Letter to the Town Board: All of Chappaqua Crossing must be fee simple
With 11 COMMENTS since Friday
November 5, 2010
by Rob Greenstein
Dear Town Board members,
A few weeks ago we heard that Chappaqua Crossing developer Summit Greenfield agreed to tax the 60 townhouses as single-family dwellings in fee simple instead of being taxed as condominium units.
Town Supervisor Barbara Gerrard was right to insist on this change. But it’s not enough. Chappaqua Crossing must be a fee simple project. Our Town Board must insist that any residential rezoning is limited to fee simple ownership.
Logical argument made for fee simple over a year ago
Mark S. Tulis served as Town Supervisor of the Town of New Castle, Chair of the Town of New Castle Board of Assessment Review, Westchester County Legislator, United States Bankruptcy Trustee and practiced real estate tax law for 30 years. On 07/10/2009 he wrote a letter to the editor titled “Summit Greenfield tax revenue projections misleading; age restriction dubious.”
Mr. Tulis stated “I would urge the Board to require fee simple ownership.” He stated “any projection by the developer as to future taxes is both misleading and non-verifiable.”
The differences between fee simple taxation and condominium taxation
In order to appreciate Mr. Tulis’s concerns, it is important to understand the differences between how fee simple residences and condominiums are taxed. Fee simple residences are typically taxed based on their value, either in comparison to similar properties or what it would cost to replace an existing structure.
Condominiums, on the other hand, like commercial property, are taxed based on the possible rental income that could be generated by the condominium. This valuation technique is based on a myth, mandated by state law, that the entire project, regardless of ownership, is a rental project. In other words, the market value of a property is based upon hypothetical rentals and hypothetical expenses, which are based on current rental market conditions.
Mr. Tulis stated, “A failure to insist by the Board that the Reader’s Digest Project be a ‘fee simple’ project will result in huge reductions in assessments in the future.” He stated “you must also analyze the potential negative impact of millions of dollars of refunds in taxes for this Project within five to ten years, which is the usual time frame for these types of reductions.”
In fact, based on information obtained through a Freedom of Information Law request, over the past 5-7 years, condominium developments in the town of New Castle have received well over a million dollars in tax refunds. This is true in both good and bad economic conditions. Chestnut Oaks received an 8.3% reduction from 2005-2009, a $156,158 refund. Pheasant Run received 20.6% reduction from 2003-2008, a $469,849 refund. Ledgewood Commons is currently seeking a $688,800 refund.
Just yesterday, the Town of New Castle uploaded to their website “An Impact Study on the Possible Results of a Reassessment Project” for the town. The report indicates, “Condominiums are enjoying a tax benefit of 40% to 60% based on the restriction in the methods used to value them.” This study clearly shows the disproportionate benefits condominiums receive. To view the study, click http://www.newcastlenow.org/images/uploads/Impact_Study_New_Castle.pdf
Let me be clear, I do not blame the condominium associations for filing tax grievances. They are merely asserting their rights under current state law.
Summit Greenfield, an aggressive tax griever
Not surprisingly, Summit Greenfield/Reader’s Digest has been the most substantial tax griever. In 2001, they lower their assessed value from $18,500,000 to $14,040.00. In 2002, they lower their assessed value from $18,500,000 to $11,845,600. In 2003, they lower their assessed value from $18,500,000 to $10,587,200. And, again in 2004, they lower their assessed value from $18,500,000 to $11,132,800. Summit Greenfield also filed tax certiorari proceedings in 2008 and 2009, and a tax protest (prelude to a formal certiorari challenge) for 2010 requesting 50% reductions in assessed value for each of these three years. If granted, that would represent a 70% reduction from the original 2001 assessed value.
And this is exactly what Summit Greenfield/Chappaqua Crossing will continue to do in the future. As Mark S. Tulis wrote “even if the current developers of the Project do not protest the Project’s assessments, I can assure you that the future owners of the individual units will do so. The tax certiorari bar certainly can’t wait to seek reductions of millions of dollars from the Town and School District.”
For example, this web site, http://www.condowestchester.com, boasts “that if you buy a condo instead of buying a house in the White Plains, Hartsdale and Scarsdale area you will save about half of the real estate tax which you have to pay if you own a house.” And what’s the very first “Important Link” provided on this web site, a link for a “Property Tax Grievance” firm.
