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The Push to Reform Co-op / Condo Tax Injustice: Where Things Stand Now

Frank Lovece in Legal/Financial on November 18, 2011

Jackson Heights, Queens, The Colonials

Nov. 18, 2011

The grassroots tax revolt that in Queens last spring resulted in the New York City Dept. of Finance admitting it made erroneous calculations that resulted in property-tax assessments up to 146 percent over the previous year's. And along with much outrage, it also resulted in State Senator Toby Ann Stavisky (D-16th Senate District) introducing a bill to correct what many co-op and condo owners see a basic iniquity: That fact that such apartments and even condo  townhouses are taxed not as private homes but as commercial properties.

The legislative session in Albany ended in June, however, with no concrete action on the bill. But, Stavisky's office avows, the bill will be back. "She'll definitely be reintroducing it, maybe with some minor changes, when the Senate reconvenes in January," legislative aide Mike Favilla tells Habitat.

In Lou of Service

When that happens, she'll have some help. Lou Guglieri, board president of a five-story, 10-unit co-op at 34-43 82nd Street in Jackson Heights, Queens — part of a group called The Colonials — has initiated a letter-writing campaign to try to convince legislators that the bill has broad support.

"I've gotten several responses from some of the senators on the Local Government Committee, which tells me they must be getting some letters," Guglieri says. That's critical, he notes, because bills "tend to die in committee if they don't start to hear from people. A lot of the state senators on the committee are upstate senators with not too many co-ops their districts."

Even upstate senators more used to suburban homes with lawns and driveways, however, can be convinced of the seeming illogic that makes co-op and condo owners second-class citizens compared to those with a house. That's because co-op apartment buildings and condo apartment buildings not over three stories high — and how arbitrary is that? — are categorized as Class 2 properties for purposes of the annual assessed property value used to calculate property taxes.  That's the same class as income-producing rental buildings — as "income-producing property," which co-ops and condo are not — their tax rates are higher than those of Class 1, composed primarily of traditional single-family and two-family homes.

Class 2 Citizenship

Stavisky responded Senate bill S4283, which takes co-ops and condos out of Class 2 and puts them into a new part of Class 1. "Right now we're calling it Class 1a and Class 1b," she told Habitat at the time. "Co-ops and condos are more close related to small family homes than they are to rental properties. By moving them to Class 1 we would [automatically] be capping [their annual] assessed valuation, because the cap on Class 1 is six percent."

Assemblyman Edward C. Braunstein (D-Bayside, Queens), who introduced the assembly version of the bill, said in March, "The point is to treat co-op owners like single family homeowners, because they're not like landlords who rent out apartments. Co-op owners' property tax is assessed like they could get rental income."

"The City hides behind the fact that state sets these classes," says Guglieri "but it's been outrageous the way New York City has taxed these properties for 60 years. These are not income-producing properties, yet they're being compare to rentals, which are. Co-ops and condos are just trying to break even and to do the capital maintenance you need to do to keep your building in good shape."

He urges co-op and condo owners and board members to contact members of the Local Government Committee and urge passage of the bill when it's reintroduced in January. "I think people are just fed up in general with way taxes are structure," he says. "This would be nice way to stat tax reform on a small scale."


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