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A
plan to completely overhall co-op and condo
property taxes has been ditched by the Giuliani
administration – at least for the moment.
It
appears the city administration is holding
the more extensive and expensive plan hostage
until it can be properly reimbursed for
the state’s school tax rebate program, known
as STAR.
In
a letter to state legislative leaders obtained
by the Post from the Dept. of Finance, the
administration advised that the loss of
the funds has given them no choice but to
simply continue the current, temporary abatement,
rather than presenting a more costly, permanent
solution.
The
current program provides a property tax
abatement to non-sponsor unit owners, but
ends at the end of June and would still
need to be renewed by the City Council and
state.
Rather
than simply renewing the current program,
the city was expected to present a legislatively
mandated long-term plan to bring the property
taxes paid by co-op and condo owners more
in line with those paid by single family
homeowners – a plan that has been in the
works for several years.
“This
is not about more equitable STAR distribution,
it’s about how little the single family
homeowner pays in relation to what a co-op/condo
owner pays,” said Robert Grant, director
of management for Midboro Management, a
Manhattan-based management company who would
like to see a permanent plan in place.
The city has recognized the disparty in
taxes for a decade, and the temporary abatement
plan put in place in 1996 was designed to
help until a more formal plan could be adopted.
Last year, the city again asked the state
legislature for a one-year abatement extension
to give it more time to refine the long-term
plan.
(The
following was in The New York Post:)
“We
have had five years of this program, and
it’s brought us closer to fairer property
tax treatment,” said Mary Ann Rothman, executive
director of the Council of New York Cooperatives
and Condominiums. “We believe this administration
is committed to continuing the abatement,
but it still has to be passed by the legislature
and in the meantime,” she agreed, “it’s
wrecking havoc with co-op and condo budgets.”
In the letter dated September 14, 2000 and
signed by Finance Commissioner Andrew Eristoff,
he states that since Fiscal 1997, the legislation
has saved co-op and condo owners $413 million,
but costs the city $167 million annually,
a figure already budgeted by the City for
fiscal 2001.
The
letter notes that the disparity between
unit and homeowners continues to the tune
of an additional $180 million each year.
But it goes on to note that the loss of
the commuter tax has cost the city $550
millon a year, at the same time the state
is reimbursing the city $400 million less
than the STAR program actually costs.
“...it
would be irresponsbile and unfair to ask
City taxpayers, who already carry the current
abatement program, to bear the full burden
of eliminating remaining disparity,” the
letter states, explaining they have “no
choice but to continue our significant commitment
to the current abatement.”
Martin Karp, chairman of the Action Committee
for Reasonable Real Estate Taxes is disappointed
the long-term plan was not presented but
continued, “We appreciate the fact that
the Dept. of Finance and the Mayor have
released their views on the plan, and acknowledge
that there is still an inequity in the treatment
of co-ops and condos in Tax Class II. We
would like an early release of a home rule
message to the state legislature so there
can be timely passage of the enabling legislation.
But we would hope that at some point, the
abatement percentages can be adjusted to
reduce the tax inequity for resident homeowners
in Class II.”
Co-op and condo owners of up to three units
in Tax Class II currently receive a credit
of either 17.5 percent or 25 percent, depending
on the assessed valuation of the unit. The
co-op credit is distributed to the board,
which by law must give it back to the current
shareholders. Sponsors are excluded so as
to encourage them to sell and not rent the
units.
In his letter, Commissioner Eristoff goes
on to advise, “If in the future the State
allocates additional resources, perhaps
by adopting a more equitable STAR apportionment
formula, then the City will be prepared
to offer detailed recommendations for implementing
a broad-based reform program.”
State
law mandated the development of a long-term
solution for the property tax disparity
that was to be presented before 1996.
While
that deadline came and went, the abatement
was extended as the administration worked
with co-op leaders on a long-term solution.
Sources say that plan was presented to Mayor
Giuliani earlier this summer by Commissioner
Eristoff, but rather than supporting the
plan, two deputy mayors urged the mayor
to use it as a wedge to get more money from
the legislature.
Calls for comment from the legislature and
City Hall were not returned by deadline.
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