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Class II owners avert drastic tax rate hike.

The last minute cut in property tax rates for New York apartment owners brought a sigh of relief for the immediate victory but concern from owner organizations that the decline in property values has not kept taxes from rising.

Owners have been given a grace period for payment of taxes until July 17 for properties assesses above $40,000 and until July 31 for those assessed at $40,000 and under. Any late payments, however, will have interest payable calculated from July 1 at 18 percent.

The new official tax rates, have been set as follows: Class I, $10.888; Class II, $9.910; Class III $12.794; Class IV, $10.698. The decline in the Class III utility taxes from last year's tax rate of $13.083 will cause a drop in an average utility bill by $6 to consumers and $61 dollars for commercial owners.

John J. Gilbert III, president of the Rent Stabilization Association, said he was exhausted but thrilled after his days of Albany lobbying proved fruitful.

"It's a tremendous victory to property owners because we prevented 31 cents per hundred dollars from being instituted," he noted.

The 31 cent rise would have been the result of a 5 percent increase in the class share for Class II, dictated by the results of a State Board of Equalization and Assessment survey, which is a guide for class share adjustments.

The SBEA-using January 1989 values -- determined that the Class I and Class III shares should decrease while Class IV should have a small rise and Class II a rise of 8.2 percent, although state law already limited that to 5 percent.

Gilbert declared the SBEA survey to be "bogus," noting it would have cost Class II owners between %80 million and $100 million. "The entire industry should breathe a sigh of relief because we dodged a bullet that would have been a deadly bullet for many property owners," he said.

Dan Margulies, executive director of the Community Housing Improvement Program (CHIP), which represents apartment house owners, was delighted by the achievement in Albany, and tipped his hat to Gilbert. "There was a legislative victory and John, was the principle combatant and deserves credit," he said. "The immediate victory is avoiding the redistribution of class shares because we would have been hurt terribly otherwise."

But this should not be misinterepreted as a great tax year, Margulies added. "This is a year in which city spending increased dramatically - in a declining economy - and the impact of tax bill increases will further depress property values," he said.

Mary Ann Rothman, executive director of the Council of New York Cooperatives said they were grateful to the RSA and REBNY as well as the Manhattan delegation in the City Council. "They understood at once the unfairness of the SBEA share distribution and worked to set aside," she said. We are pleased that they averted further burdens on Class II properties which are acknowledged to be unfairly hit, and we hope that this very distressing detour in our struggle for fair, affordable and predictable property taxes will open the eyes of our elected officials to the need for more property tax reform."

With less than one hour to go before a midnight deadline, on the eve of the day New York City property taxes would normally be due, the New York State Senate passed the enabling legislation to reset the city's tax rates and keep these Class II apartment taxes from rising dramatically. The City Council, while enacting its tax fixing resolution, also passed a law allowing the grace period for tax payments.

Without the legislative approval, the City Council could only use the SBEA rates or face the possibility of lawsuits from the utility companies if they allowed bills to go out under last year's rates. While legislative insiders said the utilities were not too upset at the State Assembly's first proposal of limiting rises to 2.5 percent, they were very upset when the number went down to 2 percent, effectively raising their tax bite, while lowering Class II's.

Con Edison, which is paying $517 million less under the new rates, released a statement on the matter. "New York City had a real opportunity to correct some of the unfairness in the historic treatment of Class III by using the 1991 SBEA assessed valuations and reducing the property taxpayer in the city and state of New York. Instead, they chose the transfer part of the burden of Class II onto the bills of electric, gas and steam rate payers. We don't think that makes sense either from on economic development or fairness point of view Class II taxpayers will still be paying part of that in their bills. The unfortunate thing is that New York City residents with no real property, and many people on public assistance, for example, will also be paying part of Class II's taxes and that is regressive by any standard of taxation."

Gilbert described the scene in Albany as a Mexican standoff between Governor Mario N. Cuomo's desire for a Medicaid takeover and a jobs bill; Assembly Speaker Sol Weprin's concern over reappointment and Senate Majority Leader Ralph J. Marino's desire to pass a bonding act for Nassau and Suffolk Counties.

"This was classic, end of the session trading," Gilbert said. He, the Real Estate Board of New York's lobbyist, Lester Shulklapper, and RSA's Frank Ricci stayed at City Hall to see the rates were adopted by the City Council.

Manhattan State Senator Roy Goodman led the debate in the Senate. "Roy Goodman was very, very important in making this happen," Gilbert noted. A spokesperson for the senator said, "We got what we think was an excellent deal and we prevented a steep increase for 1.2 million people."

Irwin Gumley, president of Gumley-Haft, Inc. and the Apartment Owners Association, called a meeting of other co-op and condo organizations late last month to discuss tax policy strategies. Gumley said the stalemate never should have happened in the first place and called the compromise "a redress of only the latest unfairness toward multi-family housing, still a long way to go," he added. "We need equalized assessments with a reversal of the previous discrepancies."
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Title Annotation:New York, New York apartment owners granted cut in property tax rates
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Jul 8, 1992
Previous Article:William J. Waldron III.
Next Article:Incentive bills die in Albany.

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