NEW AUDIT: NYC Comptroller Lander Finds DOF Improperly Granted $6.5+ Million in Co-op/Condo Tax Abatements Since 2019

 

In a new audit, New York City Comptroller Brad Lander found that the Department of Finance (DOF) improperly granted Co-op/Condo Tax Abatements to 720 units between Fiscal Years (FY) 2019–2024, costing the City at least $6,465,892 in lost tax revenue.  

“The Co-op/Condo Abatement is meant to help people who live and work in New York City achieve the elusive dream of homeownership, not to pad the profits of businesses,” said Comptroller Brad Lander. “While the vast majority of condo and co-op owners complied with the law, this audit revealed serious holes in DOF’s management of the program. DOF should not let ineligible properties, businesses, or owners receive a tax benefit that is meant for eligible New York homeowners. When managed properly, programs like the Co-op/Condo Tax Abatement can help New York families afford to stay in New York City, and it is incumbent upon DOF to make sure it doesn’t go to actors who don’t deserve it.” 

The audit reviewed Co-op/Condo Abatements granted in FY2023 and identified 720 units (678 condos and 42 in co-ops) that should not have received the benefit, including: 

• 290 condo units owned by business rather than individuals/families. 

• 218 condo units that were not Tax Class 2 or had an ineligible building classification code. 

• 57 condo units already receiving the Urban Development Action Area Program (UDAAP) exemption. 

• Four condo units already receiving the clergy exemption. 

• 27 condo units owned by individuals that received the abatement at another development—a violation of the primary residence requirements. 

• One condo unit owned by a person who does not live in New York City—a violation of the primary residence requirements. 

• 81 condo units and 42 co-op units deemed ineligible because the developments did not submit a correct prevailing wage affidavit. 

In addition to assessing abatements granted during FY2023, the audit assessed whether the ineligible abatements found in FY2023 were granted in the years before and after FY2023 (from FYs 2019 to 2024).  

To address the audit’s findings, the Comptroller’s Office recommended that DOF:  

1. Remove the Co-op/Condo Abatement from condo units that were improperly granted;
2. Recover as much as is feasible of the approximately $6.5 million in abatements that should not have been granted;
3. Ensure that submitted prevailing wage affidavits are saved, reviewed for correctness, and associated with the correct development; 
4. Ensure the error from the XY eligibility code has been corrected and is no longer in use to prevent Property Tax System eligibility checks from being bypassed and to ensure that ineligible developments and owners are not granted the Co-op/Condo Abatement. In addition, update the ineligibility coding in the Property Tax System to prevent developments receiving UDAAP from concurrently receiving the abatement;
5. Conduct periodic sample-based testing to check for ineligible units receiving the Co-op/ Condo Abatement.

DOF generally agreed with the audit’s recommendations and stated many are already being implemented. 

Read the audit here.