http://www.nytimes.com/2013/10/08/nyregion/cuomos-office-is-said-to-rein-in-ethics-board-he-created.html?ref=nyregion

Mr. Capoccia is a big donor to the Real Estate Board of NY and is a large donor to our Gov. Our building has been screwed by this developer and we have gone through a couple of HPD Commissioners, so that's pretty useless. Public Advocates office doesn't advocate for anyone and Consumer Affairs is another big black hole. Elected officials have received a ton of money from this developer so as seen on previous threads this man seems to be untouchable. Would love some reporter to do a story on this.

You mean there is a good and a bad way to fire someone? End result is the same "your fired". Hard to get a board member to talk as they need to be of sound character.

Bob.

Well, a couple did respond, and I spoke as well to an attorney, a property manager, the head of the RAB and two people at the union, so with all them plus background research I think we'll have pretty informative piece. I've been writing about this stuff for a dozen years, and even I learned some things!

I tis extremely imprtant to keep a paper trail of a Super's infractions. For example, how much overtime is breing charges and how often? Is he/she getting "bribed" (in the form of "tips") by outside contractors, very often "side jobs" are a big problem - building supplies can be used and the jobs are often during salaried time. Also what is the true background of the employee - always check for references with several prior board members. Sometimes a terminaiton agreement included a good reference. Scary but true.

What was the cause of the leak? If the leak was caused by something that is the coop's responsibility, the coop should take care of the repair. If not, the owner of the apartment causing the leak is responsible. Whether the insurance co. for either party is contacted or not is up to the parties. If it is the coop's responsibility, you need to decide who will do the repair and when access is available. If it's not the coop's responsibility, we usually let the parties work it out.

the point is - why is the work being done on a Saturday potentally with an uninsured party?

In my opinion: if you're running an honest operation, why not? You might want to stop the recorder when it comes to sensitive information.

The lawyer says this is a big screw up.

In my building we started with the original lease and years later we had to pay more for my shares and got a revised lease. Is this what happened to you?

That is confusing. A coop may issue only one copy of a lease and it must be current. How was yours revised?? it cannot be revised without a 2/3 vote of shareholders.

If the majority of the Board voted on this, your biggest issue may not be the issue itself, it may be the majority of the board. Have you thought of getting a few good people together and taking over the Board? Proving theft seems like such a short-term solution, and if you want to own and live there, perhaps taking a long-term, big picture solution and converting the building into an honest, transparent, well-run property would be a better one? Just a thought.

You mentioned reapply for STAR primary residents in 2014---do you know when in 2014? Like, is it for the 2013 year? Or from say July 2014 on? Do you happen to know exactly when we have to reapply for it 2014? Would greatly appreciate, as it's impossible to contact the Dept. of Finance. Marie

According to the STAR registration website, "Registration started on August 19, 2013 and will continue through December 31, 2013." This is the filing period "to receive the exemption in 2014 and subsequent years."

nyc is mailing information on how to re-apply to all owners.

The management co. provides the change of ownership info to the city. The new owner must apply for the STAR credit directly with the city and it will take effect based on the schedule.

Everything that JG says is correct. However, it's still iffy as to how the city will compute abatements for a partial year of primary residence. I recently read (in Habitat, I believe) that the city plans to snapshot primary residence as of January 1 and use that as the basis for the whole year. This will save them some headaches while creating migraines for everyone else.

For starters: since the city's fiscal year is 7/1 to 6/30, does the residence status as of 1/1/14 apply to the 2013-14 tax year or 2014-15? (The former, I would expect, but it's not clear.) More importantly, what about a primary resident who replaces a non-primary resident on January 2 and loses a full year of the abatement? Or a non-primary resident who takes over on January 3 and receives a full-year abatement that other non-primary residents don't get? Yes, you can certainly argue that buyers and sellers need to work this out at closing, but the city needs to be clearer on what it's actually doing.

Just a few more of the many questions on a bad compromise by our elected officials on a long-standing abatement that was itself intended as a short-term compromise ...

