Upper West Side, Roberts became one of the prime movers in dealing with changes involving the 421(a) tax abatement program. Under the abatement, condo residents paid no property tax at all for ten years, then had taxes phased in by 20 percent increments over five years. Importantly, the 15th year at 100 percent is part of the program.
Towers on the Park was a pioneer condominium when it went up in 1988. With Roberts and others pushing it, the building has blazed a trail in ambitious pursuit of every available tax abatement. When the property was built at the northwest corner of Central Park, New York had begun its long recovery, but the upper reaches of Central Park were still as tough as the lower end was tony.
The condo was designed for a mix of lower- and middle-income families representing the polyglot neighborhood. With that demographic, the building qualified for the 15-year tax abatement program called 421(a), after its tax code section. Over that decade-and-a-half, the neighborhood continued to improve and the building became a haven for working families, retirees, and veterans - exactly the people who could least afford big tax bills.
With 421(a) due to expire this year, Roberts didn't want the condo to be caught napping. "From the moment I moved here in 2000, I got involved in every meeting and forum I could," recalls Roberts, who is now in her first term. "I came in here knowing about the 421(a) phase-out - I did my homework before buying, and so did the sellers. But there were other homeowners, new and old, who did not realize what was going on. People were just getting whammed with bigger tax bills. So this was not just for me, but for my neighbors."
Roberts is a video editor with HBO, has worked for CNN, and won an Emmy for her work with Channel 11. She is energetic and attentive to detail, both essential qualities for dealing with administrative and tax issues. In addition to her full-time job, she is raising a teenage daughter on her own, so her involvement in the building is very much a labor of love. That really became clear as the 421(a) tax relief waned.
"Management brought the idea [of other tax abatement programs] to the board's attention," says Matthew Newman, a senior vice president at Maxwell-Kates, the property's manager. "But the real kicker here was the board moving to do more than other buildings. We have 90 properties in New York, and I see buildings where people don't get their tax credits because people don't fill out their forms. In some cases, those boards don't even bother sending them out or reminding people any more."
In contrast, the board at Towers formed a tax-abatement working group with one board liaison and several other homeowners (three, including Roberts, are now on the board). On-site property manager Peter Pretsfelder took the lead in contacting city agencies. There are myriad tax abatements available, most based on income, but also with special provisions for seniors and other groups. Unfortunately, every component of each program has its own terms, its own qualifications, its own forms, and its own deadlines.
Three broad programs immediately came to the fore: the New York State Co-op and Condo Real Estate Abatement (CCREA), the School Tax Relief (STAR) program, and a collection of additional exemptions for senior citizens, veterans, disabled residents, and crime victims. The law prohibits double-dipping, so owners at Towers on the Park are living through one year at 100 percent tax as the last phase of the 421(a) program before any of the other programs can apply. But they at least have the consolation that while they are paying full freight, they are taking steps to save themselves at least hundreds - and in some cases, thousands - of dollars.
Then the intrepid tax pioneers discovered that the CCREA, a 17.5 percent credit, was a temporary program set to expire this year unless renewed by city and state action. Instead of throwing in the towel, the board threw two "tax fairs," at which residents could be educated about the program, on a Saturday and a Monday in December. The first was so well attended it had to be held in the building lobby rather than the common room.
Newman says the tax working group came up with the idea of the fair as a way to overcome the inertia that has bogged down similar initiatives at other buildings. Led by Roberts and the board and Pretsfelder and his on-site staff, the fair handed out forms, explained details and deadlines, and gathered signatures for the CCREA renewal campaign. It took a lot of unpaid hours on everyone's part, but in the end, close to 500 people attended, representing about 80 percent of the units in the complex.
CCREA was conceived as a temporary program to address the wide disparity between taxes on individual homeowners and those in co-ops and condos. "Not only are the basic rates different," says Newman, "but the percentage of assessments are different. There is a tremendous difference between a townhouse and the co-op right next door."
He cites the example of a townhouse on West 94th Street, less than a mile from Towers on the Park, using publicly available data. "This is a property that sells for $5.45 million. It is assessed at $1.17 million, but is only taxed on $80,000 of assessed value. This five-million-dollar house pays $12,000 in annual property tax. We have some condo units [not at Towers] that pay that much."
Newman also points to one of Maxwell-Kates's residents, again not at Towers, who is eligible for a STAR credit of $225.90, a CCREA credit of $350.46, and a Vietnam veterans' benefit of $392.45. "That is $968.81 in annual credit, which can be compared to his monthly maintenance of $620. So, in effect, he gets [a payment of] a month-and-a-half's maintenance. Another resident is the widow of a World War II vet. Her veterans' credit alone is about $1,000, and her total credit is almost $3,000."
"There are lots of details, and it has taken a lot of effort," observes Pretsfelder. "But it has been relatively easy, especially considering the huge benefits." Belying his heavy responsibilities, Pretsfelder is a cheerful, low-key fellow who, on the coldest morning of the year, sipped an iced coffee at the on-site café that a resident had recently opened. "The basic rate under STAR is only $225.90," he says, "but the special exemptions are stackable, so for senior disabled veterans the benefits are two or three thousand dollars. For people living on a fixed income that makes a very big difference."
Even with the tax fairs, Roberts says she, the board, and Maxwell-Kates face a constant challenge to keep people informed and involved. "You've got to hit them again and again," she says. "Not just notices in the lobby or the elevator. We have a newsletter with all the details, including telephone numbers and internet addresses for forms. I also hold monthly drop-by sessions in the lobby, not the community room where people [might] miss it. I am a real believer [in the idea] that face-to-face involvement is a spur to more involvement."
Roberts credits Pretsfelder and Newman and their staffs with providing essential support, expertise, and personal participation well beyond their professional obligations. But they both cite Roberts as the true champion. "Peter and Elana have done a tremendous service for their fellow residents," says Newman. "There are few cases of a board so actively ensuring that everyone gets the tax benefits to which they are entitled."
Roberts grew up in Wappingers Falls, New York, just south of Poughkeepsie. "It was in the woods and growing up [there,] my dream was to live in a place with streetlights and sidewalks. I was a city girl at heart," she says. "When I got here, I wanted to start something, but [starting] small [so we could] get it done. And [I] hope to build from there. The keys have been organization, accuracy of information - which takes a lot of time and effort - and involvement of the board and management, working closely together."
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