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Council of New York Cooperatives & Condominiums
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Tax Action
TAX ACTION

Published: Summer 2004

Property tax abatements for homeowners in New York City cooperatives and condominiums will continue for four more years, ensuring property tax relief of 25% for all qualifying home owners in cooperatives and condominiums where assessed valuation averages $15,000 or less per apartment and 17.5% for buildings with higher evaluations. The early enactment of Chapter 97 of the Laws of 2004 (see page 1) has enabled the abatement program to continue seamlessly into fiscal 2005 without the gaps that occurred with each of the two prior extenders of the abatement program. CNYC’s Action Committee for Reasonable Real Estate Taxes had set three ambitions goals for itself in 2004. This legislation achieves all three and thus clears the path for the Action Committee to begin even more intensive work for permanent tax fairness.

FOUR MORE YEARS
As the Action Committee faced the sunset date of 6/30/04 for the eighth year of the abatement program, its primary goal was to ensure that the program would continue. The fact that home owners in New York City cooperatives and condominiums pay more than their fair share of property taxes was now widely acknowledged, so the Action Committee was confident of support for an extender. But the two-and three year extenders of the past had sunset so quickly that there had not been time for the development of a permanent plan for tax fairness. The Action Committee suggested that a four year extender might be more practical. Perhaps with four years to work on it, an equitable long term plan could be developed. Assemblyman Pete Grannis liked this idea; reaction was favorable from the City Council as well and the Mayor’s office offered no objections.

SEAMLESS CONTINUITY
The third important objective of the Action Committee seemed less attainable. It wanted to avoid if possible the problems that surrounded each of the prior extenders, when the legislation was not signed into law until late in the summer, causing July property tax bills to be payable in full, without the mitigating effect of the abatement. For many condo unit owners and cooperative corporations, this created stressful cash flow situations. The eventual adjustment on the ensuing January and April tax bills would restore a balance, but January is a long way from July, when the tax bill had to be paid. In addition, many mortgage lenders that collected monthly escrow payments for property taxes suddenly found that the monies they had collected were not sufficient to cover the full tax bill. These lenders were unmoved by explanations that the abatement would continue and that the adjustments would come on January and April bills. They demanded that the escrow payments be increased to meet the full July property tax bill. This meant more stress and more cash flow problems.

Might it be possible, the Action Committee asked, to get this important legislation passed early enough to have the abatement continue with the July property tax bills. This was the big challenge. And the challenge was met, thanks to:

  • The ‘grass roots members’ the Action Committee who sent a steady stream of letters to their legislative representatives and to Mayor Bloomberg and Speaker Miller asking for their support of extender legislation swiftly passed.
  • Assemblyman Pete Grannis of Manhattan, who has sponsored all of the abatement legislation since 1996, Senator Frank Padavan of Queens who introduced companion legislation in the Senate and all of their colleagues who supported its passage.
  • Assembly Speaker Sheldon Silver and Senator Majority Leader Joseph Bruno who recognized the importance of this legislation and allowed it to progress even as the budget deadlock was delaying most other legislation.
  • Speaker Gifford Miller and his colleagues in the New York City Council who passed with lightning speed two Home Rule messages in support of this legislation.
  • Mayor Bloomberg, whose administration acknowledged that the abatement program is an essential part of how the city currently addresses tax fairness.
  • Governor Pataki who signed this bill into law on May 28, 2004.

The Action Committee gratefully thanks all these important players, and looks forward to continued success in working with them toward permanent tax fairness.

A LONG HISTORY
CNYC formed the Action Committee for Reasonable Real Estate Taxes in February 1990 as the first step in a crusade for a fair and affordable property tax system for New York City. Action Committee Chairman Martin Karp mastered the complexities of the property tax system, noting major inequities and offering practical recommendations for tax reform. In 1993, Mayor Dinkins and the City Council convened an independent commission to investigate real estate tax policy in the City of New York. Its report confirmed that cooperatives and condominiums bore more than their fair share of the property tax burden.

