CM Dinowitz questions panel on co-op compliance costs and legal fees

Councilmember Dinowitz?

Thanks.

Good morning, everyone.

I do have to agree, by the way.

You know, we were promised a new era of transparency in this

administration and it is deeply disappointing that regardless of whatever is going on in the administration,

they should show up and answer basic questions about the rollout, the rollout that's clearly impacting tens of thousands of New Yorkers.

I have a question about co-ops.

I have a number of co-ops in my district, as you all know.

We have a lot of things like local laws, and a lot of local laws, like the Pita-Ter tax, most people support.

Most people support raising money for our city services from non-New Yorkers who have the vacation home in New York City.

But like so many of our local laws that deal with the environment or health and safety, there are often costs associated with it, unintended consequences, unintended costs, and quality of life concerns.

Because of the amount of work we need to do to comply with these laws.

And I'm wondering, for those of you representing co-ops or living in a co-op, if you not only anticipate

concerns about those one or two apartments in the building, but any costs that the building itself may have to pay for those consultants that you're so used to paying for, or legal fees.

Have you paid any of those costs yet, or do you anticipate, as this gets rolled out, that you will be enduring those sorts of costs.

So there has already been discussion amongst co-ops about potentially changing proprietary leases in order to deal with the collection of this tax, which won't be done based on a share distribution, but will rather be just assigned to an individual.

So that's a change on how expenses are usually collected.

So there may be proprietary lease amendments, which will require an attorney.

And then obviously, if there's a pay a tear and the tax doesn't get paid, there will be an attorney to try to collect the funds to pay to the Department of Finance.

If the building can't pay the PAA tax and it's left as an expense, there's a potential for insurance problems if the building has to renew their insurance and they have this debt to the city because they haven't been able to collect it.

Same thing with if a mortgage renews.

Those are sort of the issues that we've already, you know, people are already planning to try to address depending on how it's rolled out.

And we just wish that there had been some discussion in advance of the legislation being introduced in the state with co-op and condo professionals so that they could have weighed in on these issues before the legislation went through.

If I may add, having served on the board of my co-op, I can tell you that co-op boards are highly risk-averse.

So any little hint that this could cause a problem in the building with assessments or the management of the building

will immediately trigger most co-op boards to say, well, we're not going to allow any more pied-à-terre.

That's just going to happen.

And that's going to close out a large portion of the market in many of these buildings.

They're just not going to allow pied-à-terre.

So that's going to close out a lot of people who may not even be anywhere near the limit.

But they're just going to shut out anybody who's out of town.

And that's going to severely impact the market, and it's also going to reduce the price of co-ops.

They're not going to be able to get the prices that they want.

Thank you.

I appreciate that.

It seems, so it seems that there are going to, there are costs and concerns associated with this.

A tax that I support, by the way, and I think most people in the council support, but without the administration here to even discuss these things on the record in public, it's very difficult to address these issues in a public form.