Page 4 - New York Cooperator July 2020

4 THE COOPERATOR — JULY 2020 COOPERATOR.COM PULSE Industry Pulse Events The Cooperator Introduces FREE Webinars—a New Resource for Boards and Managers at cooperator.com/events The Cooperator, a Yale Robbins publica- tion, has been a resource for the boards, man- agers, and residents of co-ops, condos, and HOAs for nearly two decades, both in print and online—and we are pleased to announce a new addition to our toolkit. Yale Robbins Productions has launched Cooperator Events, a new series of FREE educational ‘town-hall’ style webinars, sponsored by leaders in the multifamily industry and focusing on issues and challenges facing today’s boards. We have assembled expert panels on everything from legal questions around the COVID-19 pandemic to optimizing your insurance cov- erage to disinfecting your community’s pool. Registration and attendance is FREE to all —just visit cooperator.com/events, choose the webinar you’d like to attend, and sign up. It’s that simple. You’ll get an email link and reminders for the event, and will have the opportunity to submit questions for the pan- elists before AND during the webinar itself. Past events are archived and available on- demand on cooperator.com/events. Serving on your board is a big job, and a big respon- sibility, but sound, timely advice from indus- try veterans can help lighten the load and make your building or association run more smoothly. We’re committed to helping you achieve that, and look forward to ‘seeing’ you at an upcoming webinar! Law and Legislation Property Tax Reform Another Potential Casualty of Coronavirus The Gotham Gazette reports that the dwindling momentum for property tax re- form is being exacerbated by the coronavirus crisis and ensuing economic disaster that the city is experiencing. After the advisory com- mission convened by the Mayor and the City Council to assess and reevaluate the city’s “confusing and unfair” property tax system released its long-awaited recommendations in January, the intended community con- versations and legislative proposals to follow stalled amid the growing pandemic. Initially formed as a next-ditch effort to address what many see as an antiquated, opaque, and inequitable jumble of assess- ments and levies that irrationally overburden lower-income communities and communi- ties of color, the Advisory Commission on Tax Reform is now in a holding pattern while city and state officials grapple with issues of logistics, prioritization, and an outsized fi- nancial crunch. However, as the Gazette indicates, the communities that are being hit hardest fi- nancially and health-wise by COVID-19 are the same as those unproportionately taxed in the current system. “Homeowners in some of the city’s most booming neighborhoods have among the lowest effective property tax rates, as do some of the most expensive co-ops and condos,” reports the Gazette, “while homeowners in places like the Bronx and Staten Island, which have not seen rapid gentrification, pay a much higher percent of their property’s value in real estate taxes. Ten- ants often serve as a release valve for the high taxes on large rental buildings.” The January recommendations focused on inequities in the assessment of one- to three-family homes, small rental buildings, and cooperatives and condominiums, giving rise to a range of reactions around the real estate industry. The first of a series of public hearings was set to take place in Staten Island on March 12, but with the pandemic taking hold in New York and surrounding areas at that time, the session was cancelled, and “\\\\\\\[v\\\\\\\]irtual hearings would be an independent commission decision, and have not been planned as of now,” according to Laura Feyer, a spokesperson for Mayor Bill de Blasio. But now that the city is facing a $9 billion budget deficit as it approaches its July 1 fil- ing date, expedient reforms to the system that garners such a large percentage of its reve- nue—35% for the current fiscal year, accord- ing to recent estimates—are not likely. New York City “relies on property taxes to fund the essential city services like hospitals and our first responders,” says Feyer, pointing to the conundrum in addressing a burdensome property tax system during a pandemic. The Mayor himself echoed that proposi- tion on May 10 to reporters who asked about property tax relief for struggling homeown- ers and landlords: “Especially since we don’t know what’s going to happen in Washington,” said de Blasio, “we right now are absolutely dependent on whatever resources we can get and property tax is a part of it for sure.” On the other hand, New York City fiscal watchdogs and reform groups say addressing inequities in the property tax system is more important than ever in the face of the coro- navirus crisis, and a growing chorus of land- lords, tenants, and business owners are calling for property tax relief as the economic fallout knocks on their doors, so to speak. “The time should not be wasted,” wrote Andrew Rein, executive director of Citizens Budget Com- mission, a nonprofit watchdog, in an email to Gotham Gazette. “The Commission’s report was a solid start to comprehensive reform.” Similarly, Martha Stark, former finance commissioner under Mayor Michael Bloom- berg who now serves as policy director of the advocacy group Tax Equity Now, said in an interview, “Given that the city’s only mechanism for raising revenue is