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Steve Spinola: 'time to lead the leaders.' (Tax Front)

TAX FRONT

Steve Spinola: |Time to lead the leaders'

With Dinkins' proposed budget faces vote by the City Council at the end of this month, the "T-word" was the obvious and a most urgent subject of the Real Estate Board of New York's luncheon last week.

The city continues to increase taxes as is if the real estate business is thriving, said moderator Jeffrey Gural, president of Newmark & Company Real Estate and co-chair of the Property Tax Fairness Coalition.

Through various proposals property owners are facing $800 million in new and higher taxes.

Citing that New York City has taxed Class IV commercial property $2.3 billion since 1987, Gural declared to the gathering at the New York Hilton: "The City has reduced the value of our property by $23 billion with its taxing policies...If we sit on the sideline, we'll be like a utility. It may be better to be a utility."

All classes of property owner in the city will feel the crunch of new taxes in the budget, Gural said. Commercial owners, for example, are looking at an increase of roughly $1.25 and up per square foot.

Tax Commission hearings, at which owners may argue the assessments on which their tax is based, Gural said, are too speedy and arbitrary. The city puts more time and effort, he said, into pursuing a sanitation violation. And taking a case to court is nearly impossible or not cost effective.

"We can't get a court hearing which is really what's needed," Gural said.

Speaking on fighting assessments was Joel R. Marcus, a partner with Pottish & Freyberg, who last year won the first assessment case against the city to go to court in 10 years. Marcus representing the ownership of 1 New York Plaza, which the court awarded a reduction over six years -- 84/85 through 89/90 -- totalling $369 million. He is currently fighting a similar case for the owners of the Shoreham Nuclear Power Plant in Long Island.

In the world of real estate taxes, Marcus said, there are some "tough realities" but some good news also. After four years of record assessment rolls, the |91 roll represented a 7 percent reduction in actual assessments. Billables, however, increased 3 to 5 percent when figuring in transitional increases and not counting the tax rate.

Rent levels are dropping by a third or more and that is not reflected in the Income and Expense statements.

The good news? "Taxpayers are fighting back and the courts are listening."

Before his case could go to trial, Marcus said, the city had to agree to an equalization ratio to be used only for this case.

For the years 1984/85 to 1989/90 the building's assessed value had increased from $145 million to $170 million. After the-two week trial, Judge Stanley Parness ordered $369 million in reductions over the six years.

"The trial is not the right way to go for every case but it is the right way to go for the right case."

Marcus said his case hinged on the existence of asbestos in the building -- the actual condition of the property. There was less emphasis on what was spent and what was made. Marcus showed that the market value of the building, if the owners wanted to sell, was greatly affected.

The judge found that if you cannot make a return that keeps up with inflation, than the city is confiscating capital.??

To help him build his case, Marcus said he called on some members of the real estate industry to gather data. "You just have to do your homework and work together."

Fighting Back

While property owners are hurting, said REBNY President Steve Spinola, the city continues to expect more revenue from the real estate industry.

"Its politics as usual, government as usual."

While demanding more taxes, the mayor, he said, has replaced every one of the 20,000 jobs lost through attrition since the Koch administration and added 5,300 more.

"Don't believe what you hear on T.V. and the radio," pleaded Spinola. "The city budget is going up from $28 billion to $29 billion."

The city has ignored attrition, he said, and responded with higher property taxes to the lack of income and sales in the real estate industry.

Spinola said the Commissioner of Finance was wrong when she said "The real estate tax has the least negative impact in terms of economic development."

"Quality of life", Spinola said, is used as an excuse by city government when explaining the exit of companies from the city. The real reason, he said, is cost.

"We are 18 months into an administration that has not talked about economic development at all," he said.

Today, Spinola said, $4 billion, is paid by commercial property owners and another $2 billion by residential. "We have a right to speak out and say you can't do this."

The pending tax burden will, Spinola said, will strangle more than the property owner. Commercial tenants will have to pay $26,000 more in businesses taxes, which, he said, may mean one employee's salary. In fact, according to a survey done by the city's comptroller's office, Dinkins tax package will cost the city 109,000 jobs.

The impact on co-op owner and homeowners will be seen, he said, in a cutback service consumption, such as eating in restaurants. In fact, he said, 37 percent of the 109,000 jobs will come out of the service sector.

"We need not only a |georgeous mosaic' in this city but we need a mosaic in terms of economic balance," Spinola said.

Spinola spoke of the efforts of Taxpayers for an Affordable New York. The "grass roots" organization has raised more than $1 million and has done a direct mailing to more than 800,000. More than 100,000 post cards with the group's slogan "We won't take hike" have been returned to both the mayor's office and the Speaker of the City Council Peter Vallone.

REBNY's president urged support for the group's next event -- a phone rally on June 12. Realtors are urged to call the mayor's office (212)788-3000 and the City Council (212)566-5068 to voice their discontent with the proposed hikes.

"If we have to lead the leaders, let's take up that lead," concluded Spinola.

"We're not moving, we're not taking a hike...many of us can't do that because our roots are in the foundation built in this city in concrete..."
COPYRIGHT 1991 Hagedorn Publication
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Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
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Author:Fitzgerald, Therese
Publication:Real Estate Weekly
Date:Jun 12, 1991
Words:1078
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