Opinion: Kill the costly coop-condo tax break: It meant $48,000 to Trump and costs the city a half-billion dollars annually
By Jessica Katz
July 13, 2018
Recently, in response to a report in the Daily News, the city’s Department of Finance rescinded a tax rebate for President Trump that is intended for condo and coop owners because, as we all know, New York City is no longer Trump’s primary residence.
Progressive New Yorkers are enjoying this “gotcha” moment over the denial of the tax break to one of their least favorite people. But we ought to use this moment to ask ourselves a broader question: What is this rebate and who does it serve?
According to the tax expenditure report for fiscal year 2018 prepared by DOF, the city is spending approximately $528 million each year on this tax rebate for condo and coop owners. That’s almost double the value of tax exemptions that help low-income and disabled New Yorkers who earn less than $50,000 per year.
According to DOF, 53% of the households who are beneficiaries are in Manhattan, 15% in Brooklyn, and only 4% in the Bronx. By dollar value, 76% of the benefits accrue to Manhattan residents, overwhelmingly in higher value areas. Trump’s share alone was $48,000 last year — the higher value your real estate, the greater the tax rebate. This rebate is separate from any of the other abatements that create or preserve affordable or rent-stabilized housing such as 421a, 420c, J-51, and others.
When Trump moves back to New York City, he will be eligible for a real estate tax rebate for his gilded penthouse residence that is worth almost double than what most New York City Housing Authority residents make in a year.
Here’s a stunner: Recent changes to the program make those who own more than three coop or condo units in the same building ineligible, but if you own a penthouse in Manhattan, a beach house in the Hamptons and a ski lodge in Aspen, by all means, claim the rebate!
Let’s rescind this rebate across the board and use the funds to help NYCHA residents live in safe, healthy, well-maintained apartments. With $32 billion in urgent capital needs, every penny recovered will be quickly spent.
If a half-billion dollars a year we’re instead used to raise bonds, that could raise $9.7 billion to help towards NYCHA’s capital needs. And importantly, this debt service expense will not increase the city’s out-of-pocket cost.
In fact, if the city merely freezes its expense at $530 million annually, there will be savings — because the coop/condo program has grown at an approximate compounded annual rate of 7% since 2001.
There are of course those condo and coop owners who benefit from this rebate whose homes are not dripping in 24-karat gold. But they are relatively few in number and their rebate represents a smaller percentage of the dollar value at stake here. Surely a balance can be reached where everyone pays their fair share to help NYCHA get back on its feet.
The recent evaluation of a public-private partnership at a group of NYCHA properties by the Citizens Housing and Planning Council, where I am the executive director, shows that there are solutions to NYCHA’s problems, but they require resources. Our study showed something obvious: When resources are provided to improve NYCHA properties, it works. Tenants benefit, energy usage is lower, and property management is no longer under an avalanche of repair requests.
This change to tax policy requires the state Legislature to act. The city’s property tax system is complicated, but this is a simple answer. This policy subsidizes condo and coop owners, the vast majority of whom are relatively well-off, at the expense of New Yorkers who need it the most.