Property tax agreement near.

If a proposed condominium and cooperative tax relief program is passed in Albany and instituted, as is expected, property owners, boards of directors and building managers will have some considerable paperwork to face, but the rewards in the future are expected to be worth it.

The long-awaited proposal to equalize taxes paid by Class 1 one- to three-family homeowners and cooperative and condominium dwellers will grant relief totalling $17 million in fiscal year 1996, $70 million in 1997 and $120 million in fiscal year 1998.

Recognizing that Class One owners can have up to three units in their buildings, City Council Speaker Peter Vallone suggested using three units as a cut-off for these benefits in co-ops and condominiums. In order to be eligible under the proposal, non-sponsor owners can own up to three units in any such building.

According to a memo sent to City Council Members at the end of March, a filing will have to be made with the Department of Finance (DOF) by September 15, 1996 by the boards to claim the abatement for fiscal years 1996 and 1997.

As bills for 1996 have already been sent out, the Fiscal 1996 credit will be taken against the Fiscal 1997 tax bill, most likely beginning in January 1997.

Boards will have to provide DOF with information as to the number of units in the building, both sold and unsold, the names of apartment owners and other information.

Cooperative corporation sponsors who hold unsold shares will not be eligible.

As part of the legislation, condominium boards will be granted the ability to apply for these benefits on behalf of the unit owners.

While condominium owners will see the benefits on their personal bill, co-op boards will have to pass the benefits along to those eligible owners through reduced maintenance charges. Those that willfully fail to pass-along these benefits will be subject to fines up to $10,000per board member.

Paul R. Gottsegen, CPM, president of Soren Management, was concerned the new law would be contrary to Internal Revenue Regulation 216, which requires boards to treat all shareholders alike.

As the new law will compel the boards to parcel out the abatements to those who qualify, the law is expected to comply with this IRS regulation, city officials said.

Mary Ann Rothman, executive director of the Council of New York Cooperatives, which has fought long and hard for property tax relief, explained "Since this is a rebate from the city and the law will command that the boards parcel it out, we don't see this as a problem."

The city also recently passed the Senior Citizen Homeowner Exemption program (SCHE) that exempts older co-op shareholders with less income from certain property taxation.

Martin Karp, chairman of the Action Committee for Reasonable Real Property Taxes, which has been actively lobbying for a fairer tax policy, said "We welcome and support the joint action of the mayor and City Council to deal with the acknowledged real estate tax inequity on co-ops and condos, especially in this period of fiscal austerity. We do believe this action will strengthen the co-op and condo sector to the benefit of the entire city."

"We recognize there will be some difficulties in administrating this program, but we believe the Department of Finance and the Council Finance division have taken major steps to simplify the program and will receive full support from the co-op and condominium community," Karp added.

The new abatements will be more generous to those buildings where the average assessed value per unit is less than or equal to $15,000. Those units will receive abatements totalling 4 percent, 16 percent and 25 percent of the tax bill in Fiscal Years 1996, 1997 and 1998, respectively.

For those buildings where the average value per unit is greater than $15,000 per residential unit, the benefits will be 2.75 percent, 10.75 percent and 17.50 percent of the tax bill in the above years, respectively.

By September 15, 1996, boards of both co-ops and condominiums will have to file the paperwork to obtain the benefits.

They will also have to realize that the value of certain benefits, such as veterans exemptions, SCHE and J-51 abatements, will have to be subtracted from the property tax bill before calculating the abatement.

Additionally, co-op and condo units with 421 exemptions, J-51 exemptions, or those that are totally exempt under the Private Housing Finance Law, such as Mitchell Lama Coops, Housing Development Fund Companies and Limited Equity Housing Corporations, are not eligible for the proposed relief unless participation in the other programs is waived by the board.

While the Council memo does not reflect the change, after an uproar of concern, those buildings that are receiving a partial abatement under those housing programs are expected to be able to receive an additional partial abatement under the new proposal.

"But it will not be considered to be double-dipping because the co-op or condo will be credited against the total taxes," explained Charles R. Rappaport, president of the Federation of New York Housing Cooperatives.

Another law to be submitted to the state legislature by the end of this calendar year is expected to further address the disparities in taxes between Class One and Class Two owner-occupied properties once the proposed three-year law expires.