Agreed, the abatement is a tax equalizer for co-op’s which as it stands are set to expire at year end. Our co-op just starting assessing it on a per share basis as one of several assessments, and yes the sponsor pays out of pocket, while shareholders pay only if the abatement doesn’t cover. This feeds directly into our capital reserve fund – which is separate from our operating funds, and reserve fund.
We do this for many reasons, but chief among them is our building needs the funds severely as we have serious local law 11, elevator, and plumbing issues. – This is what happens when your sponsor is the managing agent and still owns 60% of the building 30 years after conversion (thats a seperate conversation).
As far as differences with the city --- it happens frequently --- so nobody should rush to judgment. Most of the tax abatement information is online at www.nyc.gov in the finance section.
Note that I have seen the city take upwards of 18months to adjust their roles from sponsor to owner which has an impact to the buildings entire tax abatement amount.
A second key point is how the abatement works which is not ideal – the city credits the co-op by reducing the tax liability – so rather than cutting the shareholders checks, they adjust what is owed, which then allows the co-op to pay a reduce amount – with the difference going to shareholders.
Here is another odd twist – many – not all buildings only count their reduced tax bill as the total liability/expense for budgeting which is not correct – as they are still paying the un adjusted total, just in two ways – city as tax, shareholders as abatement funding. --- This can lead to cash shortages, delayed abatement credits, and many of shareholders concerns.
One last note, NYC’s fiscal year starts July 1, it doesn’t sink with the calendar year which is used for many co-ops reporting, please keep that in mind with differences, disputes, etc.
I hope this helps.