Revenue-Raising in Inwood, Using the "Permanent Assessment" Model
31-37 Nagle Avenue
May 7, 2014 — Is the Nagle Apartments Corps.' financing scheme the new "go to" for co-ops and condos?
Several years ago, the 111-unit co-op in Manhattan's Inwood neighborhood — a three-building complex also known as NaBors Apartments for its locations on Nagle Avenue and Bogardus Place — voted down a proposed flip tax that would have raised much-needed funds for capital repairs. So the board began to charge shareholders a monthly assessment as a way of generating much-needed revenue. This decision stuck, and Nagle's assessment is now essentially permanent.
The first year it was 2.5 percent of the monthly maintenance and it rises incrementally each December. This year, it's at 7 percent, and may eventually reach 10 percent of maintenance.
"What is the alternative?" asks board president Stephen Vernon. "The alternative is to say, 'Dear shareholder, please provide $2,000 in the next two months.'"
How has it been received? Pretty well, reports Vernon. The board got far more complaints when it raised monthly maintenance this year — the first time it had done so in three years.
The seemingly permanent assessment is not set in stone, because the board votes on it each year.
For buyers and sellers, there might be potential tax benefits: If the assessment is earmarked for a specific capital project, it can reduce the capital gains tax when an owner sells her apartment. Of course, this depends on a profit being made, but in today's hot real estate market that prospect seems likely.
Adapted from "Home of the Permanent Assessment" by Ronda Kaysen (Habitat, May 2014).
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Photo courtesy Nabors Apartments