Monthly charges for residents of New York City co-ops and condos are rising three times as fast as inflation, The Straits Times reports, reigniting fears that the middle class will soon be priced out of this increasingly costly city.
Between the start of 2020 and today, co-op shareholders and condo unit-owners have seen their monthly charges jump by 54%, according to the appraisal firm Miller Samuel. In that period, consumer prices rose by 19%. The jump in monthly charges is attributed to a small armada of factors — from unfunded city mandates to rising costs of property taxes, labor, insurance, utilities and the required maintenance of building envelopes.
“All these regulations are really putting a severe financial strain on these buildings where the shareholders really don’t have the resources to pay for everything,” says Gustavo Rusconi, vice-president and director of management at Argo Real Estate. “I understand they’re in place for safety reasons, but they really are squeezing everyone.”
Adds Mary Ann Rothman, executive director of the Council of New York Cooperatives & Condominiums: “When you put it all together, we’re going to end up being a city of the very rich and the very poor." The people in the middle who “want to make a commitment to the city by buying into co-ops and condos are going to be pushed out."
For all but the most energy-efficient buildings, the largest looming expense will come from Local Law 97, which requires properties of at least 25,000 square feet to begin reducing their greenhouse gas emissions under prescribed caps by January 2024, or face hefty fines. Recently proposed changes could give two more years of leeway to building owners that show a “good faith effort” to comply.
Warren Schreiber, co-president of the Presidents Co-Op and Condo Council, is not mollified. He and his allies are suing to stop the law’s implementation while supporting city council bills to water it down. “Yes, we should do something about the climate,” Schreiber says, “but the burden should not be put on the shoulders of co-op and condo owners.”
He estimates the tab for Local Law 97 compliance at his property, the Bay Terrace Cooperative in north-east Queens, at as much as $5 million. That would hit each of the middle-class complex’s 200 units with a $25,000 bill, which he says is unrealistic.
Pete Sikora, a campaigns director at New York Communities for Change, a group that advocated for Local Law 97's passage, disagrees. Yes, he says, overhauling a residential building’s heating and cooling systems comes with “a significant cost”, generally amounting to $20,000 to US$25,000 for each unit. But he notes that the cost can be spread out over several years, and boards can apply for a vast array of grants and tax incentives to make upgrades less onerous.
“There is no serious threat to affordability in any large-scale way,” Sikora says.
We'll soon find out who's right about Local Law 97. Meanwhile, there's no disputing that monthly charges for residents of co-ops and condos are on their way through the roof.
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