CITYLIGHTS TAX SAGA, TWO LESSONS FOR ALL LIC CONDO OWNERS

Meals on Wheels making its daily delivery to Citylights

Meals on Wheels making its daily delivery to Citylights

Just as the tax abatement for the Citylights Building was about to start rolling off, NYC boosted the buildings assessed value by 87%.  For good measure they tacked on another 5% this year.  The near doubling in possible tax payments has the co-op’s residents looking at a 50% increase in already steep monthly maintenance over the next five years, which if implemented on this tower of over 500 units will force out many residents who can no longer afford to live there.

You can read the story below for more details.  Instead I’d prefer to focus on two takeaways that all apartment owners in Long Island City should consider vis-a-vis how their buildings are managed financially.  The first lesson is to put money away for a rainy day, aka a leaky roof.  In other words make sure you have built up a big reserve in advance of the tax abatement roll-off, as this period happens to coincide with an end to the useful life of many building components, whether they be roofs, elevators, chillers, or who knows what?  Citylights stumbled badly in this regard, and has other faults of its own making – the details of which I won’t get into here but are easily construed from its reduced selling prices.  Nevertheless it also a few advantages, most notably its huge size gives it economies of scale operationally relative to condo buildings nearby.  Given that most of those buildings are relatively new, it wouldn’t surprise me if developers didn’t underestimate future capital expenditures in setting common charges in order to ‘dress up’ the units financially.  Thus take heed from your large neighbor and make sure your maintenance run rates are true and you’ve built up a heftier than standard reserve.

The second takeaway is that the current administration downtown is gunning full throttle for those – from rich to poor – who took on all the financial risks of home-ownership as it simultaneously cuts cushy deals with developers to create affordable housing – I mean it’s got to get the money from somewhere. If they could double the taxes at the last minute on a dated building like Citylights, all new condo owners in Long Island City should make sure their personal finances are also in order before they get whacked.

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