Community is being asked to bear the risk of reduced tax revenues
This serious question about the projected tax revenues from this high-density condominium development is a significant long-term risk that our community is being asked to bear. Other significant long-term risks associated with this high-density condominium development are the negative impact on our school system and the character and rural atmosphere of our neighborhoods, increased traffic, lower property values and a permanent reduction in our commercial base. And it’s because of these significant long-term risks that the overwhelming majority of residents following this issue are vehemently against residential rezoning.
Just look at the competing petitions. The petition to stop the current proposal for residential rezoning at Chappaqua Crossing—
http://www.ipetitions.com/petition/fighttostop/signatures has 854 on-line signatures, plus 36 paper signatures. 890 people are willing to contribute time and/or money in order to stop the current proposal for residential rezoning at Chappaqua Crossing. That’s about half the number of people who typically vote in the Town Board elections. And, no doubt, these 890 people will be voting at the next Town Board election.
On the other hand, the petition in support of the Chappaqua Crossing project, which is found on the developer’s web site www.ChappaquaCrossing.com, has seven signatures. That is not a typo, seven signatures!
Town board must insists that all residential ownership by in fee simple
Our Town Board must insist that any residential rezoning be limited to fee simple ownership. Summit Greenfield can build more fee simple townhouses instead of condominiums. The only condominiums should be the 20 affordable units. If Summit Greenfield is not willing to abandon their current high-density condominium development, they can use the property as it’s currently zoned for commercial use and build twenty-one single-family residences. If Summit Greenfield doesn’t think they would have an adequate return on their investment without a high-density condominium development, they need to sell the property, take their loss and move on.
Although it remains to be seen whether the Trump Organization is serious about “stepping in should Summit Greenfield fail in their attempt to rezone and develop the property,” former Chappaqua resident Hal Goldman of the Trump Organization was absolutely correct when he said last week “the Summit Greenfield project is appalling.” We need a plan that “would preserve one of our historic icons and at the same time give Chappaqua and its high school a benevolent neighbor and not a traffic nightmare.” http://www.newcastlenow.org/index.php/article/new_trump_representative_suggests_interest_in_chappaqua_crossing_prope
As Mr. Tulis stated “as a former Town Supervisor, it is somewhat awkward for me to get involved in a Project review such as the Reader’s Digest proposal. Notwithstanding, my concerns for the future economics of the Town as well as our lifestyle force me to put in this response.”
It would be a mistake for the Town Board to ignore Mr. Tulis’s concerns. It would be a mistake for the Town Board to ignore the legitimate concerns of their constituents. Our Town Board must insist that any residential rezoning be limited to fee simple ownership.
Editor’s note: The author is the organizer of the FightToStop petition.
Does this mean that you would consider supporting rezoning at Chappaqua Crossing if the entire residential portion of the project was taxed based on fee simple ownership (I know, I know, there will still be traffic issues to be resolved…) or are you simply acknowledging that they have the right to build 21 single family homes under the current zoning?
As soon as I hit the “submit” button, I realized that my last post will be taken as “proof” that I am either Summit Greenfield or their attorney or…
My personal position – speaking only for myself – is:
Good Idea: Assess and tax all residential development at Chappaqua Crossing (townhouses, single family homes, whatever) as fee simple.
Better Idea: Reassess the entire town with a homestead election and ALL residential property in town is taxed on the same basis. Then there is no need to get the developer to agree to anything. Any residential development at Chappaqua Crossing (even condos) would be taxed the same as single family homes.
Now I have to read the consultant’s report on reassessment to see why the Town Board thinks my “Better Idea” is a “Really Bad Idea”.
@Rob Greenstein…. Rob- while I agree that IF Readers Digest/Chapp Crossing should become residential all its condos must be taxed “fee simple” – I do not agree with this argument at this current moment in time. By arguing that Chapp Crossing condos must be made fee simple you are acquiescing and surrendering to the developer -Summit Greenfield, that they have won the residential rezoning battle. Just merely engaging in this debate right now signals that the people of New Castle accept the rezoning as long as it is fee simple. The focus of this debate NOW, must be can and should SG be allowed to rezone and build residential. This is a commercial parcel of land and zoned as such. It was purchased by SG with full knowledge of what it is zoned for. The economy has taken its toll on all of us and I see no need to aid this very sophisticated and deep pocketed developer at our expense – even at a fee simple tax structure. There has been almost no attempt to market this to new commercial tenants. All their focus has been residential- first senior living/age restricted, then 400 condos, then 199 condos..etc etc. While I agree with your position, to make this point now sends the message that “we the tax payers of New Castle are ok with rezoning as long as it is fee simple”> We the people, community, and tax payers of New Castle are NOT ok with this rezoning. Again, why havent we seen any concerted effort by SG to attract new commercial tenants? Because they have no intention of doing so and they are trying to game the system. We should not be debating fee simple – we should be debating rezoning.