ABATEMENTS BEGIN IN 1996
In 1994, the City Council proposed a tax reduction program for homeowners in cooperatives and condominiums. In 1995 Mayor Giuliani included property tax reductions for homeowners in cooperatives in the financial plan for fiscal year 1996. These actions led to the passage of State legislation establishing a 3-year program of escalating abatements as a first step toward tax reform. The legislation also required that the City develop a long term plan to continue progress toward tax fairness. The December 31, 1996 deadline for producing this plan came and went. Meanwhile, the work of implementing the abatement program was complicated, and CNYC and the Action Committee worked closely with the Department of Finance to help ensure that all qualified homeowners would benefit from the abatement.

AN EXTENDER IN 1999
In 1999 the abatement program was about to sunset, with no long term plan in evidence. Mayor Giuliani and Speaker Vallone included in the City budget provision for a two-year extension of the abatement at the level it had just attained of 25% for buildings where the assessment per unit averaged $15,000 or less and 17.5% for buildings with higher assessments. Assemblyman Pete Grannis shepherded the proposal through the Assembly with unanimous support and Senator Roy Goodman sponsored the Senate version. The New York State budget for fiscal 2000 included a two-year extension of the abatement program and mandated that a long term plan be presented by December 31, 1999.

NO LONG TERM PLAN IN 2000
On February 10, 2002, Finance Commissioner Andrew Eristoff addressed the Action Committee for Reasonable Real Estate Taxes. He outlined the progress of his department in researching several alternatives for the long awaited plan for property tax fairness for homeowners in cooperatives and condominiums. However, the subsequent loss of the revenue from the commuter taxes made it impossible for the city to move forward with any plan. Mr. Ersitoff reported to the legislature that the long term plan would be to continue the abatement program.

ANOTHER EXTENDER IN 2001
But the abatement program was scheduled to sunset again on June 30, 2001. A three year extender was enacted and was signed into law by Governor Pataki on September 7, 2001. Property tax bills at full level were paid in July and October of 2001; adjustments in January and April of 2002 were most welcome.

As the city worked on its budget for fiscal year 2003, the City Council suggested a significant increase in property taxes was needed to fund services in a city recovering from the devastation of the events of 9/11/01.
The increase was not implemented at that time, but, in November 2002, the City enacted an 18.49% increase in property tax rates effective January 1, 2003. This necessary increase has hastened the recovery of the economy of New York City, but it has had a harsh impact on New York city taxpayers.

2004 EXTENDER IN PLACE
Well aware that its members urgently needed the abatement program, the Action Committee for Reasonable Real Estate Taxes began very early to ask for passage of a four year extender. Chapter 97 extends the abatement at its current rate for four more years, through June 30, 2008, and it mandates that the city present a long term plan for tax fairness by July 1, 2005.
Condominium owners and cooperative buildings that were part of the abatement program have received tax bills that include the abatement. These bills were calculated using current assessments, but last year’s tax rate. The City Council will soon set the tax rate for fiscal 2005 and the Department of Finance will make appropriate adjustments, if necessary, on tax bills for January and April. In November, the Department of Finance will send to all participating cooperatives a list of all apartments that qualify for the abatement, for the STAR program, the SCHE program and any Veterans benefits. Their chart will tell exactly how much money the cooperative must return to each of these. Their notice will tell exactly how much money the cooperative must credit to each apartment. The cooperative must make these distributions by June 30, 2005.

Cooperatives and condominiums that have not previously participated in the property tax abatement program now have a brief window of opportunity to enroll. The Department of Finance is endeavoring to contact cooperatives and condominiums that it believes should be participating, but this notice may go to your lender or your property manger if they are the ones who pay your property tax bill.

Be certain that these notices receive proper attention. You can also request forms directly from the Department of Finance website at www.nyc.gov/finance or by calling the Department's Co-op/Condo Abatement Hotline at 212 361-7099.

 
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