Between the bricks

Real Estate Weekly, August 2, 1995 by Lois Weiss

Cooperative housing's problems with the IRS are getting a boost from Sen. Daniel Patrick Moynihan and Rep. Charles Rangel. The two co-signed a letter late last month to the IRS asking that the tax issues be resolved soon, especially in light of the recent court decision in favor of the Trump Village III Mitchell-Lama, in which a low-equity building's interest income was ruled to be membership income for tax purposes. The IRS is seeking leave to appeal that ruling.

HUD is undergoing a cost-cutting and reengineering process, and many employees have been eliminated by Congressional funding cuts. A bill signed by President Clinton last week de-funded HUD by some $2.58 billion for various housing programs, along with another $2 billion lost for Section 8 alone. The effects on the building industry will be swift and debilitating to many owners and developers.

The city's new industrial and commercial incentive plan (ICIP), which includes the new "smart building" option, is among the backlog of passed bills waiting for the Governor to sign.

Comptroller Alan Hevesi's report reveals the city expects to get $32 million for the Hyatt. Other budget documents had described the amount at $65 million. Sources say the Hyatt deal is close to completion and the lawyers are amending away.

If you still did not receive a water frontage bill, call the help line at (718) 595-7000 and hang in there. The bill was due July 31 and the customer service reps can tell you where the bill was actually sent. If it was sent to the wrong place, insist on getting a new bill to the right address and ask to have the late payment penalties waived. The new computer program "defaulted" many bills to the wrong address, sometimes to old offices of the owner or former owner.

The reported sales price for 800 Second Avenue is $44.778 million.

The Westchester Rent Guidelines Board reached a decision to allow increases for leases going into effect October 1, 1995 The board allowed a 2 percent increase on a one year lease and a 3 percent increase on a two-year lease where the owner supplies heat and hot water. Where tenants pay for heat and hot water it voted to provide 1.6 percent increases on one-year leases and a 2.4 percent on two-year leases. The vacancy allowance is the same as its been over the past several years and is exactly what New York City owners desire: If there is a comparable apartment in the building the rent can be raised to the rent of that apartment when a vacancy occurs. The issue of tenant harassment to obtain these vacant apartments is a non-issue end was not raised by any tenants in their testimony.

The RTC has scheduled its eighth and final national loan auction for December 12-14 in Kansas City, Missouri, a week before the agency is set to sunset out of existence. It is therefore expected that an eclectic group of over 700 loans will be offered with a value of $660 million to wrap up its Congressional mandate. First Financial Network has teen selected as the auctioneer.

The RTC's 7th loan auction in May brought in $230 million for the taxpayers from about 7,500 loans. Performing loans sold at an average of 78 percent of principal balance and non-performing loans sold for 55 percent. Meanwhile, also on the RTC s agenda is the sale of the 155-acre Fox Run Country Club in Muttontown, Long Island sometime this Fall through Terra Commercial. The property has an 18-hole golf course, manor house, pool and tennis courts and can be sub divided into thee-acre parcels.