Governor adds co-ops to tax plan

Real Estate Weekly, Feb 19, 1997 by Lois Weiss

The Governor is making the changes through permitted 30-day amendments to the School Tax Relief, or STAR program, as pert of other changes to his executive budget bill. The Governor is including an additional $8 million in the 97-98 school year targeted at senior citizen residents of cooperatives and is changing language that specifically referred to "homes."

Non-senior property taxpayers would receive the STAR exemption benefits beginning the following school year, 1998-99.

"Co-op apartment owners burdened by high property taxes through their building maintenance fees can now be assured that they will benefit from my STAR plan to provide homeowners unprecedented savings from school taxes," the Governor said in a statement. The Legislature, however, still has to approve the budget.

There are about 260,000 individual cooperative apartments in the state, including 212,000 in New York City. About 60,000 Mitchell-Lama coop units would benefit from the program.

Not all the cooperative owners will benefit, however, as the rules for cooperatives will be similar to the primary residence requirement for homeowners and will call for benefits to go only to resident tenant - stockholders.

Initially, cooperative units were excluded as the Bureau of Real Property Services, that was developing STAR, did not have the data available to credit cooperative unit owners, who pay property taxes through maintenance charges. Condo unit owners were included because they already pay taxes based on a separate tax lot.

According to Joe Gerberg, associate attorney New York State Office of Real Property Services, that office is now developing a form that home and unit owners will file with the appropriate assessor's office, which in New York City would be with the Dept. of Finance.

"No one will get it automatically," said Gerberg. "Condos have to apply. There is no provision for sponsors and the unit must be the primary residence of the occupant and not rented. The city will administer the program, he said.

When asked, Gerberg admitted that Albany had not considered the logistics of entering data for apartment complexes with hundreds or thousands of apartments and had not considered using electronic filings.

To ease the government's administrative burden in New York City, property management firms are compiling the data for the city's cooperative and condominium tax relief program and filing it electronically with the Dept. of Finance.

But the state's rules will not parallel the city's program that allows those living in the building to own up to three units in order to create parity with those owning one- to three-family homes.

Under the state plan, cooperators who combined even more than three units would be eligible if they are actually occupied by the unit owner as their primary residence. But others that hold investment units, even while living in the building, would not get a cut on the investment units.

Under the city program, unit owners do not have to declare the unit a primary residence, so long as they do not rent it out.

Since the state rules do not take these issues into account, property managers and boards of co-ops and condos will have yet another level of accounting issues to cope with as they prepare maintenance bills for individual units.

Those units ineligible for both the city and state program include units owned by cooperative corporations, sponsor-owned units and those owned by former resident shareholders that are now rented.

Paul R. Gottsegen, CPM, president and director of management of the luxury management firm Soren Management, said "If it costs too much administratively to file and the tenant shareholder got a six cent rebate, it wouldn't be worth it. But if the benefits outweigh the costs, it will be worth it to do the paperwork."

Another luxury manager, Michael Jay Wolfe, president of Midboro Management, said "Managing agents would like to become involved in the process and can add valuable input." Wolfe, who is on the board of directors of the Association of Cooperatives and Condominium Managers (ACCM), said they'd like to be a part of the design of the forms. He is also concerned this new proposal not put the onus on the boards to qualify the shareholders, but instead be placed on the unit owners. "We're involved with the city's refund now," Wolf added, hoping for some consensus from the government officials. "Please don't slam us with a million different forms and qualifications. They are already confusing."

Cooperative and condominium representatives also applauded the spirit of the program, but were concerned New York is still getting treated unfairly. Mary Ann Rothman, executive director of the Council of New York Cooperatives, said "We think it's only right that if there is a benefit for homeowners, co-ops should be included. This certainly improves the situation because the co-ops are not left out in the cold, but it doesn't change the fact that New York City, which educates 37 percent of the State's students, will still only get 12 percent of the abatement allocated for the entire State. So we are still looking at inequity to the city."