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Abatement/AssessmentApr 06, 2013

Stephanie - I have to disagree with your characterization of boards as being "bad" because they vote for an assessment which approximates the R/E tax and STAR abatements. I think most boards use the abasement/assessment transaction as a "painless" way of keeping monthly maintenance lower.

Most well-managed co-ops strive for a break-even budget where income is equal to or slightly greater than expenses. Without the assessment, monthly maintenance would have to be higher every month by the proportional assessment amount. The position these boards take is that it is better to keep maintenance lower each month than to have shareholders pay a higher amount and have only one month (when the abatements are distributed) with little or no maintenance payment. The assessment goes into either the operating or capital reserve accounts, both of which have very definite "real" purposes.

As has been stated here before, board members are also shareholders, and anything which affects maintenance levels affects them as well. It is definitely not a capricious decision.

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all coops should use assessments for capitol projects only to offset gains taxes - MTD Apr 06, 2013

If you are stuffing the money into the operating budget, you are not managing your building well. The assessment should be used for capitol projects only.

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Assessment/abatement - Steven Rosenstein Apr 06, 2013

MTD - Real Estate taxes are budgeted and paid for out of the operating account, not the capital reserve. Boards have a choice of setting their monthly maintenance to X to cover the full amount of annual R/E tax due and not voting an assessment, or they can set it to X minus 1/12th of the average abatement and then approve an assessment to cover the decrease in revenue. The net result to the shareholders is negligible over the course of 12 months. It's been my experience that almost all shareholders would rather pay less maintenance per month than reap a windfall over a short one or two month period.

But I am curious. Why do you believe the scheme I described is indicative of a badly managed building, and why do you feel that an assessment to offset the real estate tax abatement should only be used for capital projects and not factored into the operating budget?

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Abatement/Assessment - REP Apr 07, 2013

We started to assess shareholders for the approximate amount of the real estate tax rebate (NOT STAR) when increasing the energy budget was not covering the escalating costs. We have continued to have an "operating assessment" each year that coincides with the rebate. It is a painless (for most) way to get the funds for unplanned expenditures (a major plumbing repair?) and planned (decor) that improve the building and keep us form having to raise maintenance.

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