Bill Morris in Building Operations on April 7, 2022
In a move applauded — and initiated — by co-op and condo advocates, the city’s Department of Finance (DOF) has once again pushed back the deadline when boards must file a notarized affidavit stating that they are paying their employees prevailing wages, a new prerequisite for receiving the coveted co-op and condo tax abatement. The original Feb. 15 deadline was pushed to April 15. It is now May 2.
The Council of New York Cooperatives & Condominiums (CNYC) requested the extension because of a bit of awkward timing.
“When we realized that the four-year contract with Local 32BJ of the Service Employees International Union is expiring on April 20 — just five days after the affidavits were due — we asked the Department of Finance to extend the deadline again,” says Mary Ann Rothman, CNYC’s executive director, noting that the terms of the new contract will help determine prevailing wages for various categories of service employees. Some non-unionized workers and members of other unions fall under the prevailing-wage bar. The city Comptroller sets prevailing wages.
“Lo and behold,” Rothman says, “the DOF came through.”
There’s another wrinkle. “If a building meets the criteria for getting the abatement, it has to file an affidavit — even if it doesn’t have any employees,” Rothman says. “DOF had no choice but to get a response from every one of those buildings.”
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Drew Donovan, chief operating officer at Choice New York Property Management, says the analysis of prevailing wages is “incredibly involved.” In addition to pay level, it must take into account each employee’s position, tenure in the building, benefits and more. He notes that paying prevailing wages in a fully staffed, non-union building could increase payroll by 50% or more. Service employees include doormen, porters, handymen, janitors, security guards and others who work at least eight hours a week in the building. 32BJ represents more than 30,000 of these employees in more than 3,000 buildings in Manhattan, Brooklyn, Queens and Staten Island.
There are some 4,000 co-ops and condos that must file an affidavit if they wish to continue receiving the tax abatement, which ranges from 17.5% for buildings with an average per-unit assessed value greater than $60,000 up to 28.1% for buildings with an average per-unit assessed value of $50,000 or less. A list of the affected buildings is available here.
Co-ops and condos with employees and an average per-unit assessed value of $60,000 or less are exempt from the prevailing-wage requirement. An affidavit must be filed by properties with 30 or more dwelling units and an average per-unit assessed value of more than $60,000, and by properties with fewer than 30 dwelling units and an average per-unit assessed value of more than $100,000. (Assessed value is part of the equation used to compute a property tax bill; it is less than the market value.)
All apartments are not eligible for the abatement. Units do not qualify if they are in Mitchell-Lama or HDFC buildings, are owned by a limited liability company, are held by sponsors, or if they are already receiving tax exemptions or abatements, including J-51, 420c, 421a, 421b or 421g. Units owned by a trust are eligible only if the unit is the primary residence of all beneficiaries of the trust. Qualifying shareholders and unit-owners cannot own more than three units in the development, and one of the units must be the primary residence.
Rothman predicts that the prevailing-wage requirement will remain in the future, and that the deadline for filing affidavits will revert to Feb. 15. Meanwhile, she’s relieved that co-op and condo boards have a little extra breathing room this year. “This,” she says, “was a very nice accommodation by the DOF.”
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