Ed Tristram Associates

Providing MCI Services to Owners and Managers of Apartment Buildings in the NYC Metro Area

Tag: tax abatement

AN OPPORTUNITY FOR BUILDINGS WITH RENT REGULATED UNITS

Updated 12/14/19

We were excited to be working with cooperative and condominium multifamily buildings that typically had a few rent regulated units held by a holder of unsold shares. They were able to file a rent increase application for large major capital improvements that they performed and get a tax abatement based on the approved application. Often tenants were able to use SCRIE to keep their current rents as people who haven’t moved for 30+ years are usually over 50 years old.

While the new State legislation (HSTPA 2019) doesn’t specifically address the City abatement, it does make all buildings with 35% or fewer rent regulated units ineligible for rent increase. Very few coops or condos will fall into the narrow window of “enough apartments purchased to be declared effective” and “over 35% still in rent regulation.” This is particularly because so many buildings became effective cooperatives more than 30 years ago, in the 1980’s.

We are saddened that State legislators have effectively blocked cooperative and condominium home-owners from this tax abatement.

The work we have seen performed was often a triple benefit to the economy of New York:

  • construction jobs, especially skilled labor jobs, pay salaries for local people
  • work has to be done legally with all necessary permits and safety standards to maintain eligibility for benefits and even encourages building ownership to clear old violations and unsafe situations
  • housing stock is improved for the current residents and the value of the stock increases

The program encouraged people to do the big job that completely fixed long term problems instead of patch jobs that may not hold up in the long term.

 

 

Ed Tristram is president of Ed Tristram Associates, a real estate consulting firm specializing in paperwork related to capital improvements. In the last 35 years, the firm has done thousands of filings related to capital improvements, all for clients who own or manage apartment buildings.

What You Need to Know About Preferential Rents

Astoria HousesThe adoption of the HSTPA of 2019 has altered the laws regarding preferential rents. At this time, any rent regulated tenant who has a preferential rent keeps the preferential rent as their base legal rent for the entire time of their tenancy. When they move out permanently, the rent may possibly be increased  if “the legal regulated
rent upon which these increases are based must be written in the vacancy or renewal lease in which the preferential rent was first charged and in all subsequent renewal leases.”  Registering the rent is not enough, it must also be written down in the lease. This may have a catastrophic impact on the value of a multi-family building and we suggest that all owners examine the tax assessments for their buildings. All residential buildings are valued by their rental income or the estimated value of rental income for similar apartments. Some neighborhoods may have lower comparable rents so co-ops and condos should consider challenging their assessment.

Additional information can be found in DHCR Fact Sheet #40 which is available on DHCR’s website Fact Sheet 40