Paula Chin in Legal/Financial on September 20, 2016
What do tailors and carpenters have in common with co-op and condo boards? They’re all aware – or should be aware – of the importance of accurate measurements. For boards, an accurate measurement of your building’s square footage can save major money on taxes and insurance.
But when a co-op or condo board decides to contest the accuracy of what is officially known as its “gross building area,” or GBA, it has to appeal the total assessment of the property, not just the square footage.
“That means you have to file with the city tax commission and bring in evidence of rental value as well as credible evidence of square footage,” explains attorney Paul Korngold, a partner at Tuchman, Korngold, Weiss, Liebman & Gelles, who represents buildings in assessment disputes. “That means a survey from an architect or an engineer’s report, not just the board writing a letter.”
To that end, Owen Brunette, board president at an Upper East Side co-op, commissioned James Blum, a consulting engineer with the Joseph K. Blum Company, to re-measure the co-op’s building. “It was an easy enough building to do because aside from the two penthouse apartments, the nine floors are identical and have a simple, rectangular plan with no setbacks,” Blum says. “We came up with 36,815 square feet.”
So why did the Department of Finance (DOF) have the building listed at 41,600 square feet?
“With older buildings, nobody knows where their measurements come from,” says Blum. “Even the city admits to estimating estimates.”
Armed with the new number, Brunette’s co-op filed its appeal and is waiting for a hearing with the city’s tax commission. “The goal is to get the DOF to change their records so they’ll use the correct square footage when they make tax assessments the following year,” Korngold says. “If an appeal is declined and they don’t reduce the footage, building owners can file a court petition to keep the case alive so they can revisit it the next year.”
If things go Brunette’s way, the payoff could be rewarding. “There’s a discrepancy of 6,000 square feet, or 14.5 percent, between our engineer’s numbers and the DOF’s,” he says. “That means in two or three years we could see a significant reduction in our real estate taxes of anywhere between $38,000 to $50,000 a year, or four to five percent of our operating budget. With 38 units, that could translate to more than $100 per apartment per month – a huge reduction in maintenance without reducing any services.”
In the meantime, the co-op is looking ahead to November, when the board will ask insurance brokers to start shopping for casualty coverage that isn’t based on the 50,000 square feet listed in its current policy with Greater New York Mutual. “They don’t want to address the square footage issue until then,” Brunette says, “so when we renew we’ll go to two other companies and fill in the correct info and see what happens.”
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