Prevailing-Wage Affidavits Due for Co-op and Condo Tax Abatements

Under a new law, co-ops and condos with non-unionized staffs must prove that they pay the prevailing wage in order to qualify for the cherished co-op and condo tax abatement. The abatement is available only to people who use their apartments as their primary residence.

An important deadline is looming. By Feb. 15, eligible co-ops and condos must file a notarized affidavit asserting that they are paying their staffs the prevailing wage, which is set each year by the city Comptroller. (Instructions for submitting the affidavit are available here. A list of properties that must file an affidavit is available here.)

Co-ops and condos with an average per-unit assessed value of $60,000 or less are exempt from the prevailing-wage requirement. An affidavit must be filed by properties with 30 or more dwelling units and an average per-unit assessed value of more than $60,000, and by properties with fewer than 30 dwelling units and an average per-unit assessed value of more than $100,000. (Assessed value is part of the equation used to compute a property tax bill; it is less than the market value.)

For co-op and condo boards, the decision on whether to pay prevailing wages or forego the tax abatement will be based on a mix of money and emotion.

“It ebbs and flows with each building,” says Drew Donovan, a property manager at Choice New York. “If the building is mostly owner-occupied, people tend to think less strictly in financial terms, maybe in more personal terms. If the building is investor-owned, they tend to be more worried about the bottom line.”

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Donovan adds that the analysis of prevailing wages is “incredibly involved” because in addition to pay level it must take into account each employee’s position, tenure in the building, benefits and more. He notes that a union doorman’s wages and benefits total about $40 an hour, and paying prevailing wages in a fully staffed, non-union building could increase payroll by 50% or more. Service employees include doormen, porters, handymen, janitors, security guards and others who work at least eight hours a week in the building. Co-op and condo boards need to break out their calculators.

The tax abatement ranges from 17.5% for buildings with an average per-unit assessed value greater than $60,000 up to 28.1% for buildings with an average per-unit assessed value of $50,000 or less.

All apartments are not eligible for the abatement. Units do not qualify if they are  in Mitchell-Lama or HDFC buildings, owned by a limited liability company, held by sponsors or if they are already receiving tax exemptions or abatements, including J-51, 420c, 421a, 421b or 421g. Units owned by a trust are eligible only if the unit is the primary residence of all beneficiaries of the trust. Qualifying shareholders and unit-owners cannot own more than three units in the development, and one of the units must be the primary residence.

Accuracy is important. The affidavits are public record and can be introduced before a court of law or administrative tribunal.