I agree with lawrence farms crossing. Talking about fee simple is like discussing where to put the corpse while the body is still alive. I don’t want to have that conversation now. NO REZONING. 117 is already a parking lot and the crossing is a nightmare too. NO REZONING.
Enough. No residential rezoning at Chappaqua Crossing.
Lawrence Farms East, I wasn’t suggesting that all condos must be taxed “fee simple”.
Unless you’re willing to tax every condo in New Castle as fee simple, you cannot single out the Chappaqua Crossing condos and tax them as fee simple. My point is that if we require that any residential rezoning on the Reader’s Digest property be limited to fee simple ownership, the Summit Greenfield would need to build more fee simple townhouses instead of condominiums.
If Summit Greenfield is not willing to abandon the condo element of the proposal, they can use the property as it’s currently zoned for (commercial use and build twenty-one single-family residences on the single family lots they have) or sell the property, take their loss and move on.
And while I can certainly appreciate the argument that we should not be debating fee simple—we should be debating rezoning – making the sole argument that they haven’t looked hard enough for a commercial tenant is likely not enough to be a basis on which to deny their zoning request. On the other hand, pointing out the negative impacts, long term risks to our community and the uncertainly of the projected tax revenues from the proposed development should be.
I appreciate that you are making the point that there needs to be more to this discussion than “NO REZONING” as posted above. If the goal is to encourage Summit Greenfield to put more effort into using the property as currently zoned, shouldn’t we be asking the Town Board to lift (or at least modify) the size and number of tenant restrictions? I would think that would send the developer a pretty strong signal that the community expects them to do more than just ask for rezoning to residential.
@Lawrence Farms East
I am the one suggesting that all condos be taxed as fee simple. Take a look at the consultants report on reassessment on the town’s website. On Page 18 he explains that condos “…are enjoying a tax benefit of 40% to 60% based on the restriction in the methods used to value them.” While the impact on each single family homeowner who has to pay for this subsidy is small, especially since condos make up less than 4% of the residential value in town, what is the justification for giving such a tremendous tax break to condo owners? A reassessment that treats all residential housing the same regardless of the form of ownership takes the “condo vs. fee simple” question off the table (permanently, not just for Chappaqua Crossing) since the tax treatment will always be the same.
Rob…I’m not a lawyer but why can’t we require all Chapp Crossing condos to be fee simple? Cant existed fee simple condos be grandfathered and new condos be required to be fee simple. Times have changed, economics have changed, population has changed so why shouldn’t we change zone rules/laws that reflect the current state of things. Again- I’d rather be debating rezoning than fee-simple but I see no reason why new condo construction in New Castle shouldn’t be fee simple. That would level the playing field so that students living in condos and students living in homes must be “taxed” equally. Pass a new law, add an amendment, whatever it takes to make this equitable and not burden the rest of us!
West Ender, as I stated in my letter to the Town Board dated October 8, 2010, titled “Do not accept long-term risks to avoid short-term problems” the town board must insist that Summit Greenfield abandon the high-density residential development, build the existing residential single-family homes the property is currently zoned for, and focus on reasonable commercial returns on their investment. If Summit Greenfield cannot make a satisfactory return on the investment they made, then someone else will. http://www.newcastlenow.org/index.php/article/new_letter_to_the_town_board_do_not_accept_long-term_risks_to_avoid_sh/
LawrenceFarmsEast, fee simple is a form of ownership. Typically a condo owner only owns their dwelling space and a proportionate interest in the common area – they do not own the land underneath like a fee simple owner. You can’t change the ownership of existing condominiums without a revaluation of all properties in the town.
