New York's Cooperative and Condominium Community

Habitat Magazine Business of Management 2021

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LEGAL/FINANCIAL

HOW LEGAL/FINANCIAL PROBLEMS ARE SOLVED BY NYC CO-OPS AND CONDOS

Good News and Bad News for Co-ops and Condos in the New State Budget

New York State

New York State budget, co-op tax, Climate Mobilization Act, tex the rich.
April 9, 2021

New York State finally has a budget on the table – a big, fat $212 billion budget. So which do you want first, the good news or the bad news? OK, here’s the bad news: for co-op and condo boards anxious about potentially stiff fines beginning in 2024 under the city’s Climate Mobilization Act, a way to avoid those fines did not make it into the final budget proposal, Crain’s reports.

Gov. Andrew M. Cuomo had promoted a workaround that would have allowed co-op and condo boards and rental landlords to meet caps on their buildings’ carbon emissions by buying renewable energy from upstate wind and solar plants instead of investing in more expensive sustainability upgrades or paying penalties under the city’s law. Environmental activists had vigorously opposed the proposal, claiming it would undercut the spirit and the letter of the Climate Mobilization Act. 

Local Law 97 was years in the making, the result of painstaking work and thorough analysis by many people, and to swoop in and try to override it through the state process was a huge mistake,” Senate Deputy Leader Michael Gianaris said in a statement. “I am proud we stood up and defeated efforts by big real estate interests to circumvent this important new law. As a result, they’ll have to make the investments in their buildings to cut their pollution. We’re very happy to have defeated their attempt to create a loophole in the law the size of the Manhattan skyline.”

The Climate Mobilization Act requires co-op and condo boards to reduce their buildings’ greenhouse gas emissions 40% by 2030 and 80% by 2050. In October the City Council expanded these requirements to rent-regulated buildings.

And here’s the good news: a state co-op tax had been set to expire this year, but budget proposals from the Assembly and state Senate would have instead increased this tax rate to 0.15% and 0.125%, respectively. Neither proposal made the cut. Liz Krueger, chair of the Senate finance committee, framed the proposed tax increases as an unintended consequence of budget negotiations. "It was never our intention to include a co-op housing tax increase in the budget,” she says. “Its inclusion in the Senate budget proposal was a drafting error that resulted from changes to the corporate base tax. That error was corrected in the final budget."

And now, if you’re rich, the truly dreadful news: overcoming a decade-long aversion by the newly weakened governor, the Democrat-controlled Legislature pushed through a personal income tax increase on people making over $1 million a year. The highest tax bracket – 10.9% – will be for people making over $25 million a year. As for fears that taxing the rich will drive them to such tax-friendly states as Florida, Ginia Bellafante writes in The New York Times: “Now we will have an opportunity to see how many people making $2 million a year will really move from the Upper East Side to South Beach...for a savings equal to the cost of a five-year-old Chevy Malibu.” 

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