Bendix Anderson in Legal/Financial on July 11, 2019
Co-ops and condominiums with non-union employees would have to pay them a prevailing wage in order to qualify for coveted tax abatements – if Governor Andrew Cuomo signs a bill recently passed by the state Legislature. In response, the Council of New York Cooperatives & Condominiums (CNYC) has mounted a call-in and letter-writing campaign, urging Cuomo to veto the proposal.
“It could be disastrous,” says Mary Ann Rothman, executive director of CNYC. “There are lots and lots of buildings to which this would be extremely costly.”
If the proposal becomes law, many co-op and condo boards will need to certify that their non-unionized service employees earn at least the relevant “prevailing wage” in order to claim the state’s Cooperative and Condominium Tax Abatement, starting in fiscal year 2020. These prevailing wages are set by the New York City Comptroller, based on the pay and benefit packages negotiated by the Service Employees International Union, Local 32BJ. Buildings that pay their workers prevailing wages will have to pay them more than $70,000 a year – more than twice the minimum wage.
The law would apply to any building with an average property tax appraisal of more than $60,000 per unit. (An apartment with such an assessment would have a market value of roughly $750,000 to $800,000.) Many of those are smaller co-ops and condos, with as few as a dozen units, says Rothman.
“This is going to fall on buildings that don’t have the financial capacity to pay prevailing wages,” says Stuart Saft, chairman of CNYC and head of the New York Real Estate Practice Group at law firm Holland & Knight.
Many of these buildings depend on the abatement, which was created in 1996 as a first step toward equalizing tax treatment between co-op and condo owners and owners of single-family homes. The abatement reduces property taxes between 17.5 percent and 28.1 percent, depending on the average assessed value of the units in the development.
Both the New York State Assembly and Senate passed versions of the proposal just before the end of the legislative session in June, along with a flurry of other bills. Cuomo will eventually veto these bills or sign them into law, typically by the end of the year, before the start of the next legislative session.
“There are several hundred pieces of legislation on their way to the governor’s desk,” says Rothman. “I sure hope he vetoes [the prevailing-wage requirement]. We’ve been working our tails off.” Cuomo’s office did not respond to a request for a comment.
“The co-op and condo property tax abatement has been one of those benefits that has been subject to a lot of scrutiny,” says attorney Erica Buckley, head of the cooperative and condominium practice at Nixon Peabody. “There has been a lot of conversation on whether or not to keep it.”
The city’s Advisory Commission on Property Tax Reform began studying ways to revamp the system of assessing and collecting property taxes last year. The commission was to produce recommendations early this year, but so far has not done so.
Early this month, Cuomo signed into law a two-year extension of the tax abatement for co-ops and condominiums. While welcomed by co-op and condo advocates, the extension is not the major reform many are hoping for. Instead it’s a Band-Aid, says Rothman, who adds: “I wish the Band-Aid would be for four years or five years.”
Engage, enrage, ask questions and give answers with your community of board members. Submit your questions and comments here!
Thinking of buying a co-op or condo? Already bought, and not sure how co-op/condo life and rules work? Learn all about purchasing a place and living in your new community. It's not like renting, and its not like owning a house. What's it like?