Co-op/condo reps find concerned City Council

Real Estate Weekly, May 19, 1993 by Therese Fitzgerald

What could have been a finger-pointing shouting match turned out to be a meeting of consensus when representatives of the cooperative and condominimum community gathered with members of the City Council.

From inequitable taxes to redlining by banks to skyrocketing water costs, Council Speaker Peter Vailone, Finance Committee Head Hank Berman, and Housing Committee Head Archie Spigner each stood before a gathering of the Apartment Owners Association (AOA) and declared he understands their special' challenges and frustrations. Held at Harry's in the City Hall district, the meeting was AOA's Third Annual Legislative Breakfast.

"Forty-one years ago, I would have been astonished at a meeting such as this -- a meeting at which the members of the City Council of the City of New York are telling us what the problems are," said Frank E. Karelsen, Esq., of Kurzrnan, Karelsen & Frank, a board member of AOA, which represents the owners and managers of some 10,000 cooperative and condominium units in member buildings.

Berman said they are meeting with the borough presidents and bankers to stop the so-called 'redlining' by banks that, in many cases, refuse to make underlying mortgage or individual co-ops loans in buildings that do not meet a stringent and sometimes inconsistent units-sold level.

Later, AOA President Irwin Gumley of Gumley-Haft cautioned that not all bankers are stonewalling co-ops. Some, he said, see themselves as making an investment in the city when they make a loan on these units.

"There are banks that understand the stability of this market," he said.

In addition, Berman said, the Council knows the city must get its "own house in order" by reducing the numbers it employs.

The Council, according to Spigner, has shown its sensitivity and concern for "your issues" in its support of J-51 legislation. The city's legislative body, he said, also takes credit for the two-year cap on the water rate.

A Class I owner, Spigner said he and Council realize that the other property classes pay the bulk of the taxes in the city.

"If we take it from you, we have to find somewhere else to displace the situation [somewhere else]," he said.

AOA members commended the Council for its assistance in securing, on the state level, a reduction in the cap on tax increases for Class II from 5 percent to 2 percent.

But, while they have made real progress with the Council concerning property tax inequities, AOA Board Member Richard Siegler, Esq., of Strook & Strook & Lavan said, co-ops have problems with other taxes. There is still no decision, he said, concerning a federal tax -- IRS 277. This provi6omnwould exempt from federal income tax the garage rents and some City Council Speaker Peter Vailone addressed the attendees of the Apartment Owners Association Third Annual Legislative Breakfast. other commercial incomes the co-ops receives. Meanwhile, he said, federal, state, and city governments "try to piggyback on the uncertainty and tax cooperatives."