REBNY to The New York City Department of Finance Regarding the Proposed Amendment to the Department’s Rules Concerning the Partial Tax Abatement for Residential Real Property Held in the Cooperative or Condominium Form of Ownership

Alexander Shapanka

Assistant Vice President of Policy

March 23, 2022

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REBNY thanks the Department of Finance (DOF) for the opportunity to provide comments related to the implementation of a prevailing wage requirement for certain building service workers in certain properties as a condition of eligibility to receive the Co-op and Condo Tax Abatement.

New York State has long recognized the disparity in the property tax burden for owners of residential co-ops and condos relative to other homeowners. In recognition of this challenge, for the last several decades the State has provided a partial tax abatement that offers a percent-based benefit to co-op shareholders and condo owners who meet certain conditions, including but not limited to the property being the primary place of residence.

A new condition of eligibility for the partial tax abatement was added when the New York State Legislature adopted and the Governor signed S6350A / A7434A, which requires prevailing wage be paid for certain building service workers at properties that have:

  • 30 or more dwelling units and an average assessed unit value of more than $60,000; or

  • Fewer than 30 dwelling units and an average assessed value of more than $100,000.

State law mandates that the DOF promulgate a rule that creates the framework for the prevailing wage requirement and provides covered properties with an understanding of their obligations should they wish to continue to enroll in the abatement. REBNY offers the following comments on the proposed rule:

Definition of a Building Service Worker

State law defines building service worker as, “any person who is regularly employed at a building who performs work in connection with the care or maintenance of such building… which includes, but is not limited to, watchman, guard, doorman, building cleaner, porter, handyman, janitor, gardener, groundskeeper, elevator operator and starter, and window cleaner.” However, not all properties have work arrangements that fit neatly into the identified categories raising questions about whether certain workers at these buildings are covered by the prevailing wage requirement.

For example, lifeguards in residential pools are not a listed occupation in the Comptroller’s building service employee prevailing wage schedule, but their responsibilities may include light daily maintenance, including vacuuming the pool and maintaining the correct water chemistry. While the majority of a lifeguard’s job responsibilities are not related to “the care or maintenance” of the building in which they work, REBNY has received several inquiries about whether such duties would subject those individuals to a prevailing wage obligation.

Some roles that need clarification include but are not limited:

Building superintendents;

  • Gym attendants and cleaners;

  • Lifeguards; and

  • Other amenity space attendants, such as a playroom supervisor.

REBNY encourages the DOF to explicitly state that building service employees are limited to those whose job titles are explicitly covered by the Collective Bargaining Agreements on which the prevailing wage schedule is determined. In the absence of a declarative statement about these particular job classifications, DOF should provide building owners and managers with a clear list of job titles subject to the prevailing wage obligation so that there is no ambiguity as to which workers are covered by the prevailing wage obligation.

Similarly, many residential buildings have amenities including gyms, fitness centers, pools, and parking garages for residents that may also be available to the general public. In some cases, these spaces may be operated by the building, however they may also be rented or leased to third parties operators. While State law and the proposed rule state that the prevailing wage obligation applies to “all building service employees employed or to be employed at the property,” ambiguity exists as to whether certain types of workers who work for third party’s contracted with the property would be considered to be employed at the property. Specific examples include:

  • Parking attendants whose employer is the operator of the parking garage not the residential building; and

  • Gym attendants and cleaners in facilities operated by third party contractors or leasees of space from the building.

DOF should specifically clarify whether a worker employed by a third party operator not the building is covered by the prevailing wage obligation.

The law also states that the building service worker must be regularly employed to be considered subject to the prevailing wage requirement. REBNY supports DOF’s decision to define “regularly employed” in the proposed rulemaking as any building service worker “employed for a period of at least 90 days.” In addition, REBNY encourages DOF to further strengthen that definition by clarifying whether the 90 days needs to be consecutive or take place in a certain timeframe – fiscal year or calendar year.

