Published: Autumn 2008

The Action Committee for Reasonable Real Estate Taxes was established in 1990 to fight for property tax fairness for all New York City tax payers. Thanks to the efforts of the Action Committee and other groups, City and State officials acknowledged in the early 1990s that housing cooperatives and condominiums in New York City pay property taxes that are proportionally much higher than those of other home owners.

In 1996 an abatement program was put in place as an interim measure on the path to a permanent program of tax fairness. It provided a 17.5% reduction of property taxes for all units in cooperatives and condominiums whose assessed value averages more than $15,000 per unit and a 25% abatement for those of lower assessed value. The City was to develop a permanent plan to replace this tax structure. In the intervening years, the abatement program has been extended four times, the most recent last spring, ensuring the continuation of the abatement through June 30, 2012 and mandating that the City produce a long term plan by February of 2011.

TIMELY EXTENDER
ENSURED CONTINUATION
ON JULY TAX BILLS
This was the fourth time that the abatement program was to be extended. It was quite naturally assumed that the extender would be passed in Albany. But passage alone was not enough for the Action Committee for Reasonable Real Estate Taxes. Timing was important too. If, as had occurred in the first two extenders, the legislation was not signed into law prior to the time in mid June when the Department of Finance prepares property tax bills, DOF would have to bill for full property tax payments on the July bills. After a winter of unprecedented fuel costs and other financial demands, this would have caused cash flow stress for many taxpayers.

Fortunately, Speaker Sheldon Silver shepherded the necessary legislation through Assembly, while Senator Frank Padavan did the same in the Senate. And Governor David Paterson signed the extender legislation on May 11th, guaranteeing a seamless continuation of the abatement program right into the July bills that began the fiscal year 2008/2009.

PRIOR YEAR TAX RATE APPLIED
July tax bills for New York City's Class 2 properties (which includes most cooperatives and condominiums) were beneficial to the taxpayer in another way, too. Since the City Council had not set the tax rate for fiscal 2008/2009 by that point in time when DOF prepares property tax bills, July taxes were calculated using tax assessments for 2008/2009, but applying the prior year's tax rate to those assessments. The tax rate for Class 2 for 2007/2008 was 11.928%. When it was set, in the spring of 2007, the economy was robust and so the City Council had been able to reduce the tax rate, mitigating in part the increase that had been necessary in January of 2003.

ADJUSTMENT IN
JANUARY 2009
Thus the tax rate of 11.928% was used for July 2008 tax bills. Subsequently, the rate for fiscal 2008/2009 was set at 12.139%. January bills will be adjusted to reflect the new rate and to capture additional funds due for July and October payments made at the lower 2007 rate. At this writing, there is consideration of legislating a further increase in tax rate, which might go into effect as early as January to help bridge the impending budget gap in this precarious economy. CNYC will keep its members advised of developments.

DISTRIBUTION
The Department of Finance bills condominium unit owners directly for their property taxes, so that appropriate abatements and exemptions are included in the billings of those who qualify. In the case of cooperatives, where there is one property tax bill for the entire building, deductions are made from these taxes for shareholders' exemptions and abatements. It is the responsibility of the cooperative to distribute these exemptions and abatements to the appropriate apartments. To help with this distribution, the Department of Finance provides a chart enumerating what is due to each apartment for property tax abatements, the STAR and enhanced STAR programs and any special benefits for qualifying seniors, veterans and people with disabilities. This information has generally been sent out in November. Cooperatives have until the end of the fiscal year (June 30th) to distribute these sums.

PROPERTY TAX FAIRNESS
The Action Committee for Reasonable Real Estate Taxes will continue to push for permanent tax reform that will deal equitably with all New York City taxpayers. To be effective, the Action Committee will need the help of CNYC members. The outpouring of letters and calls to law makers last spring was surely instrumental in ensuring the timely passage of the abatement extender legislation. For this we thank all those who participated..

The Action Committee for Reasonable Real Estate Taxes will meet on Thursday, February 5, 2009 to review property tax assessments for fiscal 2009 and to discuss strategies for promoting a permanent tax structure that will deal equitably with all New York City taxpayers (see page 10).