Soaring charges hit condo, co-op owners

Bay Terrace Gardens

Crain’s New York

Soaring charges hit condo, co-op owners

Worse lies ahead as income from flip taxes and retail units ebbs just as defaults rise

By Amanda Fung

Published: February 22, 2009 – 5:59 am

Residents of a 54-unit Upper East Side co-op got the bad news last month—despite the board’s intense efforts to trim expenses, maintenance fees are rising 15%, nearly double last year’s hike. “People are furious,” says Steven Sladkus, president of the co-op board and a partner at law firm Wolf Haldenstein Adler Freeman & Herz. “Some of them have lost their jobs.”

It’s an increasingly common problem. Even as the city’s economy sinks, maintenance fees and common charges for co-ops and condos, respectively, are rising at the highest rates in years. Co-op managers blame soaring expenses, primarily property taxes.

And things could get much worse. Income derived from renting retail space and levying charges on unit sales is plummeting, and the number of owners defaulting is starting to rise.

Monthly fees at co-ops are going up at more than double the rate of recent years. Though steeply falling fuel costs have given buildings some relief, most boards cite drastic hikes in real estate taxes. Condo common charges are rising less dramatically, because such taxes are not included.

Fees have spiked 7% to 12% at the 300 Manhattan co-ops and condos managed by Cooper Square Realty, according to Chief Executive David Kuperberg. That compares with traditional average increases of 3% to 5%. Similarly, Halstead Property Management says the co-ops it operates are getting hikes of 8% to 14%, double historical rates.

At Lincoln Towers, an eight-building complex on the Upper West Side, owners are writing maintenance checks that are 4% to 13% higher than in 2008.

“This is by far the largest general increase we’ve had since 1987, when we became a co-op,” says Andrew Cooper, president of Residence Resource, which manages Lincoln Towers. “This is happening citywide.”

The squeeze has just begun at co-ops and condos where rental income from retail and office space is important. Ground-floor retail leases are major sources of revenue for many residential properties. For instance, such space in a building on Madison Avenue in the East 80s can fetch at least $300 a square foot. Retail rents can bring in millions of dollars, according to Faith Hope Consolo, chairman of Prudential Douglas Elliman’s retail leasing and sales division.

The retail vacancy rate in Manhattan residential buildings is running at nearly 18%—triple that of 2008, Ms. Consolo says. “There is a lot of competitive space out there,” she adds. “Retailers have been victims of the recession.”

With declines in sales prices and transactions, co-ops that still look for income from flip taxes are feeling the pinch. Deal volume was down 23% in the fourth quarter from a year earlier, according to appraisal firm Miller Samuel. The building typically makes 3% to 5% of the unit sales price.

At the market’s mercy

“Co-ops are at the mercy of the market,” says Eric Goidel, senior partner at law firm Borah Goldstein Altschuler Nahins & Goidel.

Condo buildings, which have less stringent financial requirements for initial purchase than co-ops do, face another threat. As owners lose their jobs or their bonuses, they quit paying common charges. And in the deteriorating real estate market, developers are increasingly left paying common charges for unsold units—a burden that could push some of them into bankruptcy.

“If developers default, everyone else will eventually have to pick up the balance,” says Jeff Reich, a partner at Wolf Haldenstein.

Meanwhile, operating costs—including water, sewage and labor—continue escalating. Many co-op managers point to real estate taxes for the hefty maintenance fee spikes. To help fill the city’s $4 billion budget gap, Mayor Michael Bloomberg and the City Council recently boosted property taxes 7%.

“The city hit owners at a very bad time,” Mr. Kuperberg says. “Values of homes are decreasing, and people are struggling to pay their mortgage.”

Some condo owners claim that developers misrepresent operating expenses to attract buyers. Other estimates may be made in good faith but are outdated in a short time. One new Madison Avenue condo was forced to raise common charges 25% this year, according to Mr. Reich.

“It’s a perfect storm,” he says. “Expenses are increasing, and people who [relied on financing] for an obscene amount of the price of their condos are seeing values decline.”

You need more green to live in Queens

You need more green to live in Queens

From Your Nabe.com
You need more green to live in Queens
Report by Center for an Urban Future cites boro as fifth-most expensive locale in the United States

By Philip Newman
Wednesday, February 11, 2009 3:59 PM EST

New York City’s notorious cost of living is driving out thousands of the middle class in an exodus fueled not only by the exorbitance of Manhattan but Queens, too.

It turns out that of 315 urban areas in the United States, only Manhattan, San Francisco, Honolulu and San Jose are more expensive then Queens.

In fact, Queens is the fifth most-expensive urban area in the United States.

The Center for an Urban Future, a Manhattan think tank, reported that it takes $85,918 annually for a person to attain middle-class status in Queens, compared with $123,322 in Manhattan. The same lifestyle in Houston would require $50,000.

