Cooperative apartment shareholders and residential condominium unit owners will have a difficult 2023. New York City continues its over-reliance on property taxes, which excessively tax both cooperative and condominium apartment owners. For example, a $750,000 condominium in Manhattan pays $19,000 a year in property tax, while a single-family home in Queens of the same value pays less than $6,000 per year. That, the upward pressure on the cost of construction, utilities and the need to invest in energy savings to comply with Local Law 97 of 2019 (the Climate Mobilization Act), will drain building coffers, frustrate unit owners and shareholders and, with rising interest/mortgage rates, devalue the apartments.
One possibility to helping unit owners and shareholders is de-bulking cable service. Many of the bulk service arrangements between managing agents and cable companies in New York City are no longer viable or lawful. The Federal Communications Commission (FCC) has found these arrangements to be anti-competitive and harmful to consumers. There should have been an ongoing and comprehensive disclosure to unit owners and shareholders of the amounts paid to managing agents in connection with the bulking of service, how much of that money was retained by managing agents and how much was paid to cable companies. Instead, managing agents are ending the arrangements with cable companies without making full financial disclosures.
Board members should demand a full disclosure of the bulk arrangements for their respective buildings. These disclosures include amounts paid to managing agents in connection with the bulking of service; how much of that money was retained by managing agents and how much the amount paid to cable companies needs to be made known. The next step by board members should be to ensure that all the money that was provided to the managing agents for the so-called “bulk services” are being retained by the buildings and thus maintenance costs should be reduced, or the money paid into building reserves.
As a rule of thumb, you should assume unit owners and shareholders will see a 50% increase in their individual bills — about half of which may include an up-charge of $10 per cable box per month. That money needs to come back to the building owners. As fiduciaries for the shareholders and unit owners, board members have an affirmative duty to conduct this investigation and ensure that all the money that was paid to the managing agents on these bulk service arrangements is returned to the buildings in full.
The other area to pursue in savings is utility costs, including using energy efficient light bulbs and automating non-emergency lighting lights. Buildings should consider energy audits. These efforts will pay dividends long-term in reducing the fines and penalties under the Climate Mobilization Act.
This column presents a general discussion. This column does not provide legal advice. Please consult your attorney for specific legal advice.
Carol A. Sigmond
Greenspoon Marder LLP
590 Madison Avenue, Suite 1800
New York, NY 10022