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2nd July
2004

First Published in The New York Sun, July 2, 2004

By Andrew Wolf

Fernando Ferrer, the former Bronx borough president, recently weighed in on Mayor Bloomberg’s now-stalled $400 homeowner tax rebate. He is against the program. Not because it is a gimmick and not because it isn’t enough, or it isn’t equitable. If elected, Mr. Ferrer would like to see his government flush with taxpayer money, so he can figure out new ways to spend more. 

    Council Speaker Miller had a better idea: rolling back last year’s ill-advised property tax increase by a flat percentage. But Mr. Miller failed to successfully push his perfectly reasonable alternative. 

    I also oppose the $400 rebate. Putting $400 checks in the hands of homeowners is a great political ploy for Mr. Bloomberg’s re-election, but hardly advances the city’s economic agenda. A disciplined program to roll back the 18.5% tax increase — all of it, in the shortest possible time, makes much more sense. 

    It is certainly shrewd of Mr. Bloomberg to recognize the voting power of the homeowners, a majority of whom live in the outer boroughs. This was the core of the vote that put former Mayor Giuliani in City Hall. 

    But there is one group of homeowners who prospered during the tenure of Mr. Giuliani and Peter Vallone Sr., the former council speaker, who should not be so quick to celebrate when the rebate checks arrive. 

    These are the owners of Gotham’s co-operative apartments and condominiums.The actions of the Bloomberg administration — with the connivance or ignorance of Mr. Miller and his hapless City Council — have undone a decade of progress in equalizing tax rates between single-family homes and co-ops. 

    These rates are highly discriminatory against owners of co-ops and condos, a large and growing sector. As a proportion of market value, coop owners typically pay between two and five times as much in property taxes than owners of single- or two-family homes of equal value. 

    This is an outgrowth of a tax system developed long before the co-op conversion boom that began in the 1970s. Taxes on high-rise buildings were historically set higher, favoring homeowners with lots of votes against landlords with very few. 

    During the 1990s, Messrs. Vallone and Giuliani championed the cause of tax equity between co-op owners and one and two-family homeowners. A number of stop-gap measures were instituted, but a promised permanent fix — which probably would have entailed the messy political business of re-assessing the city’s notoriously under-assessed private homes — never materialized. 

    When Mr. Bloomberg took office, he inherited this unresolved situation and a tough fiscal climate following September 11 that made it difficult to address. He exacerbated the problem by widening the spread with his across-theboard 18.5% property tax hike. But by rolling back the increase with a flat $400 rebate, rather than an across-the-board percentage reduction, the gap will widen still further. 

    One of the problems that co-op owners face — which makes them easy for the mayor and council to ignore — is that taxes are included in monthly maintenance bills and disclosed only once a year, so that co-operators will know how much they can deduct on their federal income taxes. At that point, higher is better, since it means a bigger deduction when itemizing. 

    Even the $400 rebate won’t go directly to cooperators. It will go in bulk to the co-op management, and can be distributed — or retained — as the co-op board sees fit. 

    Co-op owners can help themselves by quantifying the portion of maintenance charges paid for property taxes on monthly statements. That may make the mayor and council a bit more sensitive when it comes time to hike (or cut) taxes. 

    The Council of New York Cooperatives and Condominiums and its regional counterparts need to do a better job of informing the shareholders in their member buildings of the intricacies of the tax system. 

    Although I opposed the initial property tax increase as destructive to the city’s economy, anytime we raise or lower taxes, the opportunity exists to move the system toward tax equity for all New York property owners. 

    The rebate, as proposed by Mr. Bloomberg and ratified by the council, is just another blown chance. 

    The Legislature, in delaying approval of the city tax plan, has given us yet a third opportunity to inject fairness into the formula. 

    Unfortunately, the one missing piece is leadership.These are the times when I miss Mr.Vallone.

© 2004 The New York Sun, One, SL, LLC. All rights reserved.

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