New owner as of June 2013 might have to pay the extra money because it works as follows:

The 50% abatement adjustment is for fiscal year 2012/2013 and is based on ownership on January 5, 2012.
The current billing year (july 1013-June 2014) is based on ownership on January 5, 2013.

They are eligible for the abatement for fiscal 2014/2015, which is based on ownership as of January 5, 2014 and will appear on bills beginning on July 1, 2014.

MNT, I believe you have it exactly right. Thanks for the concise summary and example. Of course I'm not the Dept. of Finance and have no special knowledge of their reasoning.

The explanation I was thinking about came from the Autumn 2013 newsletter of CNYC. Here's an excerpt - and again, I have no special way of knowing whether this is 100% correct:

"Note that property taxes bills [sic] for each fiscal year that begins on the 1st of July are based on a snapshot in time of ownership data on the previous January 5th. Thus the adjustments made retroactively for fiscal 2012/2013 addressed ownership of units and shares on January 5, 2012. Bills for fiscal 2013/2014 look at ownership [as] of January 5, 2013."

(Anybody know why the DOF chose Jan. 5 instead of Jan. 1? I had remembered that part incorrectly. Can the date change from year to year?)

Prior to the recent change in the the co-op/condo tax abatement, the corresponding assessment that many buildings used was essentially vapor money. For example, a building's actual property taxes might be $300,000 but the city would bill the building only $247,500 thanks to the 17.5% abatement. The co-op's budget and maintenance would be based on this reduced figure for RE taxes. Then the city would say, "You know that $52,500 we didn't bill you? Now you have to give it back to your shareholders." So the co-op would impose a per-share assessment that canceled out this rebate that was paid and refunded only on paper. (To emphasize: this MUST be a per-share assessment like any other assessment.)

The alternative was to base the budget and maintenance on the full $300,000 charge and then refund real money that was collected during the year as additional maintenance. But it works out to the same dollar amounts; it just depends on whether you want to overbill and give part of it back, or charge the actual amount you pay in taxes and cancel out the vapor money with an assessment. Either way works fine, though my impression is that the assessment approach is more popular. Maintenance will reflect actual charges and will not be artificially inflated to give back part of it as an abatement.

Now that the "primary residence" horror is upon us, things get nastier since the per-share assessment will NOT be vapor money for those whose homes are not their primary residence. So now you can have an assessment that's real money for some shareholders, or you can raise maintenance to cover the cost of actually refunding the abatement to the reduced number of shareholders who qualify for it. Again, it's perfectly fair either way - and shareholders will pay basically the same amount of money in both cases - but it's difficult to explain to shareholders and you're bound to annoy some people no matter how you do it.

The bottom line for your original question: this isn't an assessment that would ever go into the reserve fund for capital improvements. It's an accounting method in one case, and artificially increased maintenance that you give back to the shareholders the same year in the other case.

Thanks! Great info!
What if the coop included the amount of the total tax - including the abatement - abatement in their budget - would that be poor planning?
Also shouldn't the total amount assessed for be the actual amount minus the sponsor portion? For example, if the sponsor owns 30% and since he does not receive the abatement - then each regular shareholder should realize a 30% break via the assessment. After all, the abatement is really intended to give property owners a break. Not to be sucked money out of them. While I understand the intention it just seems like another way not to focus on truly reducing costs. So much of the cost seems due to management ineptitude, naive Boards and general suspectbilty to ongoing money leaking.

No, it's not considered bad planning to budget for the total tax (including the abatement) and then give back the extra money as a cash refund to shareholders who qualify. Many well-run buildings use that approach, and it's fine. The main disadvantage is that it makes your maintenance higher, which is a downside for potential buyers.

Although it's counterintuitive, the assessment technique still works fine under the new scheme, without adjusting for sponsor units or other non-primary residences. The only difference is that the assessment becomes real money for shareholders who don't get the abatement. Here's an example.

