Saturday, August 01, 2015

Inability Of Former-Renting Unit Owners To Overcome Tenant Mindset May Spell Doom For Some Low-Income NYC Co-Ops; Lack Of Management Experience, Failure To Raise Maintenance Fees Leave Themselves Unable To Adequately Upkeep Building, Pay Operating Expenses While Real Estate Tax Delinquencies Threaten To Wipe Out Their Home Equity

In New York City, The Real Deal (NYC) reports:
  • Nearly one-third of New York City’s low-income co-op buildings are struggling to pay their tax bills — just one sign of their poor overall financial health. The city has 1,000 low-income co-ops and more than 4,800 co-op buildings overall.

    But despite making up about a fifth of the total, low-income co-ops account for nearly half of all delinquent tax bills from co-ops, according to the Wall Street Journal.

    Housing experts say that management in the buildings is too hands-off, and many buildings have failed to raise their maintenance fees sufficiently to upkeep the buildings and pay bills.

    They view themselves as tenants rather than as apartment owners,” said Steven Wagner, a co-op and condo lawyer. “They are not used to the responsibility of managing a building or running what can be a multi-million-dollar business.”

    Some buildings, such as the 38-unit property at 401 West 143rd Street, are facing foreclosure by the city, in which case they would be turned over to a nonprofit and converted to rentals.(1)

    The 1,000 co-ops that still exist today were created beginning in 1981 from abandoned buildings seized by the city, as a way to encourage homeownership among the poor.

    “Most of the co-ops are well-functioning, affordable housing resource for their shareholders, and they have stabilized thousands of lives,” said Christopher Allred, an assistant city housing commissioner for asset management.
Source: Limited income co-ops accounted for nearly half of co-op delinquent tax payments: report (Residents “view themselves as tenants rather than as apartment owners," lawyer says).

(1) See The Wall Street Journal: New York’s Struggling ‘Low-Income’ Co-ops (Many are in arrears in taxes owed to the city) (requires subscription; if no subscription, go here - then click appropriate link for the story):
  • [Managing agent Yvette] Hanon said there is plenty of blame to go around. She said the board had raised maintenance only twice in 25 years, while owners acted like tenants and called the city for repairs, racking up violations on the apartments they own. There are now more than 300 housing violations on the building.

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