Published: Autumn 2012
Home owners in New York City cooperatives
and condominiums pay far more
than their fair share of property taxes. In
1990, CNYC formed the Action Committee
for Reasonable Real Estate Taxes to
bring this fact to the attention of lawmakers
and to advocate for tax fairness.
In 1996 an abatement program was put
in place as an interim measure while the
City was to develop a permanent play for
property tax fairness. It provided for 17.5%
reduction of property taxes for all qualifying
units in cooperatives and condominiums
whose assessed value averaged more
that $15,000 per unit and a 25% reduction
for those with lower assessed values.
Instead of meeting the mandate to reform
taxation, the City proposed extenders
of the abatement program when it was
scheduled to sunset in 1999, 2001, 2004
and 2008. Once again, in February 2011,
the date for the City to present a long term
plan for property tax fairness came and
went with no permanent plan proposed.
In the intervening years, assessments
throughout the City had risen, so that
very few cooperatives or condominiums
were now eligible for 25% abatements.
Precipitous assessment increases in
outer boroughs in 2011 had drawn protests
so vocal that the City had capped
tax increases for affected properties.
In the spring of 2012, at CNYC's request,
legislation was introduced in the
Senate and Assembly for another extension
of the abatement program.
And then there were hints that the
City was working on the abatement program.
And at the same time there were
repeated assurances from the City that
the abatement would be included in
property tax bills for July 1st payment. In
1999 and 2001, when extenders weren't
passed until later in the summer, July
billings had been for the full amount of
property taxes. In fact, it was to avoid
the disruption caused in those two instances
that CNYC had requested early
introduction of extender legislation in
2004, 2008 and this year.
Finally, in the middle of May, without
prior discussion with CNYC or the Action
Committee or any other affected parties,
the City revealed in discussions that it
was planning modifications to the abatement
program. The City proposed to extend
the abatement program in its new
form for just 3 years. CNYC would have
preferred a 4 year extender to give the
next administration time to undertake the
complex task of true tax reform with a
view to treating all New York City taxpayers
fairly. A positive aspect of the proposals
would reestablish higher abatements
in buildings with lower assessed value.
Another aspect was the proposed limitation
of the abatement to people's primary
residences (plus up to two additional
units in the same building as the primary
residence). While this is not necessarily
an unreasonable modification, it is not a
distinction made for Class 1 properties.
Therefore, this proposal makes homeowners
in cooperatives and condominiums
less like Class 1 homeowners; precisely
contrary to the intent of the initial
The modifications were to be phased
in over a period of two to three years.
CITY PROPOSED AMENDMENT
These charts show the three year
abatement program proposed by
|Available only on one's primary residence and up to two additional units in the same building.
The thresholds for abatement to be modified as follows:
$50,000 or less
|Non-primary residential units that received an abatement in FY2011 follow this phase out schedule:
$15,000 or less
NO EXTENDER PASSED
On June 18th, three days before
the scheduled close of the legislative
session, the final wording of the
City's proposed abatement legislation
was introduced. This important legislation
was coupled with modifications
to the City's J-51 and 421A programs
and with provisions regarding credit
against the New York city personal income
tax for income from S corporations
in the city.
The New York State Constitution requires
'aging' of legislation prior to its
consideration by the Senate or the Assembly,
presumably to allow lawmakers
to study the proposal and to enable
interested parties to comment. This
procedure can be bypassed only with
a Message of Necessity from the Governor.
Governor Cuomo determined
that there were no grounds for such a
message, and so the legislative session
ended on schedule on June 21st
without consideration of the City's bill or
of the bills that would have simply extended
the abatement program.
SPECIAL SESSION PROMISED
State Senators and members of
the Assembly then went home amid
assurances that they will return to Albany
for a special session where the
City bill is sure to be passed. These
lawmakers are running for reelection
in November, and the special session
is not anticipated to take place before
the election. See page 2 about ensuring
that every candidate seeking your
vote knows how important property
tax fairness is to you.
"OLD" ABATEMENT ON JULY BILLS
As promised, the Department of Finance
included the property tax abatement
– in its 2011 form– in bills for payment on
July 1, 2012. October bills were recently
sent out with the same figures. This raises
several questions, which are outlined below.
CNYC has tried since June to make
an appointment with the Department of Finance
to get answers to these questions,
but has not yet been successful.
If the City's plan is implemented, cooperatives
and condominiums with lower
assessed value will qualify for additional
When and how will this be credited?
2) At the same time, some of the abatement
accorded to units that are not the
primary residence of their owners will
have to be returned to the city.
When and how will this occur?
3) And how, exactly does the Department
of Finance propose to ascertain
without error which apartments are primary
Can this realistically be done for implementation
4) In the case of condominiums, each
unit owner receives a bill from the City
where abatements and exemptions are
calculated and explained. For cooperatives,
however, the situation is very different:
since there is one property tax
bill for the entire cooperative, deductions
are made from this tax bill for the various
exemptions and abatements for which
shareholders have qualified. It is the responsibility
of the cooperative to distribute
these exemptions and abatements
to the appropriate apartments before the
end of the fiscal year (June 30th). To facilitate
this distribution, it has been the
practice of the Department of Finance
to provide a chart enumerating precisely
what is due to each apartment for property
tax abatements, the STAR program
and any special benefits for qualifying
seniors, veterans, and people with disabilities.
This information is generally
sent in November (often to the managing
agent), and cooperatives have until
the end of the fiscal year (June 30th ) to
distribute these sums.
With the abatement currently in limbo,
when can cooperatives expect to
receive this important information?
5) Finally, the July and October bills
were calculated using this year's assessment
and last year's tax rate.
This has become a regular practice in
the City, with the City Council typically
setting the new tax rate in the summer
or fall, and the Department of Finance
making adjustments on January and
April tax bills. In a year of deficits and
crises, it is very unlikely that the tax
rate will go down. Thus there will already
be increased tax liability when
the adjustment is made.
When will this adjustment appear on
OF PROPERTY TAX LIMBO
Cooperatives and condominiums typically
prepare their budgets in October
and November in order to begin the New
Year with new levels of carrying charges
(maintenance). Because condominium
unit owners each pay their own property
taxes, the condo budget process is not
affected by this issues.
But the uncertainty regarding property
tax abatements forces the boards
and management of cooperatives to
make a number of assumptions, as they
prepare their draft budgets. Possibly
the special legislative session will come
early enough in November for them to
choose between Plan A and Plan B before
having to announce the new budget
INCREASES OR REDUCTIONS?
Each cooperative will have to determine
how it is affected by the changes
that the City has proposed. If its assessed
value averages $60,000 per
unit or less, it can anticipate higher
abatements for each qualifying home
owner. BUT if some shareholders do
not use their cooperative as their primary
residence, the abatements on
those units will begin to be halved this
year. STAR participation is a good
clue to primary residence, but not an
infallible one, since it is the shareholder's
responsibility to apply for this
exemption, and there are many who
may not have applied. Reviewing last
year's November chart will help determine
whether it would be a good idea.