A Queens group learns a new trick – speaking with one voice – and discovers there is power in numbers.
Tens of thousands of co-op and condo residents in Queens are sick and tired of inflated real estate tax assessments, and they’re not going to take it anymore. So they’ve banded together and launched a protest that has caught the attention of elected officials and city bureaucrats and could alert co-op and condo residents across the city that they possess powerful political muscles. All they need to do is figure out how to flex them.
The protest in Queens began to come together earlier this year when the city’s Department of Finance (DOF) sent out its annual real estate tax assessments for the 2011-12 fiscal year, which begins July 1. While assessments rose by an average of about 17 percent in Queens, the increase for some co-op garden apartments in eastern Queens was staggering – an average of 70 percent that sometimes spiked as high as 200 percent.
“If these numbers are implemented, it will lead to crushing maintenance increases in eastern Queens,” says Bob Friedrich, board president at the Glen Oaks Village co-op and a founding member of the four-year-old Presidents Co-op Council, which speaks for upwards of 50,000 co-op and condo residents in Queens. “People here can’t afford increases of that magnitude.”
“When those evaluations came out, it was a wake-up call,” says Warren Schreiber, board president at Bay Terrace Co-op Section 1 in Bayside, Queens, and a fellow co-founder of the council. Schreiber, who also runs the 12-year-old Bay Terrace Community Alliance, adds: “We knew we had to do something.”
With a sense of urgency, council leaders met with attorneys in February and began mapping strategy and contacting elected officials. City Councilman Dan Halloran, a first-term Republican from Whitestone, arranged for council leaders to meet on February 22 with David Frankel, the city’s finance commissioner, and his deputy, Michael Hyman. At that meeting, Frankel and Hyman acknowledged that some assessments in eastern Queens were unusually high, and they agreed to conduct a review.
The next day, in what Friedrich described as “the largest gathering of co-op and condo presidents ever held in Queens,” the group expressed its concerns to numerous elected officials, including Halloran and fellow Councilman Mark Weprin, State Senator Toby Stavisky, and state assembly members Ed Braunstein, David Weprin, and Grace Meng. State Senator Tony Avella sent a representative. The attorneys Geoffrey Mazel and Mark Hankin were also present.
At that meeting, the discussion covered possible litigation, a letter-writing campaign to Mayor Michael Bloomberg and local newspapers, and the crafting of legislation that would put a cap on assessment increases, create a new tax class for co-ops and condos, and freeze assessments during any appeal of a tax increase.
Since its inception in 2007, the Presidents Co-op Council has addressed numerous issues. It opposes the pending co-op/condo ombudsman bill, the new requirement that all co-ops conduct an energy audit, and a proposal that would require co-ops to provide written explanations whenever they reject a potential shareholder’s application. But the tax assessments were the lighting rod that energized the group and sharpened its focus.
So why are so many of this year’s assessments off the charts? Eric Weiss, partner at Tuchman Korngold Weiss Lippman & Gelles, recently told Habitat that some Queens co-ops were slightly under-assessed during the 2010-11 fiscal year. “So now you’re seeing an overreaction to the under-assessment,” Weiss said. “One thing you can say about the assessments is that they’re consistently inconsistent.”
In part, that may be because the city computes a co-op’s market value not on the basis of recent apartment sales prices but on the valuation of similar rental properties. The resulting Fair Market Value is a key element in the equation that produces the tax assessment.
“I think 50 percent of the blame lies with the computer models the Department of Finance is using now, and they’re not doing quality control,” says Halloran. “But that’s not the whole picture. [DOF] doesn’t have the power to change the maximum amount assessments can increase each year, or the percentage of a property that’s taxable. That’s governed by state law.”
Sympathetic state legislators are now looking into what the city council can do and what will require action by both the council and the state legislature. “The real problem is the city council,” says Stavisky. “They should not be classifying co-ops as rentals. It’s the city council’s job to change that classification.” She adds that all legislation, whether at the city or state level, “takes a long time.”
Meanwhile, one thing is certain. The political muscle now being flexed in eastern Queens has made politicians and bureaucrats sit up and take notice. “Any time an issue gets raised by this many people, it’s a sign something’s wrong,” Halloran says. “It’s your signal to look at the issue and see what’s going on. It turns out this problem is systemic – it’s happening across the city, but especially in Queens. As a politician, you have to pay attention. You ignore it at your peril.”
For Stavisky, who has served in the state senate since 1999, the issue is both political and personal. “When Warren Schreiber brought this to my attention,” she says, “I had my staff look into it. I live in a three-building co-op complex in Whitestone, Queens. One building had a 144 percent increase in its assessment this year, and the other two were in triple digits. I couldn’t believe it.”
All involved parties agree that this brewing tax revolt in one corner of the city has the potential to spread. “Our elected officials have finally recognized the Presidents Co-op Council as a force to be reckoned with,” says Schreiber, adding that the council wants to work together with other co-ops and condos and with existing groups, such as the Council of New York Cooperatives & Condominiums. “I think co-ops and condos in other boroughs shouldn’t just organize, but we should all work together. Think about the possibilities – they are just endless if the whole city could speak as one voice.”
A revolt leads to a revenue cap.
The co-op/condo board tax revolt in Queens gained momentum in mid-March as the tax commissioner responded with a 50 percent cap on property taxes. In addition, two state legislators have vowed to introduce bills that would treat co-ops and condos like single-family homes, which have a six percent annual cap.
“Assessed values citywide went up 6.56 percent” across all classes, says Owen Stone, spokesperson for the city tax commissioner, “and for Class 2 it was 7.98 percent.” Explaining the arbitrary 50 percent cap, he notes: “We saw that many properties had very large increases and decided not to have increases of more than 50 percent for all class properties.”
“We’ve seen our sales prices drop drastically,” says Mike Palladino, president of the Le Havre Owners Corporation. “We have more people now delinquent on maintenance than we’ve ever had. Even a two or three percent increase of [the property] tax will hurt us.”
Throughout March and early April, the Presidents Co-op Council made repeated unanswered requests to David Frankel, New York City’s tax commissioner, to reveal the comparable buildings used to arrive at the large tax increases. Frankel finally responded after the New York Post broke the news on April 9 that the finance department had used nearby commercial buildings, instead of residential ones, as comparables. “There was a glitch,” Stone told the paper.
By this time, says Eric Weiss, a partner at Tuchman Korngold Weiss Lippman & Gelles and the attorney for the massive Glen Oaks Village co-op complex (which had an astonishing 86 percent property tax increase), the mystery was already beginning to unravel. When the city posted the comparables on the Department of Finance (DOF) website, Weiss says, “We saw what kind of properties they were using for the comps. For Glen Oaks, they were using mixed-use buildings, a K class, which is a retail classification.”
Generally, commercial-building rents are many times higher than residential rents. State Senator Toby Stavisky has since filed a Freedom of Information Law request to the DOF to help ascertain if this was a human or computer error.
To find what the city used as comparables for your building’s property taxes, go to http://tinyurl.com/comparablesnyc and choose your borough.