Property taxes make up a huge chunk of every co-op's budget, so boards pay close attention to their building’s assessed valuation and the tax rate used to compute the final tax bill. In July, the tax rate for Class 2 properties – cooperatives, condominiums and rental buildings – was reduced. Curb your enthusiasm. That doesn't mean your tax bill will be smaller.
Why not? The problem, according to Frank Ricci, the government affairs director at the Rent Stabilization Association, is going to be the difficulty of challenging residential buildings’ assessed valuations, which were announced before the coronavirus pandemic hit. “Tax assessments came out Jan. 15,” Ricci told Habitat in May. “Everyone had until March 1 to file a challenge. I think there were some 37,000 challenges filed; maybe they heard 250 of them before everything was shut down. In effect, there have been no challenges heard whatsoever (since the shutdown).”
Doug Turetsky at the Independent Budget Office for the City of New York says that property taxes funded roughly 30% of the 2020 budget, and they’re projected to fund nearly 35% based on the adopted budget for 2021.
In addition to the lowered tax rate, two bills passed by the City Council might offer some relief. One of the bills temporarily gives buildings assessed at less than $250,000 a 0% interest rate on late property-tax payments – instead of the customary 18%. The second piece of legislation allows certain property owners affected by COVID-19 to pay a 7.5% interest rate for delinquent taxes paid by Oct. 15.
“It's going to be interesting,” says Carl Cesarano, a principal at the accounting firm Cesarano & Khan. “You have one bill that gives taxpayers a deferment but charges them interest – and they have to meet these hardship criteria. And then there's this other bill that says, ‘Well, this should really just be for poor folks.’ And nothing looks like it's going the way of the co-ops in either of these things.”