The most recent battle over a tax abatement for co-ops and condos is over, as the state Legislature passed a bill that would retroactively instate the tax break and extend it for three more years. But a bigger resolution ending the seemingly perpetual renewal of a temporary fix remains on the horizon.
The measure, authored by state Sen. Toby Stavisky (D-Flushing) and Assemblyman Ed Braunstein (D-Bayside), will raise the tax abatement from 17.5 percent, retroactively effective to June 30, 2012, to 25 percent in 2013 and 28 percent in 2015 for properties with an assessed value below $50,000 (equivalent to a market value of about $500,000). The bill also ends the abatement for property owners who use their co-op or condo as a revenue-generating rental property or an investment, and not their primary residence.
“This is a major victory for the vast majority of co-op owners in Northeast Queens, including thousands of senior citizens on fixed incomes,” Braunstein said.
The tax break was first devised to alleviate an inequity in the property tax code which equated co-ops and condos with commercial properties. The resulting inflated assessed values of what are, for many, primary residences, was temporarily alleviated via the abatement until a permanent solution could be reached.
“Passage of the legislation is the culmination of a long, hard fight for fairness and equity,” Stavisky said. “For the past 15 years, the City of New York has been providing tax abatements to co-op and condos, in order to address the disparity between property taxes paid by owners of co-ops and private homes. While what is really needed is wholesale revision and reform of the classification system, the abatement we passed in Albany remedies the inequities. In fact, the abatement will increase for most Queens’ co-ops because it is based on progressive property tax assessments.”
Warren Schreiber, co-president of the Presidents Co-ops and Condos Council, welcomed the legislation, but added that more must be done to bring a permanent fix.
“We have mixed feelings about it,” he said. “We’re happy that it was renewed, but this is just a temporary measure. We’re looking a permanent solution in the form of equity.”
The problem, Schreiber added, is in City Hall.
“Albany is not going to sign off on it without the mayor’s blessing,” he said, adding that Mayor Bloomberg has been trying to avoid resulting revenue losses from reclassifying co-ops and condos as residences.
Schreiber suggested the Bloomberg administration is overlooking the significant contribution of co-ops and condos to the city’s economy.
“The co-op and condo community, we are a billions of dollars industry. The goods and services we use, the number of people that we employ, the number of people that have jobs because of the contracts that we employ, I think that trickle-down effect is significant. People should not diminish the importance of our community.”
Permanently removing co-ops and condos from the same category as commercial properties remains a difficult task.
The solution, according to Braunstein, is comprehensive property tax reform. The ideal would see co-ops and condos impervious to property tax fluctuations, protected by the same single-digit percentage cap that one- to three-family homeowners enjoy.
“This is a monumental task with winners and losers,” he said. “Hopefully a new [mayoral] administration will have the ambition to take on such an endeavor.”
State Sen. Tony Avella (D-Bayside) has introduced similar legislation that creates a separate category for co-ops and condos, protecting them with a cap on property tax increases and basing their assessed values on similar co-ops and condos.
The Bloomberg administration has reportedly demanded any solution be revenue neutral, which Avella dismissed.
“ Co-ops and condos have been overpaying for years. What we’re trying to do is equalize the disparity,” he said. “You’re lucky we don’t ask for a refund.”