New York's Cooperative and Condominium Community

Habitat Magazine June 2020 free digital issue

HABITAT

BRICKS & BUCKS

BUILDING PROJECTS IN NYC CO-OPS/CONDOS

Groups Push for Freeze on Property Taxes During Pandemic

Carol J. Ott in Bricks & Bucks on June 3, 2020

New York City

June 3, 2020

Habitat spoke recently with the leaders of three organizations who are pushing the city to freeze property taxes during the coronavirus pandemicJay Martin, executive director of the Citizens Housing Improvement ProgramFrank Ricci, government affairs director at the Rent Stabilization Association; and Mary Ann Rothman, executive director of the Council of New York Cooperatives & Condominiums.

Habitat: Since the pandemic began, the state and federal governments have offered relief – loans, mortgage forbearance and cash payments – but co-ops and condominiums have been excluded from these programs. Could you give us the details of your demand that the city freeze property taxes?

Ricci: In New York City, if you own or manage property, your ability to do that is based on your cash flow, not the value of the co-op or condo. A lot of co-ops and condos never have the ability to build up their cash reserves. So now we are in the midst of an emergency, and a co-op or condo or a rental building that has commercial space is dependent on that commercial rental income to meet their bills every month. They're in trouble. So we've banded together and asked the city for some relief. We're not saying we don't want to pay any taxes, but at least go back to the tax bill that people had last year or the year before.

Habitat: Jay, where do your members stand today, financially speaking?

Martin: On the commercial side, it's a bloodbath. We saw rent collections drop anywhere from 60 to 90%. For multifamily property owners, the property tax is the largest expense, and it goes up every year. So we need some sort of a property tax freeze. And the mayor, frankly, has to step up and be a leader and figure out where he can cut costs to help make that happen.

Habitat: Mary Ann, what has been the effect in the co-op and condo world?

Rothman: I think we are marginally better off than rental properties because we’re resident-owned housing, and I think owners in co-ops and condos do their best to pay their bills. But we, like rental properties, have lost the rents from commercial spaces because they’ve been unable to function during the pandemic, and we do have lots of owners in co-ops and condos who haven't been able to work for one reason or another. So the burden there falls on the remaining shareholders and unit-owners to pay the operating costs. We encourage everyone to pay their bills if they can, and most particularly to pay property taxes because the city needs our taxes to function. But I think that we're making a very realistic proposal here in saying the values of our properties have doubtless gone down in these weeks of pandemic, and therefore returning to the 2018, 2019 tax assessment level is both realistic and more palatable. 

Habitat: If the city does not respond to your request, what do you imagine the scenario might be for the city down the road?

Ricci: Assuming any co-op condo buildings can't meet their full obligation July 1st, then there's interest and penalties tacked onto what they owe, at the convenient, consumer-friendly rate of 19%. So all of a sudden you could find a lot of buildings in tax arrears, with enormous interest and penalties on them. 

Habitat: Perhaps the July 1st tax payment can be handled. But will the next payment, if the city hasn't picked back up, be devastating in the co-op condo community?

Ricci: Yeah, and I would add that there's still Local Law 11 work, which is enormously expensive. And all the new energy requirements are going to kick in, in 2024, for a lot of these buildings, which are going to be even more expensive. You need a few years to plan for things like this, especially in co-op and condo buildings. Yet they may not have that ability because all their money, every last nickel they have, is going to taxes now.

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