going to be through the property tax, I don’t know how much more urgent it could be to ensure the taxes are done in a way that is fair and that is really reflective of people’s values.” (Tax Eq- uity Now has sought to reform the tax system through the courts; it filed a lawsuit against the city and state that was a catalyst for the formation of the advisory commission in the first place. That lawsuit was dismissed in the appellate division earlier this year, according to the Gazette, but the group is filing an ap- peal in the state’s highest court.) However, changing New York City’s property tax scheme requires action at both the city and state levels. Over the past 40 years, the Gazette notes, conflicting inter- ests in those arenas have put a wrench into any meaningful reform. Now, while the city strains to shore up its budget, the state has put property tax reform on the backburner. “Property tax reform is not the issue we are dealing with this year,” said State Senator Brian Benjamin, a Manhattan Democrat and chair of the Committee on Revenue and Bud- get, on a recent podcast. “At this point we are really dealing with the COVID crisis.” Trends Coronavirus Boosts Appeal of Single- Family Homes and Townhouses While the future of New York City’s resi- dential market is still up in the air, Mansion Global infers that certain properties will see increased interest in a post-pandemic era. Those that offer space, privacy, and social distance may very well have an edge over the typical New York abode that shares common spaces with multiple households and build- ing staff. This might be good news for the previ- ously slumping townhouse market, which saw a 35% drop in median sales price in the third quarter of 2019 versus the same quarter the previous year, reports Mansion . As gen- eral residential real estate activity is expected to resume when the state and city progress through reopening phases, townhouses and single-family residences are poised to make a comeback of sorts. “It’s hard to draw conclusions yet, but we’re seeing interest,” says Compass agent Jim St. Andre. “Lots of people are calling asking about townhouses and what kinds of oppor- tunities there are, especially on the renovated side, properties that are ready to move into.” Doug Bowen, of the Doug Bowen/Zia O’Hara Team at Douglas Elliman, has a simi- lar outlook, stating, “There’s not a broker that doesn’t agree that the townhouse market is going to emerge from this pandemic stronger than almost any other segment, to be per- fectly honest.” What has made much of the luxury highrise market appealing to buyers in re- cent years—souped up amenities, commu- nal spaces for congregating and socializing, sense of community—are exactly the types of things that virus-wary purchasers will be try- ing to avoid as they seek new residences after the lockdown. Other than the sense of com- munity, which might still hold importance for homeowners facing months of isolation and potential dependence on neighbors dur- ing a quarantine, the common elements that made living in a condo or co-op so desirable have not been available to residents for the last few months. Those looking to relocate will have that in mind. “Everything that was good about luxury buildings suddenly becomes a downside,” says Living NY director of sales Kobi Lahav. “People want to be isolated, and if you have your own townhouse you can stack it up with all the food you need, you can have your own shelter within New York City.” As Mansion Global notes, having a home with private access that doesn’t involve com- ing into contact with neighbors or staff comes with its own set of maintenance headaches, but it also limits exposure risk. “Moving for- ward, privacy will be the ultimate amenity,” predicts CORE founder Shaun Osher. Mansion also speculates that new or new- ly renovated properties will have the edge within the townhouse/single family market, as buyers will also be considering the logisti- cal and financial prospects of engaging in a lengthy renovation. This bodes well for new construction that includes maisonettes or boutique condos, some of which also have the added bonus of service amenities com- mon to luxury apartment buildings. Osher gives the example of “townhouse units in full-service condo buildings, and some new developments, like 15 Renwick Street, \\\\\\\[that\\\\\\\] have maisonette units.” He has seen increased interest in these types of prop- erties since the pandemic, noting, “They pro- vide the best of both worlds—private access, private outdoor space, and multiple floor liv- ing, but with the amenities of a full service building, a doorman, concierge service.” St. Andre extends the prediction to condo buildings with fewer units—three to 10— where interaction with other households will be fewer and further between. “I think people will find smaller buildings interesting and pay a premium,” he says. Valuation will follow demand, of course, giving townhouses and move-in-ready units in smaller buildings a chance to catch up price-wise. Bowen’s assessment is that Brook- lyn condo prices could fall by another 10% in the current slowdown, but “townhouses are more insulated from that by at least 50%, just because of the type of housing it is and this particular moment. I think two years from now, we’ll be in the hottest townhouse mar- ket we’ve ever seen in Brooklyn.” n Please submit Pulse items to Darcey Gerstein at darcey@cooperator.com