Tuesday, October 10, 2017

Helpful Resources for Purchasers

Though we navigate it every day, the Due Diligence process can often appear opaque or overwhelming to new buyers. The City, State, and Federal governments host a number of helpful resources, but these can be difficult to find for those who do not know where to look. To that end, we have compiled a list of online resources where relevant information can be freely accessed, such as property records, tax information, and payment portals for municipal services, among others. We hope that they can be of use not only to prospective purchasers, but to current homeowners as well. Please note that web addresses can change over time. If a link is broken, we recommend working backward through the URL to the last intact page. Due Diligence Links    

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The I-Card is a paper record that the City of New York adopted in 1902 to document the required building improvements of tenements and multiple dwelling buildings, and for regulating their use. It was a product of the Progressive Era, a period around the turn of the last century when building codes, sanitary conditions, and safety issues in tenement housing all came under greater scrutiny. Thus, the city came up with a way to track the required alterations that certain buildings made over time—the “I” in “I-Card” refers to these improvements. Such regulations demanded that a tenement had proper and adequate fire-escapes and means of egress through the roof, as well as proper ventilation and lighting in interior areas. Following the new legislation, the Tenement Housing Department had to locate and review all 83,000 tenements within the city. The department thus developed a standard means of inspection that could be learned quickly by their employees and filed so that these cards could be accessed readily for future inspections. These cards also contained drawings or diagrams to show the exterior and interior arrangement of each tenement house. For buildings without a Certificate of Occupancy, which was not required until circa 1938, the I-Card can be accepted as the legal record of existing occupancy as of the last date indicated on the card. However, buildings with I-Cards may have or need more recent legal occupancy records if any lawful alteration or conversion work was performed in the building beyond that date. Not all houses built before 1938 have I-Cards—this is likely because they were misfiled, lost, or inadvertently destroyed—but if a building was never considered multiple-dwelling (i.e. housing three families or more) or inspected as such, then it would never have acquired an I-Card in the first place. Sources: http://www.brownstonedetectives.com https://hpdonline.hpdnyc.org  

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What is it And Who Qualifies? The 421-a tax abatement was created in 1971 to encourage the development of underutilized or unused land by significantly reducing property taxes on newly developed land for a set period of time. During the time period, thousands of New Yorkers were moving upstate or to the suburbs, and City officials feared a decline in residential development. Initially the city gave these tax breaks to any newly constructed development, but as the Manhattan housing market rebounded in 1980’s, the City created an “exclusion zone” between 14th and 96th Streets. Any developers building in this “exclusion zone” were 421-a eligible only if they constructed affordable housing on-site (typically 80/20, with 20% being low-income units) or off-site (by purchasing certificates that were used to create low-income units in other parts of the city). Thousands of condominiums across Manhattan were developed under this program prior to the 2008 housing market crash. The abatement was available for new developments located only on lots that were vacant, underutilized, or “nonconforming” with the prescribed zoning use under the 421-a abatement. Owners are exempt from paying any increases in property taxes that result from new construction. The 421-a abatement was initially set to run for 10 years, but can run for as long as 15-25 years in upper Manhattan and the outer NYC boroughs. The 10-year abatement provides unit owners with a 100% abatement from property tax increases for the first two years, with taxes then being increased by 20% of the current tax rate every two years for the remaining eight years. For example, if an apartment is bought in a building that had a 421-a abatement in the first year and sold in the seventh year, the new buyer would have the remaining three years of reduced taxes, since the abatement stays with the property and does not follow the owner. This tax abatement expired in January 2016, due to disputes over wages between the construction industry and developers. However, a revival bill dubbed 421-a, “Affordable New York,” is currently being developed in the state Legislature.  The “Affordable New York” bill would permit qualified developers a 100% property tax break for a term of 35-years, mandating that all affordable units remain so for a 40-year term. The bill also includes mandates regarding construction worker wages and benefits. The newest version of the bill suggests allowing outer borough developments with up to 80 units to qualify (an increase from the 35 units necessary to qualify in the Governor’s initial proposal). Currently, the biggest issue is the debate over the average assessment value for qualifying condominiums, with NY Republicans looking to raise the limit from $65,000 to $85,000. By increasing the assessed value (which is based on a percentage of the unit’s market value), pricier properties will then qualify for the abatement. This has led many to question whether the 421-a program actually promotes affordable housing, or if it just incentivizes private development in the outer boroughs. It does not help that affordable housing benchmarks have been hit in the time since expiration, and the anticipated cost to the City to support the program with the current proposals are expected to total $1 billion (estimated at $100-120 million per year) over a ten-year period, seemingly while not increasing the affordable housing inventory. Mayor De Blasio and Governor Cuomo have fought publicly after the former introduced a proposal that would expand affordable housing, which the Governor shut down because of inadequate pay for construction personnel. The Mayor has described the current proposals as an “undue burden” on NYC residents, with the cost for each affordable unit increasing to $592,000 from $507,000 when the initial version of 421-a was in effect. Things to Consider Despite Tax Relief Opportunities When buying a condominium or co-op, it is important to consider the scenarios in which these tax abatements fall off or change, and to research which new laws or regulations have potential impact on your purchase in the next 3-5 years. What will be the real cost when the abatement expires? The property taxes could drastically jump to levels higher than those at the time of purchase.  

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Are you having a hard time finding resources on Real Estate subjects? We recently compiled a list of useful links for those looking to learn more about real estate processes, laws, and taxes. It includes both municipal resources and other helpful sites, such as Streeteasy and Oasis, a source for detailed community maps. We hope that they can be of use to you!

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