Suppose there are 10 units in the building and each has 10 shares. Under the old scheme, if each unit was due a vapor-rebate of $100, you would impose an assessment of $10 per share. No one pays any real money, the books balance, and your maintenance charges reflect actual expenses. (By the way, this is the approach we use in our building.)

Now suppose there are two sponsor units among the 10. The total rebate is now only $800 instead of $1000. But you STILL assess at $10 per share. Each of the units due a $100 refund breaks even, and the two sponsor units owe $100 each, in real money. This works out exactly right if your budgeted RE tax reflects a flat abatement of 17.5% for the whole building, as if everyone were going to get the refund. Those who don't qualify will pay the extra amount they owe via this assessment, and you will end up with exactly the right amount to pay the tax collector.

This is quite complicated to explain to shareholders - especially the retroactive clawback to mid-2012 for rebates already paid. In my opinion, the whole "primary residence" requirement is a poorly considered adjustment to a bad tax law that was only intended to be a Band-Aid in the first place. None of this abatement stuff was meant to be permanent; our legislators were supposed to come up with a tax scheme that was fair to co-op and condo owners without adjustments.

A follow-up question for any accountants or experienced treasurers on Board Talk: if you're planning to continue with the abatement/assessment model, how are you going to reflect that in your budget? The idea is:

[Unadjusted tax minus full 17.5% abatement] + [Net real-cash assessment] = [Actual tax bill]

But if you do it like that, then the assessment gives the impression that it's not per-share, even though it is. Suggestions?

Ironically, this is one argument for budgeting the full tax amount and then inflating maintenance in order to have real cash to give back to the shareholders who receive the abatement. It will certainly be clearer in the budget under the new model.

With the new rules how you reflect the numbers in the budget stay the same as before. The only change is that some people will have a real assessment to pay once a year. In our building about 15% of the shareholders will have their abatements phased out. For the other 85%, they will have a monthly maintenance that is the same amount every month, except for the small variation in the month when our building applies the abatement/assessment charges. The 15% will have to budget their own finances to handle the assessment without the abatement.

Thanks, Burt - I see what you're getting at. If you budget three separate line items - taxes minus full abatement (payable), partial abatement (payable), and full assessment (receivable) - then things will balance out as they have before, regardless of how many shareholders pay actual money for the assessment. We had moved to a simplified model of listing only the actual tax bill and footnoting the abatement/assessment, but may well go back to the three-line model this coming year.

Also, with respect to shareholders who have to pay the assessment with real money, we'll almost certainly allow them several months to do so. That's what we've done with the retroactive clawback to mid-2012. The affected shareholders have four months to pay the extra taxes. If they sell during that period, they must pay the full balance at closing.

What about people who were assigned shares in May of June of this year?

At year end, our mgmt. co. prorates the share of property taxes paid and mortgage interest paid for the year and issues 2 1098's, one to the current owner ands one to the previous owner. The owner at the time of the tax credits/assessment will be billed for the full assessment and receive the full credit. It's up to the attorneys to take that into account at closing, just as one might adjust the value for 200 gallons of oil in a heating oil tank in a home sale.

If your coop attorney is on a retainer, he may be getting paid to do a couple hours of work per month without an additional fee. If he is simply paid for all his services as needed, there is no reason why someone else couldn't have done it. Generally there are certain time frames needed for proper notification of a meeting notice, should be easy to comply.

The board attorney works for the board – he is not going to help overturn the people who pay his salary – enough said.

Generally, the appropriate meeting notice info is included in the proprietary lease.

Here's how I would go about it: I would google the NY State rules for special meetings, probably under AG. I am not a lawyer, and can therefore not give legal advise, but I would assume that you can issue the notice yourself. You probably need to issue the notice 7-30 days or something like that, prior to the meeting. I would also ask the upset shareholder to do the same (without telling him that you have done the same). This way, you have the answer, and you'll also find out that it is quite likely that he is not going to find the information for you, which, in my opinion, means that he has no basis for being upset.