NYC co-op owners priced out by soaring maintenance fees
Related mediaOutrageous amenities in NYC apartments Funny, classic and eye-catching NYC signs NYC's tiniest apartments Five-star hotel spas in Manhattan Central Park's hidden gems
Spiraling maintenance fees at co-ops are becoming a major headache for some owners -- driving some of them to cheaper pastures.
Annual maintenance fees per room on the East Side rose from an average of $3,457 to $5,606 from 2001 to 2011, according to the Council of New York Cooperatives and Condominiums. On the West Side, fees jumped from an average of $2,784 to $4,671 per room over the same time frame.
For West Siders, real estate assessments doubled and their property taxes rose from $739 per room per year to $1,912. All together, taxes in West Side co-ops went from gobbling up 23 percent of a monthly maintenance bill to 37.5 percent, leaving co-op owners with a smaller pie slice to pay for utilities, repairs, infrastructure upgrades, debt service, insurance and labor.
Assessments and higher maintenance bills are in part driven by steadily rising fixed expenses such as water, sewer and utilities. Insurance rates also increased after 9/11. But property taxes are a major driver of escalating maintenance bills in all buildings, experts say.
The city Finance Department did not respond to inquiries about the rise in assessments for New York City co-ops.
Most cash-cramped shareholders sell, said Stuart Halper, a real estate attorney and co-owner of Impact Real Estate Management.
"I see a lot of people around Fort Greene and Prospect Heights -- neighborhoods that have skyrocketed in value -- who have been there 25 years," Halper said. "They're cashing out. They leave the city because they can't afford to live there any more,"
Having to pay one's fair share of infrastructure upgrades in prewar buildings comes at a bad time for people who have seen their incomes drop, he said. Where do they go? "They leave the city: Florida, Georgia, the Carolinas," Halper said.
In some co-ops, costs are also being driven by affluent newcomers demanding costly upgrades. "Every building I work with seems like Fort Knox in terms of security. That's a new thing. And it's got to be costing a lot of money," said Michelle Maratto, a managing partner in Itkowitz Llc.
New shareholders who "couldn't get into the Fifth Avenue and Park Avenue buildings," sometimes want the buildings they do buy into to become luxury residences, said Phyllis Weisberg, a real estate attorney who teaches a course called "Three Challenges to Effective Board Performance: Gender, Generation and Gentrification," for the council.
"They want a concierge. They want a gym. They want to redo the lobby," Weisberg said.
Neil Schaier, a lawyer who lives in a Chelsea co-op, added, "There is always tension between the families in the building who want the lowest costs possible," and appearance-conscious shareholders "who want to spend every penny possible."
A co-op can move to repossess a unit in which a shareholder has paid off a mortgage, but fallen behind on his maintenance fees. "I see a lot of nonpayment cases against people who could afford their buildings at one point, but now they no longer can. They are people who were there 25, 30 years and often are the people who put the building on track and part of the reason the new [affluent] people want in," said Maratto.
One morning this January, a 42-year-old man was in housing court, trying to get back the two-bedroom co-op he bought 15 years ago, and which had been padlocked hours before.
The defendant, who did not want his name used because he felt it would adversely affect his job search, said he fell behind on his maintenance payments after he lost his office manager job and was not eligible for unemployment benefits.
"If I lose it, everything I've worked for all my life is gone," he said of his apartment. Unexpected assessments, he said, "are what killed me."