I went to my co-op’s annual shareholder meeting last night. One of the two main topics for discussion was the plan of one of our non-residential neighbors to add floors to its pre-existing structures nearby, potentially reducing, modestly, the (unimpressive) views of some residents.
One of my fellow residents (whose view is not at risk) asked a simple question: “Has there been any discussion of what they will be required to give back to the community?”
“They,” incidentally, are a hospital. A not-for-profit teaching and research hospital in fact.
And they are being damned for “not giving back to the community”?
Remind me again where I’ll find the scum and villainy?
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The other hot topic was the board’s proposal to implement a transfer fee, also called a “flip tax,” of up to two percent of the sales price whenever an apartment is sold. The debate centered entirely on how much money it would raise for the collective cooperative versus the impact on individual apartment values — the classic “us versus ourselves” doggerel that arises whenever some members of a group want to sacrifice other members “for the good of the whole.”
As I sat there listening to the oblivious arguments and the more oblivious counter-arguments, I wondered whether anyone would ask the simple question of why a fee should be imposed that does not reflect an underlying cost? We pay maintenance fees that reflect the underlying costs of running the building. Fair enough. We pay move-in and move-out fees because moving in and moving out consume resources (staff, use of elevators, etc.). Fair enough.
But what cost is being offset by a transfer fee? None was identified. The only selling point was “It’s money for us!” How is it that good ethics, or even good accounting? If we pit ourselves against each other in this way, then what will be the next way?
I will be voting against the proposal, though for some reason I suspect the wolf vote will prevail over the sheep vote. Just a hunch.
5 responses so far ↓
Link Mark // May 20, 2008 at 9:15 am
There is nothing that more closely approximates communist totalitarianism than a co-op or condo association. When I lived in a condo complex in VA, one of the favorite practices was citing people for daring to store their bicycles on their porch…never mind that it was only possible to see what was on someone's porch if you leaned over the edge of the stairwell in the breezeway AND were at least one story above the "violating" condo.
Link Avatar300 // May 20, 2008 at 9:53 am
Run, Kip, run. Or possibly: This isn't the sales tax you're looking for…
Link J-Philip // May 21, 2008 at 12:36 am
I believe Kip's Law applies here, in a microcosm.
Link Silas // May 22, 2008 at 1:26 pm
Isn't the justification for the flip tax kind of evident from the name? That you want to penalize people who buy condos just to speculate and then "flip" to someone else, rather than be a pleasant member — and then pocket the penalty money for all the legitimate members?
I'd be genuinely surprised if no one actually made that argument :-/
I'm assuming, of course, that a flip tax has some sort of exemptions that focus it in the way I've described above: e.g. doesn't apply if you actually inhabit the unit for a year, not retroactive to existing members, etc. But even without such exemptions, it will still have the function I described: a tax on a sale of a unit is inherently less burdensome to someone who has to figure its impact as a cost of living their 10 years vs. someone merely holding it 3 months.
How detached from reality am I here?
[Kip replies: How does living in a unit for a shorter time generate externalities to those who live in a unit for a longer time? If anything, the externalities are positive rather than negative, since the flipper provides liquidity to what is an inherently illiquid market.]
Link Silas // May 23, 2008 at 1:37 pm
Kip: it's not black and white. Yes, flippers create liquidity. However, co-ops probably want to fill their units with people who have a long-term stake in the future of the co-op, NOT people who will be gone soon. I thought this was just basic co-op reasoning.
If people value the latter benefit more than the former (or the latter benefit contributes more to the price of the units than the former), they would be happy to tax flippers.