Published: Summer 1998
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homeowners in cooperatives and condominiums by making a contribution
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PROPERTY TAX ABATEMENTS
The Action Committee for Reasonable Real Estate Taxes was established
by CNYC early in 1990 to work for a fair and affordable property tax structure
for New York City. In 1996, City Council Speaker Peter Vallone and Mayor
Giuliani proposed a three-year tax abatement for homeowners in cooperatives
and condominiums. Assemblyman Pete Grannis and State Senator Roy Goodman
sponsored the 1996 State legislation that established the abatement program;
this law also required the City to develop a long-term plan to continue
the process toward tax fairness.
The third and final year of the abatement program began on July 1, 1998.
Qualifying homeowners in cooperatives and condominiums where assessments
average $15,000 or less receive a 25% abatement of their taxes, and those
in buildings with higher assessments receive a 17.5% abatement. Tax bills
sent in June for the first tax payment of fiscal 1998/99 included the
abatement to the extent that this was possible, but individual homeowners
will not learn precisely what their savings will be until November. Bills
for January 1999 tax payments will contain appropriate rate adjustments
(in our case, this will mean lower tax payments). The reasons for this
are described below.
NO LONG-TERM PLAN YET
As this Newsletter goes to press, no long-term plan has yet been proposed,
but the Department of Finance has repeatedly assured CNYC that work is
in progress on this plan. To insure against a gap in tax relief, Assemblyman
Grannis introduced A.11074 in the spring of 1998 to extend the abatement
at its present rate for an additional year and to reiterate the requirement
of a long-term plan. Passed unanimously by the Assembly, this bill was
languishing in the Senate Rules Committee when the Legislature recessed
in June. It could still be passed if the lawmakers reconvene in the fall.
ACTION COMMITTEE TO MEET SEPTEMBER
CNYC and the Action Committee continue to push for timely progress on
the Grannis bill and the long-term plan. We urge you to bring tax fairness
to the attention of all candidates for the State Legislature and to join
us at the Action Committee meeting on Wednesday, September 16, 1998. Since
our current tax abatement ends on June 30, 1999, we must mobilize to push
hard for its continuation.
1998/99 TAX RATE STILL NOT
New York City's complex property tax system includes four classes of taxpayers
and formulas for the distribution of the taxes among them. No class can
have an increase of more than 5% in its share of the taxes from one year
to the next. But, State legislation is required if the increase is to
be capped at a lower point.
Based strictly on the assessments, the tax share of Class 1 (one-, two-
and three-family homeowners) should have had a substantial increase in
tax share. Class 2 (multiple dwellings, including cooperatives and condominiums)
should have had a modest decrease in share and Class 4 (commercial property)
should have had a substantial reduction. But government tends to shield
Class 1 homeowners from increases. Thus the Mayor and the City Council
each requested Albany legislation to cap class share increases at 2.5%;
however, they had differing views on how the amount above 2.5% shaved
from Class 1 should be distributed among the other classes. Albany appropriately
passed the 2.5% cap, but left it to the City to decide on distribution
among the classes.
In July, the City Council passed a bill establishing the class shares
and moving all the increases above 2.5% from Class 1 to Class 4. Barring
a veto by the Mayor, the City Council was scheduled to set the tax rates
for the four property tax classes in late August. This would produce a
tax rate for Class 2 that is reduced slightly from last year's rate. January
tax bills will be adjusted to reflect the new rate.
Only after the 1998/99 tax rates are fixed, will the Department of Finance
be able to accurately calculate the dollar amounts of exemptions due to
senior citizens under the State's enhanced STAR program and to qualifying
veterans and the property tax abatements for each qualifying homeowner
in cooperatives and condominiums.
Condominium owners who pay taxes individually on their own units will
simply receive adjusted tax bills in January. Because cooperatives receive
these exemptions and abatements on the property taxes for the whole building
and pass them on to the qualifying shareholders, the Department of Finance
will send each participating cooperative a detailed list of all shareholders
and the dollar amount due to each one. This information is scheduled to
be sent out in October (the Halloween Letter). Upon receipt
of this information, management should be able to begin crediting abatements
and exemptions on shareholders' December maintenance bills.
FINANCE DEPARTMENT SENDS PREVIEW
YEAR THREE ABATEMENTS
In August, as a final verification of the tax abatement information, the
Department of Finance wrote to the designated contact (often the managing
agent) of each qualifying cooperative, enclosing a complete list of apartments
and stating whether each unit is eligible or not -- and if not, why not.
If errors were found, this was the final opportunity to contact DOF with