Coop Assessment Lump Sum Payment

Sharon, your management company explained it as it actually is. most coops get an abatement, they then assess each owner in the same month as the abatement payout so that the owners don't "feel" it. the coops do that rather increase maintenance.

the assessment that you are talking about, distributed over months, is for a larger amounts that usually go towards major improvements (facade/roof/boiler/etc). my old coop had an assessment for a few years for the elevator replacement.

Right. See http://www.nyc.gov/html/dof/html/property/property_tax_reduc_coop_condo.shtml

Completely normal. It is a very painless way for the coop to gain revenue. Shareholders never had the money so they don't miss it as the theory goes.

isnt stealing your annual tax abatement enough?

gcondo: I don't get your comment. No one is getting stolen from in a coop. No one profits from assessments. The building gets maintained. When you own a house it will need things that are expensive: a new roof, boiler, driveway repaved, windows, shingles, etc. You own a coop, you own part of a building. It doesn't maintain itself. New roof, sidewalks, electrical systems, elevators, decor, windows, boilers, etc. That gets paid for out of a capital budget--not an operating budget. There is a reserve fund, but it is very, very unwise to depleat it too much. So assessments are made as necessary. Hopefully the building has a prudent, conservative, intelligent board with at least some officers having backgrounds in law, accounting, engineering if possible (that is what my board is like, anyway). Since capital projects don't pay for themselves and it is bad management to saddle a coop with undue amounts of debt, assessments are made. The most painless type is assessing abatements or refunds. Why is this even necessary to discuss? It seems so obvious. If you don't like paying for the upkeep of a building, then rent an apartment and don't buy one. No one is forcing anyone to own. But if you do, don't bitch about capital expenses that are readily anticipated since sooner or later every building has them--some quite large.

I can live with assessments. What I do not like is when a coop board feels free to take 50% of an abatement without any justification or explanation.

If they need the money, they can explain it or raise maintenance, fine with me.

Stop making assumptions and get off your soap box!!! ;D

gcondo, I don't think you understand coop management or prudent types of management anyway. You do not raise maintenance--a permanent move is 99% of cases--to fund a one-time capital expense. To do so diminishes the value of the units for resale (higher maintenance depresses sales prices). In addition, assessments get added to your cost basis and when you sell you can reduce the amount of your capital gains by deducting assessments over the years. You CANNOT ascribe any maintenance payments to your cost basis even if some of the maintenance was in fact used for capital improvements. It is just the way the IRS works. To treat the deductions otherwise is to invite an audit. That said, it makes sense to assess for capital expenses.

If a coop board's actions are not explained, there is an annual meeting where every coop I've ever known provides shareholders with an opportunity to question the board members. Why collection of the rebates/abatements was deemed appropriate can easily be asked about at this annual meeting. It should also be clear enough by looking at the financial statement you get each year and examining the operating and capital budgets.

Kyle:

"So assessments are made as necessary. Hopefully the building has a prudent, conservative, intelligent board with at least some officers having backgrounds in law, accounting, engineering if possible (that is what my board is like, anyway). Since capital projects don't pay for themselves and it is bad management to saddle a coop with undue amounts of debt, assessments are made. The most painless type is assessing abatements or refunds. Why is this even necessary to discuss? It seems so obvious. If you don't like paying for the upkeep of a building, then rent an apartment and don't buy one. No one is forcing anyone to own. But if you do, don't bitch about capital expenses that are readily anticipated since sooner or later every building has them--some quite large"

wow..freakin wow...I vote for Kyle for Congress..screw that ..President....I always thought you were a liberal..in fact you are independent...Kyle for President..Kyle for President.

Lol. Independent? Yes. But most friends describe my politics more as "infuriating.". I don't see this as very political--it's pretty basic coop management principles. It isn't advisable to operate as the OP suggests in the fit of pique.

gcondo,
Just be happy they only took 50%. of the rebate. My landlord has been taking 100% for nearly a decade.

Assessing the Real estate tax rebate was something that Coop landlords "learned" how to do shortly after it was implemented in 1997.
I can tell you as a matter of fact that during the first few years Coop Shareholders received a rebate in the form of a "Rent reduction" on their maintenance invoice. Which is how the law reads.

Soon after that Coop Landlords learned that they could take this money from the resident "shareholders" since they are able to assess the shareholders without a majority vote.

Funny how Condos are able to survive without resorting to these kind of tactics. In fact with Condos it's not legal.

Assessments are supposed to be introduced for a specific use. In order for this assessment to be ethical the proceeds from the "assessment" should be placed in a separate trust which would only be used specifically to offset future tax increases before maintenance increases. But this would be to easy to monitor and audit. Instead it's very artfully buried in the "financial statements" provided to the shareholders. Anyone who is not an accountant, lawyer or RE pro usually has no clue how to read these annual statements. That's how your landlord wants to keep it.

They take money that belongs to the shareholders AND raise the maintenance anyway. My maintenance has exceeded expense increases by a significant margin for the past 8 years in a row.

Oh, BTW, The sponsor (landlord) is not eligible for the rebate since he is not a resident shareholder. Does anyone actually think that sponsors are actually going to write a check for their "assessment" ? ... when pigs fly.
This is a way to acquire funds at the residents expense. The sponsor is the ultimate beneficiary.

Kylewest wrote: ... then rent an apartment and don't buy one...
Coop shareholders are renting. They just have none of the renters rights nor any of a home owners rights.

Here's an interesting article that came out right around the time that Coop Landlords learned this trick.

http://www.nytimes.com/2003/03/02/realestate/q-a-abatements-and-co-op-assessments.html

andwin: your views are not mainstream and represent an outlier position. I write now only in the very unlikely event someone reads this and hasn't the knowledge to sift fact from odd views. The coops in which I've lived have no sponsors calling any shots since they long ago sold their stakes or hold so few units as to be irrelevant. My coop, like many--or even most--is run by my fellow shareholders. No one is being personally enriched with assessments. To speak of "landlords" in the context of a coop is bizarre, as is saying "coops shareholders are renting." When compared to true renters, shareholders in a coop have distinct tax advantages, have the potential to realize capital appreciation of their asset, can participate in the running of their building if they so choose, get to avoid the negatives of transient neighbors and absent owners, and have a board that can nip problems in the bud because they have substantial power to do so. As a renter one is utterly impotent.

In any event, the bottom line is monies collected by a well-run coop serve all shareholders. If a coop functions otherwise, don't live there. No one has a gun to his or her head. But what is just plain annoying is people who mope through life with victim mentalities as if life happens to them rather than their lives being a consequence of their own decisions. Hate assessments? Don't own a coop. Hate boards? Don't live in a coop. The one thing you shouldn't do is buy the darn coop and then gripe about owning a coop.

kylewest, exactly, and thank you.

As a past co-op president myself, I concur with kylewest. The whole mantra was always "maintenance, not replacement." The co-op has no interest in holding back money from individuals. As the board, we're accountable and answerable to the share holders. We work for them.

kyle, you don't know anything about me, stop acting like you do lol, and stop putting words into my mouth so you can stand on your soap box

dont sit there and deny that coop boards do not dip into the abatement on an annual and unexplained basis. Yes, it takes money to maintain a coop - nobody is disputing that. you do not need to respond to me tyvm

Hi SharonNYC, there's no set rules around it. Some buildings will do it in one shot and spread it out pro rata fairly among all the shareholders. Other times if it is a major expense (like roof repair), they will spread that out over 1 year or more. In the latter cases, it really does help to have more units and neighbors in the building!