Higher Taxes = Higher Rents and More Homeless

[consigliere]

Here's a disturbing article from the November 6, 2002 edition of the Gotham Gazette:
 
 
Possible Rise In Property Taxes (i.e. Rents); Rise In Homelessness
 
To help cover the city's budget deficit, the Bloomberg administration may increase property taxes by as much as 12 percent this year and 25 percent next year. The property tax is the only city tax that the mayor and City Council can raise without the approval of the state. Council members have reported that the administration has solicited their opinions on a potential increase.
 
If property taxes rise, homeowners and building owners will not be the only ones paying a bigger bill.
 
"It will translate directly into rent increases," says Michael McKee, associate director of New York State Tenants And Neighbors Coalition, a tenant advocacy group. "The landlord pays it out of the rents he collects. A property tax increase would result in higher rent increases for just about every category of tenant."
 
Even rent-regulated tenants would be affected by a property tax increase. The tax makes up about 25 percent of the operating and maintenance costs that the Rent Guidelines Board. considers when establishing annual allowable rent increases. Furthermore, due to the intricacies of the property tax law, rental properties shoulder a higher tax burden than most other residential categories (see New York's Secret Tax).
 
New York State Tenants And Neighbors will await a formal property tax proposal before announcing its position, but, said McKee, "We might very likely oppose it."
 
In a rare instance of agreement, landlord groups, such as the Real Estate Board of New York, which represents the real estate industry's interests to the city, state and federal government, also oppose the prospect of a large property tax increase.
 
"We've said that we would pay a fair share, but a vast real property tax would, in our view, be a very bad thing for the city," said Warren Wechsler, of the Real Estate Board. "Businesses would pack up and go, and residents would pack up and go, and there would be fewer people paying the freight."
 
A large increase in the property tax would make New York City even less competitive in terms of its tax burdens, said Wechsler. "It would also, in one way or another, impose costs on owners of rental properties that could make it hard to maintain services and keep their buildings up," he said.
 
Budget watchers believe that spending cuts will come first, and the city will appeal to the state and federal governments for financial assistance. Still, New Yorkers may well end up with some form of tax increase. If the property tax gets the nod, for many, it will come disguised as a rent bill.
 
More Homeless on the Streets and in the Shelters
 
Cooler weather has arrived and with it, increasing concern about the number of homeless people on the streets of the city. Anecdotal evidence says that street homelessness is on the rise, and the Department of Homeless Services has seen a corresponding increase in the number of single adults requesting shelter.
 
The average daily census has been increasing by about 200 people per month over the last few months. While such increases always occur as winter approaches, current numbers are much higher than they have been in past years.
 
In September 1999, the city sheltered an average of 6,586 single adults each night. This September, it housed an average of 7,650. The Department of Homeless Services has plans to conduct a census of the street homeless, typically single adults who avoid the shelter system, as part of its strategic plan. The agency is overwhelmed by the ever-increasing numbers of homeless families requesting shelter.
 
"On the family side, the growth has been so accelerated and exceptional," said Jim Anderson of the Department of Homeless Services. "As a result, we needed to open just under 2,000 new units of family shelter since January."
 
Just one year ago, there were about 6,500 families in need of shelter on a typical night. Now, there are nearly 9,000.
 

[consigliere]

This story comes from the November 20, 2002 online edition of the New York Daily News:
 
Property tax hike would sock it to renters, too
 
By LISA L. COLANGELO
DAILY NEWS CITY HALL BUREAU CHIEF

The millions of New Yorkers who rent their homes and apartments will find there's no escaping higher property taxes.
 
If landlords are hit with the 25% tax increase pitched by Mayor Bloomberg, they will try to pass it along to tenants as quickly as possible.
 
Tenants in the city's 600,000 unregulated units should get ready for sticker shock as soon as their leases are up.
 
"Owners are going to attempt to recoup the higher taxes," said Steven Spinola, president of the Real Estate Board of New York, which kicked off an aggressive campaign against property tax increases this week. "This is a big hit, not only for big owners, but for the small owners who find it difficult to make all the numbers work."
 
Even people in the city's 1 million rent-stabilized units are not immune. Last year, when landlord costs were at an all-time low, the Rent Guidelines Board approved 2% increases on one-year leases and 4% hikes for two-year leases. With higher property taxes in the equation, the board may have little choice in June but to soak renters.
 
"We're legally required to look at all factors, including the burden of real estate taxation, on the residential real estate sector," said board chairman Marvin Markus.
 
Tenant advocate Michael McKee said yesterday that he is worried the board will use any property tax increase as an excuse to approve a huge rent hike.
 
"This is not a board that has been sympathetic to the problems of tenants making ends meet," he said.
 
Mayor Bloomberg, City Council Speaker Gifford Miller (D-Manhattan) and Councilman David Weprin (D-Queens), who heads the Finance Committee, have been targets of a letter-writing and telephone campaign by groups representing property owners, urging the politicians to kill the 25% hike.
 
"We are always playing catchup," said Frank Ricci, director of governmental affairs for the Rent Stabilization Association, which represents owners of rent-stabilized buildings. "There have been astronomical insurance increases, and fuel still hasn't come down."
 

[MikeW]

Strangely, non-regulated renters will probably be the least effected by this. Free market rents are weaker than what had been normal already. If the economy doesn't pick up, people who don't have below market regulated rents may not be inclined to take an increase, and may be willing to move. This may force the LLs in to eat the cost increase.

Regulated renters will pay the RGB increase simply because they know they'll never get a better deal if the move.