Paula Chin in Legal/Financial on September 6, 2016
The numbers weren’t adding up. Owen Brunette had just become president of the co-op at 108 East 91st Street, in Manhattan’s Carnegie Hill neighborhood, last December when he got a call from the building’s managing agent. She had just started overseeing the property and was catching up on her paperwork. She told Brunette that the board needed to comply with Local Law 84, the New York City rule requiring owners of buildings over 50,000 square feet to measure their energy and water consumption and submit the data to the city every year.
Brunette was puzzled. To his knowledge, the nine-story, 38-unit property, which includes two rooftop penthouse apartments, wasn’t anywhere near that large. A fellow board member did a quick calculation using measurements from a previous survey of the building, and came up with roughly 35,000 square feet.
“I asked the agent where she was getting the 50,000 figure from, and she said she had pulled it from our insurance application,” recalls Brunette. “When I told her we believed the number was wrong, she said, ‘Prove it.’”
Brunette promptly dug up the co-op’s most recent tax-abatement filing. According to the New York City Department of Finance’s (DOF) own records, the building was 41,600 square feet. That settled the LL84 matter, but still left a glaring 6,600-square foot discrepancy between the co-op’s estimates and those of the DOF. That got Brunette and the board members thinking. Whose number was, in fact, correct? What if the DOF got it wrong and had overestimated the building’s square footage – as the co-op’s insurance company apparently had?
“That would mean we had been over-assessed for who knows how long,” Brunette says. “And overpaying insurance on top of that.”
As Brunette and his fellow board members discovered, it’s not enough for co-op and condo boards to nail down the exact square footage of their properties. To protect your bottom line, it pays to make sure that same figure is being used by the DOF to estimate taxes and by insurance companies to determine rates.
“We found out by accident that the numbers don’t necessarily match up,” Brunette says. “But I don’t think we’re unique. There are probably lots of buildings in the same situation as us. What’s rare is that anybody bothers to check. If they did, it could save shareholders a lot of money. That’s certainly what we’re hoping for.”
At Brunette’s co-op, verifying the discrepancy with the city was simple enough. The board checked the DOF’s annual notice of property value, which includes square footage – or what the city refers to as “gross building area” (GBA) – because it taxes owners on every square inch of the property, from outside brick to outside brick. But how the DOF determines GBA is not always reliable. Most of the time in setting values for properties, the DOF simply uses the same square footage it has had on file for decades – which may have been incorrect to begin with, especially in older buildings like 108 East 91st Street, which was built in 1928. Or the DOF relies on the Department of Buildings (DOB) to provide it with updated information.
“There is no way of determining when or how the 41,600-square foot number for our building got baked into the records,” Brunette says, “but somehow it did.”
Getting inaccurate measurements un-baked from the records is something every co-op and condo board should pursue.
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