New York's Cooperative and Condominium Community
Bill Morris in Legal/Financial on February 7, 2022
The city’s Department of Finance has pushed to April 15 the deadline for co-op and condo boards to file a notarized affidavit stating that their building’s service employees are paid prevailing wages, a new prerequisite for the building’s residents to qualify for the cherished co-op and condo tax abatement.
The original Feb. 15 deadline still stands for boards to file a list of all co-op shareholders and condo unit-owners who use their apartment as their primary residence, another requirement for receiving the abatement.
Prevailing wages (and benefits) are set each year by the city Comptroller. (A list of prevailing wages by job category is available here. A list of properties that must file an affidavit is available here.)
While most workers who belong to the Service Employees International Union’s Local 32-BJ are paid prevailing wages for their job categories, some non-unionized workers and members of other unions fall under the prevailing wage bar. Qualification for the abatement does not depend on whether an employee is a member of a union; it depends on the level of pay and benefits.
Drew Donovan, chief operating officer at Choice New York Property Management, says the analysis of prevailing wages is “incredibly involved” because in addition to pay level it must take into account each employee’s position, tenure in the building, benefits and more. He notes that paying prevailing wages in a fully staffed, non-union building could increase payroll by 50% or more. Service employees include doormen, porters, handymen, janitors, security guards and others who work at least eight hours a week in the building.
Co-ops and condos with an average per-unit assessed value of $60,000 or less are exempt from the prevailing-wage requirement. An affidavit must be filed by properties with 30 or more dwelling units and an average per-unit assessed value of more than $60,000, and by properties with fewer than 30 dwelling units and an average per-unit assessed value of more than $100,000. (Assessed value is part of the equation used to compute a property tax bill; it is less than the market value.)
The tax abatement ranges from 17.5% for buildings with an average per-unit assessed value greater than $60,000 up to 28.1% for buildings with an average per-unit assessed value of $50,000 or less.
All apartments are not eligible for the abatement. Units do not qualify if they are in Mitchell-Lama or HDFC buildings, are owned by a limited liability company, are held by sponsors, or if they are already receiving tax exemptions or abatements, including J-51, 420c, 421a, 421b or 421g. Units owned by a trust are eligible only if the unit is the primary residence of all beneficiaries of the trust. Qualifying shareholders and unit-owners cannot own more than three units in the development, and one of the units must be the primary residence.
In a statement, the Council of New York Cooperatives & Condominiums welcomed the extension of the affidavit deadline: “CNYC thanks the Department of Finance for its understanding of the difficult decisions that some buildings now face. The additional time to make this decision is helpful.”
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