Q&A: Taxing Cells, A Tankless Task, For Whom the Bill Tolls

Taxing Cells

Do we have to report cell-phone antennas on our roof as income? In all the years we’ve had the cell phone in place, we never have, and nothing has happened.

Don’t get complacent. Co-op and condo buildings that aren’t reporting income from the cell-phone antennas on their property may be facing increased scrutiny, now that a new report says New York City has missed an estimated $24 million in property taxes. The June 27 report, a joint audit by City Comptroller John C. Liu and State Comptroller Thomas P. DiNapoli, explains that owners of large apartment buildings must report income from cell antennas to the Department of Finance (DOF). This income increases the assessed value of the property, which helps determine property taxes.

The report said the DOF has failed to collect an estimated $24 million in property taxes because it didn’t use all available resources to identify buildings that don’t report income from cell antennas. The DOF admits it fell short of collecting all the tax it should have, but put the figure at just $10.5 million, not $24 million. The report counters that this was only because the DOF counted just 843 properties that didn’t report income, whereas the comptrollers said they identified about twice that number: 1,711.

The report also suggests that the DOF “ascribe cell-site income when it identifies and verifies additional properties that are cell sites and were not reported.” Translation: make up an income figure out of thin air when you think you’ve found some property that didn’t report.

How does the DOF derive those figures? According to the report, the department “adds a preset amount to the property’s income and adjusts the assessed value.” For properties north of 125th Street in Manhattan and in the outer boroughs, the DOF assumes $2,000 a month per cell carrier that leases space. South of 125th Street, it assumes $4,000 per month.

That’s right: from one side of the street to the other, it doubles – and apparently a building in a low-income area of the Bronx or in the hinterlands of Staten Island earns as much from leasing cell-tower space as one in a wealthy Brooklyn neighborhood. Really?

What should a condo or co-op board do? Well, report that income, obviously, minus whatever wear-and-tear or other deductions your accountant may find. And secondly, keep an eye out to make sure the DOF isn’t ascribing cell-antenna income to you if you don’t have any cell antennas, or, if you do, that the department isn’t overestimating your income from it. – Frank Lovece

A Tankless Task

We are considering a tankless water heater for our 22-unit building. We’ve heard reports that “tankless water heaters” provide energy savings. What’s the story?

Tankless water heaters sound great. Water is heated, either with a gas burner or electric element, and is delivered as a constant supply. Heat loss is effectively avoided because of the instantaneous nature of the system. But here comes problem No. 1: the flow rate of hot water can decrease as demand increases.

Indeed, tankless water heaters – which are being marketed to smaller co-ops and condos in addition to their primary user, owners of single-family homes – seem at first glance to be a big plus: they are, on average 24 to 34 percent more efficient than traditional heaters. They require less energy and last twice as long as their more conventional counterparts. They can also run on electricity, gas, propane, or solar power.

But professionals like engineer Eric Cowley, principal in Cowley Engineering, say that despite those pluses, the system is impractical for larger buildings. Since the flow rate is limited, a tankless system will not be able to keep up with hot water demands. “What happens when a great number of people are taking a shower?” asks Nick Orozco, a superintendent on the Upper West Side. “The system can’t handle it.”

–Tom Soter

For Whom the Bill Tolls

We are thinking of entering into an agreement with a cell-phone provider to lease them our roof space. But we heard something about a problem one building had with AT&T. Can you fill us in?

In October 1992, AT&T entered into a lease with The Leonori – a landmarked, 13-story condo at 26 East 63rd Street/701 Madison Avenue in Manhattan, completed in 1902 under architects Buchman & Fox – to rent rooftop space for cell-phone towers. The towers, now operated by what a lawsuit describes as AT&T subsidiary New Cingular Wireless, became operational two years later. In March 2003, the lease was extended to 2018.

“This lease agreement required that AT&T establish a direct meter and account with Con Ed,” says Mark Freyberg, of The Freyberg Law Group, the board’s attorney. “We gave them permission, while they were establishing their direct account, to submeter from us temporarily. And we, of course, would bill them and they’d reimburse us.”

But, Freyberg says, “they never established their direct account.” The Leonori never discovered it until it had an energy audit conducted last summer “and through this process it was determined that Defendant has failed to arrange for its own metered electrical supply to measure its electrical consumption,” the lawsuit reads — and so until last October, the building continued to pay the wireless company’s electric bill to the tune of what the lawsuit estimates as “in excess of the sum of $750,000, with interest thereon.”

AT&T, however, interprets the lease differently. A spokesperson says: “Under the terms of the lease, Leonori approved a submeter and was required to read it and bill us for electricity used. For reasons unknown to us, they never sent us a bill until last year. We’ve been paying the bills since then, and for months now have been trying to resolve their claim for electricity used, but not billed, before then.”

The moral of the story: look at your monthly bills. – FL