Co-op City’s official newspaper serving the world’s largest cooperative community. © Copyright 2012 Co-op City Times
Vol. 47 No. 28
Saturday, July 14, 2012
J-51 credits save Co-op City $2 million in taxes each year BY JIM ROBERTS An important real estate tax reduction program lowers Co-op City’s tax bill by more than $2 million each year, but legislators in Albany are wrangling over whether to tinker with the law in the future. And while the current tax breaks Coop City receives under the J-51 program appear safe, future new reductions could be in jeopardy if the state lawmakers and Gov. Andrew Cuomo don’t come to a deal that keeps the tax relief program in place. Without any J-51 tax reductions, Riverbay would face a $14 million gross annual New York City shelter rent property tax bill each year. But under the program, which gives property owners tax benefits for improvements, Riverbay is receiving the $2 million tax reduction for the work done on the community’s elevators and windows completed in the past few years. The J-51 program was enacted in 1955 to encourage the owners of residential buildings to upgrade cold water flats by installing heat and hot water system and has since been expanded to include real estate tax benefits for most capital
improvements, certain repairs and conversions of buildings to residential use. Co-op City pays shelter rent tax, rather than real estate property taxes because of the Mitchell-Lama program. The shelter rent tax is determined by adding up the rent roll and then deducting utility costs. The shelter rent tax is 10% of that figure and is much lower than a regular property tax bill would be. The J-51 tax credits for the completed elevator and window work in Co-op City are being given over a period of years, so Riverbay will continue to receive the tax reductions for several years to come. The tax credits for the elevator work, for example, will continue through the year 2020, at an annual reduction of $752,000. Over the next few years, Riverbay will receive a total of approximately $2.1 million for the window upgrades already done. According to Barry Zweigbaum of Goldberg, Weprin & Ustin LLP, the law firm that handles the J-51 applications for Riverbay, there is a possibility that potential J-51 tax credits yet to be granted by the city could be in jeopardy if the state (Continued on page 2)
Most of Co-op City’s public areas are WiFi accessible (Story on p.4)
Storage unit rates increase effective August 1, 2012 BY ROZAAN BOONE Beginning next month, the rate for renting a Bargold storage unit will increase by $1 each year going forward, as per Resolution 12-15, which was approved by the Riverbay Board of Directors on March 14. The Bargold storage units, which are located in the basements, are currently rented to shareholders for $35 to $65 a month, depending on the size of the unit. However, beginning on August 1, 2012, the rates will go up by $1 each following August, in accordance with Resolution 12-15. In 1998, Riverbay contracted with Bargold Storage Systems to install 980 storage units in 30 buildings. Those units were rented directly to Riverbay share-
holders at rates varying from $35 to $45 a month depending on size. In June, 2005, prior to the 7-year Bargold contract expiring that August, the Riverbay Board voted to extend the contract for another 7 years, but this time, approved paying the contractor $10 per month, per storage unit, while taking over administration of the leases and maintenance of the storage rooms. That contract will expire at the ending of this month. Resolution 12-15, which was submitted by then-Director Bill Gordon, and seconded by Directors Ray Tirado and Othelia Jones, extends the 2005 contract with Bargold for another 7 years, however, as was the case in 2005, there are some modifications. (Continued on page 2)
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Board, shareholders to discuss HUD loan deal before vote on Wednesday BY JIM ROBERTS The Riverbay Board of Directors will hold an Open Board Meeting on Wednesday, July 18 beginning at 7:00 p.m. at the Dreiser Community Center Auditorium to discuss the community’s proposed $600 million mortgage refinancing, answer questions from shareholders on the proposal, and then vote on the mortgage loan. A vote by Board members on Emergency Resolution #12-62 – HUD/FHA Loan Approval with HUD Modifications of By-Laws – will be taken following discussion and questions from the Board, led by Cathy Pharis from Wells Fargo Bank and Riverbay General Counsel Jeffrey Buss, and then questions from the audience. Questions from the shareholders must be on the mortgage proposal only and will be limited to two minutes each so as many shareholders as possible can ask their questions. The total shareholder question period will last up to 45 minutes. Under the proposed deal, the federal Housing and Urban Development (HUD) agency will guarantee Riverbay’s $600 million mortgage from Wells Fargo Bank through the
Federal Housing Administration’s (FHA) 223F program. The City and State of New York have agreed to guarantee the first $70 million of the loan. The HUD-guaranteed Wells Fargo mortgage would drop Co-op City’s mortgage interest rate to 3.5% over the next 35 years of the loan, which will then be paid off. The deal guarantees a set mortgage rate and eliminates concerns over the current New York Community Bank mortgage, which has to be refinanced at potentially much higher rates in 15 years. The current NYCB mortgage rate rises to 5.75% this October, goes to 6% next July, increases again to 6.25% in 2016 and tops out at 6.5% in 2021 before requiring refinancing in 2026. The HUD-guaranteed Wells Fargo mortgage at a 3.5% interest rate will save shareholders $14.3 million over the next 20 months and then $10 million to $12 million per year through 2026, for a total savings of $152 million between now and 2026. Up until August of last year, HUD’s 223F program, which offers low interest 35 year loan guarantees insured by the FHA, was only open to rentals, and (Continued on page 2)
Meeting Notice