Affidavit Submission

State law requires that covered properties submit an affidavit certifying that all building service employees employed or to be employed at the designated property shall receive the applicable prevailing wage for the duration of such abatement and the proposed rule requires that the affidavit be submitted as part of the initial abatement or renewal application.

REBNY appreciates DOF’s action to adjust the deadline for the affidavit for FY22-23 until April 15, 2022 in recognition that this proposed rule had not yet been released at the time abatement filings were traditionally due. This adjustment allowed buildings to understand the structure of the prevailing wage program prior and whether or not the economics of the abatement make sense with the wage and benefit requirements. We encourage DOF to address two additional issues related to the affidavit filing.

First, the draft rulemaking states that properties exempt from this prevailing wage requirement are not required to submit an affidavit. In practice, however, the Coop Condo Abatement Portal (CCAP) currently requires an affidavit to be submitted for every property applying for the abatement whether or not the property is covered by this prevailing wage obligation. Exempt properties should not have to submit an affidavit, which is why REBNY encourages the DOF to examine and update the CCAP to reflect that policy.

Second, the draft rulemaking also imposes a requirement to submit such affidavit regardless of whether the designated property employs or will employ any building service employees. Because the applications are submitted manually, requiring an affidavit for properties with no employees could lead to confusion and an oversight that may lose New Yorkers their rightful abatements. REBNY would encourage the DOF to treat properties that do not and will not employ any building service workers similar to those that are exempt by their assessed values with regard to the affidavit requirement. Alternatively, the DOF could offer an additional affidavit for such properties to avoid any mistakes in the application.

Value of a Dwelling Unit

The proposed rulemaking states that the provision of a dwelling unit free of a charge to a building service employee shall be considered a bona fide fringe benefit, consistent with the US Fair Labor Standards Act Section 3(m), which allows an employer to count value of housing toward wages. REBNY agrees with the DOF that such units should be calculated as part of bona fide fringe benefits. This is appropriate because doing so provides a valuable fringe benefit to the employee and is a cost borne by the residents, either through a direct purchase from the developer or built into the building’s common charges.

At the same time, additional clarity should be provided to help buildings ascertain the value of this benefit. The draft rule states the dwelling unit benefit will be considered a cost of no more than the value of prevailing rentals in the locality for comparable dwelling units. To calculate the value of the benefit, “locality” needs to be further defined along with a methodology for buildings to make such a calculation.

Coordination with the Comptroller’s Office

The proposed rule notes that the Comptroller’s Office, not the DOF, is responsible for compliance and enforcement of prevailing wage obligations. For this reason, REBNY encourages the DOF to work with the Comptroller to coordinate public outreach to help buildings understand their obligations and comply with these new requirements.

Primary Residence Certification

Eligibility of the partial tax abatement is limited to those shareholders and unit owners whose unit is the owner’s primary residence, and certification of primary residence status is provided to DOF by the applicant as part of the initial application or renewal application.

Recent changes to State law provide DOF with the ability to require unit owners and shareholders to directly certify their primary residence status with the agency. This was done in recognition of the fact that the unit owner or shareholder, not the authorized agent who generally submits abatement applications on behalf of the property, is best positioned to make such a representation.

However, rather than requiring the unit owner or shareholder to directly certify their primary residence to DOF, the proposed rule requires the unit owner or shareholder to certify this information to the board or authorized agent, which must keep record of the certification and indicate the residence status of each owner in the abatement application. As a result, the draft rulemaking creates an additional administrative burden on residential boards, which are volunteer positions, by requiring the board to collect the certifications. More importantly, it creates no additional efficiency for the authorized agent that must confirm primary residence in the application submitted to the DOF and may lead to delays in applications as the authorized agent needs confirm the certification from the boards prior to submitting, and these bodies meet infrequently.

To avoid potential administrative problems or delays, the DOF should require unit owners and shareholders to submit a certification of primary residence directly to the Department.

Thank you for the consideration of these poin

Topics Covered

  • Labor
  • Co-op
  • Condo