“Is it really that important to worry about the possible decline of New York’s middle class when the city has added so many well-heeled residents in recent years?” the center asked.

“The middle class are the backbone of the city’s work force — the book editors, Web designers, lab technicians, architects, nurses, paralegals, actors, university professors, carpenters and bus drivers.”

The Rev. Edwin Reed, chief financial officer of the Greater Allen AME Cathedral of Jamaica, said “the middle class are the professional people that really make the city run.”

Citywide, a combination of steep housing costs, the highest taxes in the nation and the rising cost of everything from milk to auto insurance has driven thousands of New Yorkers to places like eastern Pennsylvania, the Atlanta suburbs and North Carolina.

Overwhelmingly, it is housing costs that have diminished the middle class throughout the city, with the average monthly rent citywide at $2,801, which is 53 percent higher than in San Francisco, the second most-expensive city, the center found.

Between 1999 and 2007, the median sale price for a single-family home in Queens rose by 147 percent. That was more than in any borough except Manhattan, where the price shot up by 209 percent. The median price went up 131 percent in the Bronx, 145 percent in Brooklyn and 142 percent in Staten Island.

Queens residents are paying heavily for housing. A recent survey reported that 49 percent of residents shell out as much as 48 percent of their income on housing.

As for stagnant wages, the Center for an Urban Future said real weekly wages — those adjusted for inflation — rose by a smaller amount in Queens than in any other borough between 1975 and 2007.

In Queens wages rose by 1.1 percent, compared to 1.7 percent in Brooklyn, 2.5 percent in Staten Island and 8.6 percent in the Bronx. Wages climbed by 96 percent in Manhattan over the same period.

Queens also had a greater percentage of workers in low-wage jobs than any other borough except the Bronx. The report said 34.4 percent of Queens workers over 18 were employed in low-wage jobs, as determined by the U.S. Population Reference Bureau.

Citywide, the percentage of workers in low-wage jobs was 21 percent. In a breakdown by borough, the Bronx was at 42.1 percent, Brooklyn 32.2 percent, Staten Island 22.5 percent and Manhattan 21.6 percent.

But it is not just low wages and exorbitant housing that are making living in the city a trial for the middle class. Nearly everything costs more:

• Auto insurance: The survey obtained rate quotes for a 37-year-old male driving a 2006 Toyota Corolla who had been in no accidents in the previous five years and had an excellent bill payment history. In Queens he would pay $1,250 compared with $450 in Atlanta and $610 in Washington, D.C.

• Milk: One gallon in the city costs $4.08 (the national average is $3.82)

• The city has the nation’s fourth-highest telephone rates

• Day care in the city costs at least $2,000 a month for one child

New Yorkers pay 50 percent more in taxes than people in any other major American city and city taxes are 90 percent higher than in any other U.S. city. The average property tax on a one-, two- or three-family home has gone up 87 percent since 2000.

“Queens has done worse than any other borough in recent years when it comes to people moving out of the city,” said Jonathan Bowles, director of the Center for an Urban Future.

Most of the migration out of Queens and the rest of the city took place in more prosperous times before the economic slump began in late 2007.

“Queens lost 51,177 residents in 2006 vs. 35,788 in 1993,” Bowles said. “Thus, domestic out-migration levels for Queens was a staggering 43 percent higher in 2006 than in 1993.”

Most middle-class residents cannot afford private schools, so many leave the city.

“People like to live where they feel they have access to a good education for their children,” said Cheryl Caddle, chairman of the Education Committee of the Cambria Heights Civic Association. “A lot of people believe the public schools in New York are subpar.”

Tanya Cruz of Community Board 13, which stretches from Glen Oaks to Queens Village, Laurelton and Rosedale said “our educational system is failing.”

The Center for an Urban Future said another factor making New York unattractive is unsatisfactory public transportation.

Many parts of Queens and Brooklyn have the longest commutes in the nation, and conditions en route are not always good.

“On a lot of bus lines, people are packed in there like sardines,” said Yvonne Reddick, district manager of Community Board 12, which represents Jamaica, Hollis and Springfield Gardens.

Olga Djam of Elmhurst said many commutes are too long. “If you’re commuting for an hour and a half, when are you going to spend time with your kids?” she asked.

The center offered recommendations to preserve the city’s middle class:

• develop a strategy to diversify the economy and support the growth of middle-income jobs

• stop neglecting the city’s community colleges (whose graduates earn 38 percent more than high school graduates)

• improve mass transit, particularly outside Manhattan

• increase housing for the middle class

• protect the character of neighborhoods

• rethink efforts to increase revenue from fees and fines, which have a particularly heavy impact on the middle class.

Reach contributing writer Philip Newman by e-mail at news@timesledger.com or phone at 718-229-0300, Ext. 136.

