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Budget: thumbs up for cap spending, down for taxes.

The City of New York's proposed $29.5 billion budget and its 10-year capital strategy program of $47.1 billion were greeted for the most part in a warm fashion from the real estate industry. Criticism was reserved primarily for not downsizing enough and for projections of a $.5 billion increase in collections of real estate taxes over the next four years even within the constraints of a freeze on the average tax rate.

Dan Margulies, executive director of the Community Housing Improvement Program (CHIP), said his big concern is if the property tax freeze is any more real in this budget.

"They are still freezing the rate and allowing assessments to catch up to the 1987 levels," he noted. "A rate freeze is simply a charade and the levy is still going up.

"A half billion dollar increase over four years is not a freeze by anyone's definition and is based on assessments that should be below where they were five years ago in real value," Margulies added.

Margulies said the poorest neighborhoods with the most fragile housing have always tended to be over-assessed and will bear the brunt of that $543 million dollars and they are the same buildings that will be experiencing double-digit water bill increases.

"If you look at assessment rationally, every building with a meter should have its assessment reduced," he added.

"If the rest of the budget is built on similar falsehoods we're in real trouble," Margulies added. "There are increases for the Mayor's office and [City Council President] Andy Stein's office that seem disproportionate to what is happening."

John J. Gilbert III, president of the Rent Stabilization Association (RSA), said the real issue and real fear is that the Mayor Dinkins will not get his taxes in Albany and will come back and put more pressure on the City Council to increase the tax rates. "We shouldn't be lulled into thinking an increase in taxes is not real and could become necessary," he said.

Steven Spinola, president of the Real Estate Board of New York said, "The Mayor deserves more credit than he's gotten."

When it appeared six months ago the city was not getting any Federal money and would not be able to borrow money, Spinola said, the city decided to make cuts and got lucky with large Wall Street bonuses. More income tax revenues were received due in part to those bonuses.

"We hope this doesn't stop the restructuring or further downsizing and it appears they are slowing this down which is troublesome," Spinola noted, "but the city was really holding the line on spending to come up with this kind of surplus."

While several agencies affecting property owners will have staff cuts over the next four years, Spinola said no one should blame budget cuts for a slowdown in services. "The issue is not to cut services but how to provide services with less expense," he explained, adding that every company has done that including the Real Estate Board and other real estate firms.

Margulies believes the city needs to have more structural reform and that other programs should be completely revised. "You can't look at a body count at a particular agency and say they can't do their job because they couldn't do it before, and they might or might not do it now," he said.

Downsizing of government is a positive thing, Gilbert agreed. "It's not a negative, but we have to make sure we do it efficiently enough not to stop government from working."

"We're still angry over the misallocation of the Safe Cities Safe Streets money," Spinola noted. "It is still being misused."

City Council Speaker Peter F. Vallone and Finance Chair Herbert E. Berman released a joint statement saying they would be "diligent" in their efforts to produce a finance budget reflecting their concerns about smaller and more efficient government while ensuring that essential services are maintained.

Capital Program

There is some good news, however, in the 10-year capital budget proposals, Spinola added. "There is a recognition that the city can help its own economy by doing whatever it can to keep some capital projects going without jeopardizing the bond ratings of the city."

Lynda Tepperman, vice president of the George A. Fuller Construction Company, which just finished the Manhattan Municipal Building, said "No matter what he does for the city it's good for construction. He's got to get the construction industry going. It's too big an industry for people to be walking around unemployed. It's a win situation."

Call For Sale Of Tax Liens

Meanwhile, Council Minority Leader Alfred C. Cerullo III, a Republican from Staten Island, criticized the Mayor's $140 million program of new taxes, particularly commuter taxes, and is calling for the New York State legislature to authorize the city to begin a one-year pilot program to sell tax liens -- excluding those on residences -- as proposed by the Collect Committee headed by developer Stephan F. Anfang.

Anfang said he believes the program should be piloted for at least two years to see if it could work. He does not think the city should invest further staffing for such a program but said it should be run by a private company, such as the Collect Committee. "Now that I think about it I could do it," Anfang said. "It's not like I'm so busy with real estate."
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Title Annotation:capital spending
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:May 6, 1992
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