New York's Cooperative and Condominium Community
Bob Friedrich in Legal/Financial on June 14, 2018
Yesterday we reported that a proposed $400 property tax rebate for homeowners who earn less than $150,000 a year was dropped from the city’s new budget. But those hoping for reform of the city’s broken property tax system still have two sources of hope: a lawsuit filed by a group called Tax Equity Now New York (TENNY), and a seven-member mayoral commission charged with making property taxes simpler, clearer and fairer.
Today Bob Friedrich, president of the Glen Oaks Village co-op in Queens, writes in Crain’s that there is a glaring omission on the commission. Friedrich writes:
New York City’s notorious property tax system is a sham and desperately in need of a fix. The mayor, city comptroller, Department of Finance commissioner, Assembly Speaker and many other elected officials acknowledge this. I know, because as co-president and founder of the Presidents Co-op & Condo Council, representing almost 100 New York City co-ops and condominiums, I have spoken with each of them and many elected officials about this crisis.
Property taxes on co-ops and condos bear no relationship to their actual fair market values. In fact, crazy as it sounds, assessed valuations for these properties are based on what the value of an entire co-op development would be if it were a rental property. The property tax calculations for these properties are so riddled with incorrect assumptions that they produce erroneous and inaccurate valuations. This byzantine system of taxation has produced property taxes that have risen well in excess of inflation.
Under the current system, co-ops and condominiums (Class 2 properties) are taxed at significantly higher rates than one- to three-family homes (Class 1). The type of home one chooses should never affect the rate at which property taxes are assessed.
To make matters worse, unlike Class 1 properties, Class 2 properties have no caps to curtail exploding co-op tax assessments. Private homeowners are protected from escalating property taxes with an annual property tax assessment cap of 6 percent per year, or no more than 20 percent over five years. These caps keep annual property tax increases out of the stratosphere. Co-ops have no such protective caps.
Even our modest proposal to grant temporary relief – allow Class 1 assessments to rise 8 percent per year, or 30 percent over 5 years – has been met with inaction. It’s infuriating that year after year, politicians who speak about protecting affordable housing remain unable to solve this problem.
Under pressure from groups such as my organization, the Council for New York Cooperatives and Condominiums, and plaintiffs in the TENNY lawsuit, the mayor and City Council speaker created a commission to find ways to fix it. Last year at a town hall meeting, Mayor Bill de Blasio said that because he is term-limited and could not run for re-election, he would have greater flexibility in making difficult choices that a tax panel might propose. In response to my question, he assured me that all stakeholders would have a seat at the table.
Unfortunately, that has not happened. Co-ops have no representation on the newly announced commission. Not a single co-op board president or co-op representative will be at the table. However, a majority of the seven-member panel are de Blasio contributors and political supporters.
At the announcement of the panel, City Council Speaker Corey Johnson said, "It is crucial that we work to bring clarity and fairness to this process, which has long perplexed the public and left many feeling hoodwinked by the city government tasked with representing them.” Unfortunately, the public is again being hoodwinked by the very same city government officials tasked with fixing the problem.
Engage, enrage, ask questions and give answers with your community of board members. Submit your questions and comments here!
Co-op and condo board business broken down into bite-sized bits - 2 stories each week. Read now on all digital devices.
Learn all the basics of NYC co-op and condo management, with straight talk from heavy hitters in the field of co-op or condo apartments
Professionals in some of the key fields of co-op and condo board governance and building management answer common questions in their areas of expertise
Got elected? Are you on your co-op/condo board?
Then don’t miss a beat! Stories you can use to make your building better, keep it out of trouble, save money, enhance market value, and make your board life a whole lot easier!