Jennifer V. Hughes in Legal/Financial on March 4, 2015
The quest for a limit on how high the city can hike property taxes for all condos and co-ops was first proposed four years ago, but now it's coming back. Some of the people leading the charge to expand the cap are cautiously optimistic that all co-ops and condos are getting closer to seeing similar relief.
"The current administration is very focused on affordable housing," says Bob Friedrich, co-president of the Presidents Co-op & Condo Council, a consortium that represents 65 co-op and condo buildings. "There is no greater example of affordable housing than [what you find] among the co-ops in Queens and Brooklyn, but right now the policies of the city are hurting these communities."
The DOF Speaks?
Also now, for the first time, lawmakers and advocates are getting a feel for how the city coffers could be affected if the cap were extended. Because of his support on the issue, City Councilman Paul Vallone recently asked the city's Department of Finance (DOF) for projected information on the impact. According to the councilman's office, the department indicated to his office that revenues would rise in the first year after a cap, but they would fall $44 million by the fifth year.
(A spokesperson for the city's DOF declined to comment on the information provided by Vallone's office, and has not taken a position on the proposal to extend property tax caps to all co-ops and condos.)
Vallone says his office is awaiting a final analysis from the DOF and will consider this data and all the issues. He pointed to DOF tentative assessment roll projections for 2016, released in mid-January, that estimate a 6.6 percent hike in the total amount of assessed property value for all co-ops citywide and a 14.2 percent increase in assessed value for all condos. That boils down to an average tax hike of $448 for co-op dwellers, and an increase of $838 for condo owners. Single-family homeowners squeaked by with just a $228 hike.
To enact the cap, the change must be made at the state legislature, but lawmakers in Albany will only act with the city's blessing. Bills with the cap were introduced but died in last year's session. Sponsoring lawmakers say they will reintroduce them again.
Friedrich, who besides being co-president of a lobbying group is also the president at the 2,904-unit Glen Oaks cooperative, says the assessed valuation at his co-op increased 50 percent in 2012, from the previous year. He says the city originally asked for an 86 percent increase, but lowered it after "heavy lobbying" by the co-op community.
Co-ops, condos, and rental properties make up only about 24 percent of the city's property value, yet they pay 36.5 percent of the city's $21 billion in annual real estate taxes, according to the Citizens Budget Commission (CBC), a watchdog group. But the CBC is not on board with extending the cap, or even supporting existing caps, according to City Studies Director Maria Doulis. "Assessment caps lead to bizarre inequities: properties with the same value can have substantially different tax bills because the value of the properties appreciated at different rates," she says. "State leaders should be looking to eliminate the caps gradually, not extend them to additional properties."
One of the thorns in the proposal is the idea that a blanket co-op/condo tax cap would benefit middle-class buildings as well as multimillion-dollar properties. Friedrich says one solution would be to create a threshold value in which very pricey co-ops and condos would not be eligible for the cap.
Braunstein acknowledges that it's a difficult problem. "It's politically difficult to change the property tax system overnight," he says. "I represent both co-ops and single-family homes and if the solution to fix this problem is to shift the burden to single-family homes, that's a very difficult political problem, too. I think that's why the system has been as it is for so long."
Friedrich points out that installing a cap helps with the city's efforts toward affordable housing for renters as well as shareholders and unit-owners. When co-op and condo owners rent out their units, they have to jack up the rent to pay for higher taxes, squeezing those renters, too.
"We understand that there have to be some increases, but 8 percent right now is triple that of inflation," Friedrich says. "Isn't that enough for the city's insatiable appetite for revenue?"
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