Should I vote for a flip tax?

What neighborhood is this in?

UWS - a 70 unit prewar full svc co-op.

The problem is that no one wants to be the first to pay the flip tax. My building was able to get the votes to implement a true flip tax -- imposed only on the profit if someone sells within five years -- back in the early '00s after a few shareholders doubled their money in 18-36 months. Problem is, ten years later, no one has ever paid the flip tax! We've had multiple sales within a month of the five-year mark.

There has been discussion of amending the flip tax, but several long-term residents are adamant that they shouldn't have to pay flip tax. A host of people have come and gone through the building without ever paying flip tax; why should they be "penalized" for staying. I believe the Board tried to implement a flip tax only on units purchased after a certain date, but learned that was illegal. (I think it was also illegal for the Board to do this without a super-majority shareholder vote). There was discussion of a sliding scale, which is legal, but it was clear that a small group of long-term residents designed the sliding scale to exclude themselves and include everyone else, so the newer residents said no. We're small, and in some cases, two large units can prevent a super-majority, and there are two large units on both sides of the flip tax debate. The issue will be deadlocked until someone gives.

In your case, I'd preserve your self-interest and vote against the flip tax. Let the co-op implement it after you leave. That said, 2% is not unreasonable, so if it does pass, I think you'll be fine from a resale perspective.

hohjo58...why are there so many assessments and high maintenance to begin with? Maybe it's time to scrutinize the board members. Find out whats' going on and if there are any incompetents on the board or heaven forbid there is fraud involved. Don't just blindly vote for it. Find out what the heck is going on.

Why are the financial not in good shape? Who's running the show up there?

Unless your building has an unusually high number of 1-bedrooms that turnover, a flip tax won't make much difference in changing the revenue profile of the building (perhaps 2%). You should vote against it because you won't realize the benefits of that flip tax as an owner before you bug out.

no no no! Stupid way to raise revenue IMHO. For one, it's an unstable revenue stream: How can the board predict how many sales there are going to be in any given year?

If your co-op is spending more than it is taking in, it is spending too much period, or it needs to take in more money, period. Since the majority of your co-op's expenses are probably fixed (property taxes, labor contracts) then the board just has to be smart about saving money around the edges (working with NYSERDA on electricity savings, for example) and/or raise maintenance charges.

But distributing the money-raising unfairly by taking $30K from some shareholders and $0K from others seems absurd to me. And the idea that buyers who might be turned off by monthly maintenance charges don't "see" a flip tax presumes that buyers are unsophisticated yahoos ... which has not been my experience.

ali r.

My buildings flip tax was convenient, with things like the local law 11, breaking boilers, etc. , we have a healthy reserve fund with no need for assessments.
In a 100 year old building, something major is never far away or that cheap.
My co-op however is on the smaller side however (@ a dozen units).
(third year in a row without raising maintenance though nothing to do with the reserves, just good management)

The percentage though is a big deal, mine (3%) I think is too high, 2% or less is apropos.
If your a "flipper" of course it wont benefit you, but if you plan on staying 7 plus years, it will.

Just to add, our building's local law 11 work 2 years ago cost was @ $60K.
What's that assessment look like to 12 units with no flip tax reserve?

Yes