Jessica Katz in Legal/Financial on July 16, 2018
As the city debates reforms to its lopsided system of assessing and collected property taxes, the Council of New York Cooperatives and Condominiums, among other advocates, has vociferously opposed an end to co-op and condo tax abatements. Writing in the Daily News, Jessica Katz argues that the abatements are a costly – and unfair – benefit for well-to-do owners of co-op and condo apartments. Katz is executive director of Citizens Housing and Planning Council, a nonprofit education and research organization that, since 1937, has supported city housing and neighborhoods. This is an edited version of Katz’s article.
The city’s Department of Finance (DOF) recently rescinded a $48,000 tax rebate for President Trump’s penthouse condo in Trump Tower. The abatement is intended for residents who use their apartment as a primary residence, and, as we all know, New York City is no longer Trump’s primary residence. We ought to use this moment to ask ourselves a broader question: What is this rebate and who does it serve?
The city is spending approximately $528 million each year on the tax rebate for condo and co-op owners, according to the tax-expenditure report for fiscal year 2018 prepared by the DOF. The report notes that 53 percent of the households who are beneficiaries are in Manhattan, 15 percent are in Brooklyn, and only 4 percent are in the Bronx. By dollar value, 76 percent of the benefits accrue to Manhattan residents, overwhelmingly in higher-value areas. (This rebate is separate from any of the other abatements that create or preserve affordable or rent-stabilized housing, such as 421a, 420c, J-51, and others.)
Here’s a stunner: Recent changes to the program make those who own more than three co-op or condo units in the same building ineligible, but if you own a penthouse in Manhattan, a beach house in the Hamptons, and a ski lodge in Aspen, by all means, claim the rebate!
Let’s rescind this rebate across the board and use the funds to help New York City Housing Authority (NYCHA) residents live in safe, healthy, well-maintained apartments. With $32 billion in urgent capital needs, every penny recovered will be quickly spent. If $528 million a year were instead used to raise bonds, that could raise $9.7 billion to help towards NYCHA’s capital needs. And importantly, this debt service expense will not increase the city’s out-of-pocket cost.
There are of course those condo and co-op owners who benefit from this rebate whose homes are not dripping in 24-karat gold. But they are relatively few in number and their rebate represents a smaller percentage of the dollar value at stake here. Surely a balance can be reached where everyone pays their fair share to help NYCHA get back on its feet.
The recent evaluation of a public-private partnership at a group of NYCHA properties by the Citizens Housing and Planning Council, where I am the executive director, shows that there are solutions to NYCHA’s problems, but they require resources. Our study showed something obvious: When resources are provided to improve NYCHA properties, it works. Tenants benefit, energy usage is lower, and property management is no longer under an avalanche of repair requests.
This change to tax policy requires the state legislature to act. The city’s property tax system is complicated, but this is a simple answer. This policy subsidizes condo and co-op owners, the vast majority of whom are relatively well-off, at the expense of New Yorkers who need it the most.
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