Queens: A blue-collar boro shifts gears

Where is the middle-class?

Daily News
By Lisa L. Colangelo, Friday, February 6th 2009, 10:16 AM
DAILY NEWS STAFF WRITER

Queens, long known as a haven for middle-class New Yorkers, may be outgrowing its blue-collar roots, a new report says.

In fact, it’s more expensive to live in Queens than in Orange County, Calif.; Stamford, Conn., and even Nassau County, according to “Reviving the City of Aspiration,” the report released by the think tank Center for an Urban Future.

“More neighborhoods in Queens are out of reach to middle- and working-class families than ever before,” said Jonathan Bowles, co-author of the report, unveiled yesterday.

“It used to be that you could find a good deal on a home, whether it’s Sunnyside or Laurelton. Prices have gone through the roof,” he said.

The report looked at a number of factors that have socked middle-class New Yorkers, such as rising child-care costs, fewer middle-income jobs, lack of public transportation and out-of-scale development in their neighborhoods.

These may be some of the reasons, Bowles said, that 44% more people moved out of the borough in 2006 than in 2003, even as its population increased overall.

“People are focused more than ever on the cost of getting by,” said Corey Bearak of the Queens Civic Congress, a coalition of community groups.

“It’s always the middle-class income that gets squeezed.”

Parents unhappy with city schools also are forced to pay big bucks for private or religious schools.

“Some people are paying private college rates from kindergarten,” Bearak said. “The first break they get is if their child goes to a city college.”

Southeast Queens also is being squeezed – traditionally a stable, middle-class haven for African-Americans and Carribean-Americans, Bowles said.

“I think the opportunities for the next generation of the black middle class may not be the same,” Bowles said. “A lot of people who were municipal workers and health-care workers were able to buy homes in southeast Queens.”

Longtime Cambria Heights resident Cheryl Caddle said the city needs to provide better educational programs.

“We have good elementary schools,” said Caddle, who is the PTA president at Public School 176.

“But after that, people feel that they need to find a private school or trek their kid to some other part of the city.”

Fire Damages Baybridge Condos

Update From NY1

The Blaze occurred in the Baybridge Condos.

Several Queens residents were left out in the cold after a fire in Clearview Friday evening.

Witnesses say the fire started at Jordan Road.

As firefighters battled flames on the second and third floors of a condo, the flames it spread to a neighboring building.

“They crashed our windows, so we don’t know what damage is done or how bad it is,” said neighbor David Linker. “We’re right next door to all the damage though so I’m sure there’s smoke damage and significant damage.”

All the residents left safely.

Officials were still investigating the cause of the fire on Friday night.

See the NY1 Video

Additional Photos

Smoking Ban Hits Home. Truly.

January 27, 2009
Belmont Journal
Smoking Ban Hits Home. Truly.
By JESSE McKINLEY

BELMONT, Calif. — During her 50 years of smoking, Edith Frederickson says, she has lit up in restaurants and bars, airplanes and trains, and indoors and out, all as part of a two-pack-a-day habit that she regrets not a bit. But as of two weeks ago, Ms. Frederickson can no longer smoke in the one place she loves the most: her home.

Ms. Frederickson lives in an apartment in Belmont, Calif., a quiet Silicon Valley city that is now home to perhaps the nation’s strictest antismoking law, effectively outlawing lighting up in all apartment buildings.

“I’m absolutely outraged,” said Ms. Frederickson, 72, pulling on a Winston as she sat on a concrete slab outside her single-room apartment. “They’re telling you how to live and what to do, and they’re doing it right here in America.”

And that the ban should have originated in her very building — a sleepy government-subsidized retirement complex called Bonnie Brae Terrace — is even more galling. Indeed, according to city officials, a driving force behind the passage of the law was a group of retirees from the complex who lobbied the city to stop secondhand smoke from drifting into their apartments from the neighbors’ places.

“They took it upon themselves to do something about it,” said Valerie Harnish, the city’s information services manager. “And they did.”

Public health advocates are closely watching to see what happens with Belmont, seeing it as a new front in their national battle against tobacco, one that seeks to place limits on smoking in buildings where tenants share walls, ceilings and — by their logic — air. Not surprisingly, habitually health-conscious California has been ahead of the curve on the issue, with several other cities passing bans on smoking in most units in privately owned apartment buildings, but none has gone as far as Belmont, which prohibits smoking in any apartment that shares a floor or ceiling with another, including condominiums.

“I think Belmont broke through this invisible barrier in the sense that it addressed drifting smoke in housing as a public health issue,” said Serena Chen, the regional director of policy and tobacco programs for the American Lung Association of California. “They simply said that secondhand smoke is no less dangerous when it’s in your bedroom than in your workplace.”

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