For Brooklyn developers, landlords and other people involved in real estate, tax abatements are a major part of calculating the value and future worth of a project. That means any changes to the rules for how tax abatements work is of great importance. New York State has passed just such a change.
How are tax abatements different now?
The new law applies to the whole city of New York, and it sets new conditions that building owners must meet in order to obtain tax abatement. The first condition is that the average unit must be assessed to be worth less than $60,000. The second is that the unit average value is between $60,000 and $100,000, but there are no more than 30 such units. The third and last condition is the most binding: For buildings that cannot meet either of the two above conditions, they must submit paperwork certifying that they pay all building service workers a living wage.
This includes any worker at the condominium or cooperative building who works more than eight hours a day. The City Comptroller and Commissioner of Finance determine what a living wage is, taking into account benefits and other compensation, and they determine if a building meets the requirements. The certification must show that all building service workers make at least a living wage.
This is a major change. Most buildings will need to quickly show that they pay a living wage to qualify for a tax abatement because there will not be many that have a low enough value to meet one of the first two conditions to qualify for an abatement in New York. Individuals with a stake in real estate will want to make sure they fully understand the implications of the new law.