We’re all miserable as rents and taxes continue to climb
10:56 AM, MAY 2, 2012
By Sarah Trefethen & Sabina Mollot
Owners of multi-family buildings pay the lion’s share of New York City property taxes, according to a recent analysis by New York University’s Furman Center for Real Estate and Urban Policy.
The effective tax rate for larger rental buildings is five times the rate for one- to three-family homes, according to the findings, included in the center’s State of New York City’s Housing and Neighborhoods Report.
“As a result of the strong preference shown to homeowners at the expense of large rental properties, New York City imposes one of the highest tax burdens on apartment buildings of any large city in the country,” Vicki Been, director of the Furman Center, said in a statement. “Conversely, the tax on one- to three-family homes is one of the lowest in the country.”
The survey results were announced as the city’s Rent Guidelines Board unveiled its proposals for annual rent increase for the New York’s one million rent regulated apartments.
In proposing hikes from 1.75 to 6.75 percent, owner representative Steven Schleider said tenants need to “share the burden” of landlords’ rising fuel costs and property taxes.
In the 2011 fiscal year, the city collected nearly $17 billion from property owners, according to the Furman Center study, and 36 percent of that revenue came from taxes on apartment buildings – even though those buildings make up only 24 percent of the citywide market value.
At the same time, one-, two- and three-family homes make up 49 percent of the city’s real estate value but accounted for just 15 percent of the city’s property tax revenue.
Once differences in abatements, exceptions, and valuation are taken into account, the study found, the effective tax rate for one- to three-family homes in 2011 was 0.67 percent. The effective rate for multi-family buildings was 3.31 percent – much closer to the 3.85 percent paid by the owners of commercial buildings.
The study’s authors hypothesize that higher property taxes likely are indirectly passed on to the renters, either in the form of higher rents or in cutbacks to building maintenance and repairs.
Meanwhile, during an often heated meeting at the Cooper Union Tuesday night, the RGB voted 5-4 to approve preliminary rent hikes of 1.75 to 4 percent for new one-year leases and 3.5 to 6.75 percent for two-year renewals.
The final vote is on June 21 when, tenant activist Mike McKee predicted, “The bottom line is, I think we’re going to get screwed again.”
McKee, normally a fixture at RGB events, opted to remain outside the building with tenants who were swapping hardship stories over a “people’s mike,” rather than take part in the usual routine of heckling the nine-member board for being landlord-biased.
“I will not dignify the process other than to protest it,” McKee said afterwards.
“They don’t even have the guts to put a number on it,” he added, referring to the range of numbers the board agreed to vote on, which were suggested by RGB chair Jonathan Kimmel.
A rent freeze, proposed by the board’s two tenant reps, was quickly voted down, 2-7, as was a hike as high as five and nine percent (one and two-year leases, respectively) with a 10 percent sublet allowance, and an additional one percent for buildings that exclusively use fuel, proposed by owner rep Steven Schleider.
As for what ended up being the winning range of increases, McKee said he believed it was done intentionally that way, “to keep people off balance. It’s emblematic of what’s wrong with this whole board.”
The board’s one vocal owner rep, Schleider, called for increased eligibility for rent subsidy programs like SCRIE. “Owners and tenants need long-term assistance, not a one-shot deal,” he said.
Maggie Russell-Ciardi, of Tenants & Neighbors organization, called the process a “sham,” saying she supported legislation reforming the RGB.
Assembly Member Brian Kavanagh has sponsored a new bill proposing more oversight by the City Council on RGB membership. Currently, the board has two tenant reps, two owner reps, and five public reps, including the chair, who are chosen by the mayor.
One tenant leaving the meeting said the only way tenants could fight the ever-climbing rents would be to attempt a citywide rent strike.
East Villager George Tzannes, said “If even half the tenants said let’s do a rent slowdown, it’s going to create a problem for (the owners). They’re going to go screaming to the politicians and they’ll say, ‘What can we do?’”
According to Ronald Scheinberg, a public member of the RGB, the vote each year is based on data collected by the board on situations faced by landlords as well as tenants.