Co-op Council mulls lawsuit over valuations

A coalition of angry Queens co-op presidents and local elected officials recently led a “tax revolt” at City Hall, where they protested what they claim to be unfair valuations for co-ops and condos.
The initial roll, released in January, listed some valuations increasing by as much as 147 percent in northeast Queens, while the city-wide average was nine percent.
When it was revealed that some of the comparables used were commercial properties, and not rentals, the Department of Finance (DOF) announced that there was a computer glitch with their new system of finding comparables.
“We call it a scandal because we think the problem is a lot deeper…” said Bob Friedrich, president of Glen Oaks Village.
“The failure of DOF to recognize its mistakes for three months, only to ultimately blame all of its failures on a computer glitch, is simply unacceptable,” said Assemblymember Edward Braunstein.
Under state law, co-ops and condominiums are designated as class 2 properties, meaning they are valued as income-generating units based on comparable rental properties.
State Senator Toby Stavisky proposed a bill on March 28 that would reclassify co-ops and condos as class 1 properties, which include one and two-family homes. Stavisky herself lives in a co-op.
Valuations on class 1 properties cannot increase more than six percent in a year. Class 2 properties with 11 units or more have no such limit, but increases must be phased in over a period of five years.
On Monday, May 2, a day after the tax revolt, the City Council Finance Committee held a meeting to discuss the increase in valuations.
In response, DOF Commissioner David Frankel testified that the valuations rose so dramatically because of properties that were previously undervalued.
Frankel also announced that the department had limited this year’s increase to 50 percent, which would be phased in over a period of five years.
Friedrich, who also founded the President’s Co-op Council that represents over 100,000 co-op shareholders, noted that this alone was not satisfactory. He said that he and his group would not rest until there is permanent solution, including reclassifying co-ops as class 1 properties.
The current list of comparables for co-ops and condos has been partially updated to use appropriate comparables.
“Hopefully, we will have a more accurate and up-to-date list on our web site soon,” said Owen Stone, spokesperson for the DOF.
The final valuations will be released on May 25, and the increases will go into effect July 1, the beginning of the next fiscal year.
Friedrich noted that if the demands for remediation are not met, the President’s Co-op Council is ready to file a lawsuit against the city.
On Tuesday, May 3, Councilmember Mark Weprin asked Comptroller John Liu to audit the DOF and its computer system to discover how the glitch had come to pass.