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Dinkins: '4-year tax freeze, less construction.' (New York Mayor David Dinkins)

Dinkins: |4-year tax freeze, less construction'

A call for a four-years property tax freeze by the real estate industry has been answered by Mayor David N. Dinkins who added the measure to his budget released last week. Cuts in capital spending, however, sent a mixed message to the construction segment.

Eli Attie, a spokesperson for the mayor, said the Mayor will accelerate a couple of hundred thousand dollars in construction and design projects to help the industry. Although there are proposed cuts in the capital budget, he said, nothing will be cut for about 18 months at which time the Mayor is hoping to see some economic and public works programs from the Federal government. Attie said that some proposals are already being introduced in Washington "on both sides of the house."

The mayor announced a $3.5 billion reduction in the city's building plan, reducing the city's 10-year capital construction budget to $8.5 billion from $12 billion. Last month the mayor pledged to spend $125 million in construction projects to stimulate the failing economy.

"The real estate community has got to be pleased to see the kind of downsizing and meaningful structural reform we are seeing in this budget," he added.

The mayor also called for the elimination of 20,000 municipal job.

Dean Mead, senior research associate for the Citizens Budget Commission expressed concern at a Property Tax seminar last week [see story p.] that the four-year freeze would affect the outcome of real property tax reform.

Attie said there is a recognition within the administration that property tax reform is overdue in this city and the Mayor does not have any intention of "backing off" the freeze. "The mayor has talked about property tax reform in the past,n he said. "We have this property tax freeze and we're committed to that." The freeze, which is on the average rate, could go forward, sources said, without impeding the reform of the distribution of the tax burden.

City Council speaker Peter F. Vallone and Finance Chair Herb Berman released a joint statement supporting the freeze and the Mayor's efforts to reduce the size and cost of government. They were, however, concerned with the level of cuts proposed in the capital budget. "We should be looking at other ways to reduce debt service, to mitigate the cuts to our capital commitments," the statement reads.

Steven Spinola, president of the Real Estate Board of New York, said they were encouraged by this four-year freeze. "It should send out the news that tenants in office buildings will have some certainty about taxes," he said. He said the city has come a long way towards living within its means but there is still a concern over the total downsizing so "we don't have to continuously go through this."

Louis J. Coletti, president of the New York Building Congress, had expressed dismay when the capital cuts were first revealed and now declined comment.

Spinola said the cuts in capital spending are going to hurt the economy but, because they are scheduled for the latter years, he believes the administration was "pushed" by budget watchdogs and is hoping to avoid them by a bailout from the Federal government. "We should all join forces [to push Washington]," he said, "instead of fighting among ourselves."

The Safe Cities/Safe Streets tax will increase by 2 cents in 1994 as an addition to the "frozen" property tax. This was budgeted previously and Spinola said as long as we see progress on that front, "no one will complain."
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Publication:Real Estate Weekly
Date:Feb 5, 1992
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