#NYC’s rent-stabilized owners need tax relief

With property taxes due July 1, it should come as no shock to anyone that thousands of building owners will be unable to make their equivalent of rent payments on time. That doesn’t bode well for a city already teetering on the brink of economic collapse.

Not long into the novel-coronavirus outbreak, the New York City Office of Management and Budget said it was putting aside $180 million in anticipation of July 1 property-tax delinquencies. But officials didn’t anticipate the length or economic severity of the pandemic. The real figure needed could be twice that amount.

Landlords are in this predicament because there has been a 25 percent to 35 percent decline in rent collection since April, shortly after COVID-19 shut down the Big Apple. But small building owners — mom-and-pop operations, mostly immigrants and people of color — aren’t getting rent from as much as 50 to 60 percent of their apartments.

Take Lincoln Eccles. The son of Jamaican immigrants, he owns a 14-unit building in Crown Heights. He has been working on payment agreements with half of his tenants, and that doesn’t include two apartments that haven’t paid rent since 2018. The property taxes due today represent 60 percent of his rent rolls, revenue he simply doesn’t have. Not to mention, Eccles is also grappling with a $9,000 emergency boiler repair.

On average, property taxes account for nearly 40 percent of a building’s rent stream. But government continues to ignore the dramatic decrease in residential and commercial rent revenue and its crushing financial impact on building owners like Eccles.

Despite thousands more stories like that of Eccles, Mayor Bill de Blasio has his hand out this week, expecting landlords to pay their real-estate taxes on time, in full, or face harsh penalties. But here’s the thing: Landlords can’t pay their property taxes with rent revenue they don’t have. Landlords aren’t cash cows and the small owners, especially, aren’t sitting atop hidden pots of gold.

Last Thursday, some responsible members of the City Council tried to cut landlords a break by proposing legislation that would have dropped interest rates for delinquent property-tax payments to zero percent. But Hizzoner instructed his minions to text members during their meeting, warning that anything less than maintaining the existing 18 percent interest rate would bankrupt the city.

Although the council ultimately voted to lower the interest rate to 7.5 percent — a step in the right direction — it is unconscionable to squeeze any penalties from landlords at a time like this. It also comes with a means-test caveat, which is kind of hypocritical, considering that fewer than two weeks ago, de Blasio instructed the rent board to implement a rent freeze for all tenants. That freeze came with no means test, no requirement of proof of economic hardship.

Then, last Friday, the mayor tried to pressure Gov. Andrew Cuomo to extend the moratorium on evictions and give tenants a yearlong grace period to catch up on missed rent payments. New normal, same old de Blasio politics: prohibiting, deferring and cutting off the rent stream; not caring that landlords won’t have the resources to repair, maintain and upgrade apartments and buildings, pay employees and meet additional costs of daily sanitizing efforts; oblivious that owners provide jobs to local residents and support neighborhood business.

Property taxes last year accounted for nearly half of the city’s revenue and fund essential services like public hospitals, education, sanitation and emergency response. Break the backs of owners, and they won’t be able to contribute at all — a catastrophe.

Here’s what de Blasio can do immediately to right the ship and prevent an economic crisis of titanic proportion:

• issue an administrative order that extends July 1’s tax deadline to Sept. 30;

• instruct the City Council to create legislation that provides a one-year moratorium on interest-rate penalties on delinquent tax payments, the same grace period de Blasio is proposing for tenants to catch up on rent payments;

• a freeze on property taxes at 2018-19 levels from Oct. 1, 2020 to Sept. 30, 2021, the same period that rents will be frozen on the city’s 1 million rent-stabilized apartments, and

• lobby Washington with mayors from around the country for federally funded rent vouchers.

De Blasio’s politics can’t be a one-way street. He says tenants who can’t pay the rent shouldn’t be evicted, period. We say that landlords who can’t pay their property taxes today shouldn’t be penalized, period.

Joseph Strasburg is president of the Rent Stabilization Association.