For years, many co-ops and condos and the organizations representing them have rallied around a common cry: “Taxes are unfair!” And they’ve had a point: for years, single-family homeowners have been the chosen ones, at least as far as the politicians go. While the assessed valuation – a key part of the financial equation that determines how much a building pays in property taxes – on co-op and condo taxes increased, those on single-family homes had a cap on how high they could go. »
That changed slightly over the years, when co-ops and condos with 11 units or less got their own cap: no more than 8 percent per year and no more than 30 percent over five years. It was still higher than the assessment for single-family homeowners; that cap is no more than 6 percent per year and no more than 25 percent over five years. But it was a start.
The quest for a limit on how high the city can hike property taxes for all condos and co-ops was first proposed four years ago, but now it’s coming back. Some of the people leading the charge to expand the cap are cautiously optimistic that all co-ops and condos are getting closer to seeing similar relief.
“The current administration is very focused on affordable housing,” says Bob Friedrich, co-president of the Presidents Co-op & Condo Council, a consortium that represents 65 co-op and condo buildings. “There is no greater example of affordable housing than [what you find] among the co-ops in Queens and Brooklyn, but right now the policies of the city are hurting these communities.”
The DOF Speaks?
Also now, for the first time, lawmakers and advocates are getting a feel for how the city coffers could be affected if the cap were extended. Because of his support on the issue, City Councilman Paul Vallone recently asked the city’s Department of Finance (DOF) for projected information on the impact. According to the councilman’s office, the department indicated to his office that revenues would rise in the first year after a cap, but they would fall $44 million by the fifth year.
(A spokesperson for the city’s Department of Finance declined to comment on the information provided by Vallone’s office, and has not taken a position on the proposal to extend property tax caps to all co-ops and condos.)
Vallone says his office is awaiting a final analysis from the DOF and will consider this data and all the issues. He pointed to DOF tentative assessment roll projections for 2016, released in mid-January, that estimate a 6.6 percent hike in the total amount of assessed property value for all co-ops citywide and a 14.2 percent increase in assessed value for all condos. That boils down to an average tax hike of $448 for co-op dwellers, and an increase of $838 for condo owners. Single-family homeowners squeaked by with just a $228 hike.
“Just this week our communities were blasted again,” Vallone said in a statement. “I fully support expanding a property tax cap to all co-ops and condos so that they may effectively plan their budgets without needing to worry about the unknown variable of their yearly tax hike.”
To enact the cap, the change must be made at the state legislature, but lawmakers in Albany will only act with the city’s blessing. Bills with the cap were introduced but died in last year’s session. Sponsoring lawmakers say they will reintroduce them again.
One such sponsor, New York State Assemblyman Ed Braunstein, says it’s all about budget certainty. While the 2016 assessed valuation increases are more modest than they have been in the past, he reiterated that modest hikes have not always been the case. “In 2011, it is not an exaggeration that certain co-ops saw increases of more than 150 percent,” he says. Now that they have some DOF projections, “the next step is to try to talk to the de Blasio administration and get them on board.”
Friedrich, who besides being co-president of a lobbying group is also the president at the 2,904-unit Glen Oaks cooperative, says the assessed valuation at his co-op increased 50 percent in 2012, from the previous year. He says the city originally asked for an 86 percent increase, but lowered it after “heavy lobbying” by the co-op community.
“In 2000, the property taxes were $2.9 million,” he notes, referring to the co-ops’ total bill. “In 2015, we have budgeted them to be $5.6 million. Property taxes now make up almost 30 percent of shareholder monthly maintenance. In some co-ops, it is 40 percent or higher. The trajectory of these increases will destroy the middle class co-ops in New York. The city’s projection of a $44 million drop by year five is political jargon for increased revenues that continue to increase, but at a slower pace,” says Friedrich.
Co-ops, condos, and rental properties make up only about 24 percent of the city’s property value, yet they pay 36.5 percent of the city’s $21 billion in annual real estate taxes, according to the Citizens Budget Commission (CBC), a watchdog group. But the CBC is not on board with extending the cap, or even supporting existing caps, according to City Studies Director Maria Doulis.
“Assessment caps lead to bizarre inequities: properties with the same value can have substantially different tax bills because the value of the properties appreciated at different rates,” she says. “State leaders should be looking to eliminate the caps gradually, not extend them to additional properties.”
One of the thorns in the proposal is the idea that a blanket co-op/condo tax cap would benefit middle-class buildings as well as multi-million-dollar properties. Friedrich says one solution would be to create a threshold value in which very pricey co-ops and condos would not be eligible for the cap.
“It’s a work in progress, but our position is that the affordable co-ops and condos in Queens and other boroughs should not be held hostage to the multi-million-dollar buildings,” he says.
Braunstein acknowledges that it’s a difficult problem. “It’s politically difficult to change the property tax system overnight,” he says. “I represent both co-ops and single-family homes and if the solution to fix this problem is to shift the burden to single-family homes, that’s a very difficult political problem, too. I think that’s why the system has been as it is for so long.”
Friedrich points out that installing a cap helps with the city’s efforts toward affordable housing for renters as well as shareholders and unit-owners. When co-op and condo owners rent out their units, they have to jack up the rent to pay for higher taxes, squeezing those renters, too.
“We understand that there have to be some increases, but eight percent right now is triple that of inflation,” Friedrich says. “Isn’t that enough for the city’s insatiable appetite for revenue?”