But my main point is that a condominium development allows a developer to get more density approved. This project is absolutely too dense! As I said in my letter, the only condominiums should be the 20 affordable units. If Summit Greenfield is not willing to abandon their current high-density condominium development—including two five-story apartment buildings with 44 condo apartments in each—they can use the property as it’s currently zoned for commercial use and build twenty-one single-family residences. If Summit Greenfield doesn’t think they would have an adequate return on their investment without a high-density condominium development, they need to sell the property, take their loss and move on.
Rob…You are still not clearing this up.If fee simple is a “form of ownership” as you say,and a condo owner does not own the land then according to you the only way we can change fee simple condo is to revalue all properties. If that is the case then why has the developer proposed some of the condos be fee simple. Logic would dictate that if the developer can propose some be fee simple then why not all. Under the developers proposal to make some of the units fee simple there is no supposition that we must revalue all properties in town?
Lawrence Farms East, the developer has not proposed that any of the condos be fee simple. What the developer agreed to was to tax the 60 townhouses as single-family dwellings in fee simple. The only units taxed as condominiums should be the 20 affordable housing units. But, even with my suggestion – 60 fee simple townhouses, 20 affordable condos & commercial use – it is CRITICALLY important that the Town Board insist that any zoning change be tied to the site plan. Otherwise, the town board puts us in the position of having zero control over what happens at the site.
In other words, the Town Board must do everything in its power to ensure that the developer cannot come back a few years later and say “We need more residential units,” for whatever reason—the most likely being that residential gives him a much greater return on investment. However, property zoned “commercial” is the better return for the town. In that regard, I would encourage everyone to read Michael Merchant’s letter to the Town Board in this edition. The letter is titled “Commercial Data Storage Facility at Chappaqua Crossing Makes no Sense”, and pay VERY close attention to the comment made below it describing the developer’s possible strategy:
“To All, the commercial data center concept is just a decoy, so I certainly would not worry about it. SG has not intention of any commercial development plan. Their plan is very simple. Get the residential re-zoning and in one year come back to the town, show “no marketability” options for commercial and use that to get permission to knock down the Readers Digest building and add 300 more condos. I am a developer and can tell you that this is the game plan. End of story. The advantage for SG in this case is that our Town Board does not have the analytical background, experience and backbone to see through this. All they are focused on is the 20 affordable units, which don’t make a dent in meeting any Westchester requirements. They put their Democratic party agenda above governing. It is a shame that this is going to be jammed through because our Town Board is simply not up to the task. I wish I had this Town Board on the other side of our development projects – we would be reaping the financial rewards.”
what looks like a condo is not always a condo.
As Mr. Greenstein accurately points out, a condo owner owns the space in which they live as well as a proportionate interest in the common elements of the community. Old Farm Lake, Ledgewood Commons and Pheasant Run are examples. These communities consist primarily of townhouses and most people think that townhouses = condominium. however, that is not a correct assumption and is the root of Lawrence Farms East’s confusion.
A townhouse development, which looks like a condo, can be designated a Homeowner’s Association, or a Planned Unit Development, which would provide the individual owners with fee simple ownership of their residences. The organizing documents of the community typically place many of the same restrictions on the owners in terms of what they can do with the exteriors of their homes and, sometimes, the interiors of their homes, but they are taxed differently. An example of a local townhouse development that is actually a Homeowners Association is the Guard Hill community in Mount Kisco.
A condo and a homeowners association must submit an offering plan to the Attorney General for approval. I can’t tell you why Guard Hill was developed as an HOA and not a condo.
I hope that helps to clarify the distinction that Mr. Greenstein and others have been making when they discuss fee simple ownership being applied to Chappaqua Crossing.
Many thanks for clearing this up. Let me repeat. We should be focusing on the debate regarding rezoning commercial to residential and NOT on fee simple vs condo tax rates. Having said that if the debate progresses and we must consider what tax structure the residential portion should consist of I now am certain it must be fee simple. So if Summit Greenfield can get this to be residential our Town Board should insist that the residential units be a Homeowner’s Association, or a Planned Unit Development, which would provide the individual owners with fee simple ownership of their residences. The developer is starting from scratch – meaning it is only commercial now and any change to residential will be newly created. So we should insist that the residential portion of Chapp Crossing be structured in such a way to create a fee simple tax base. If condos create an uneven tax burden than this development should not be condos- it should be an HOA.
I agree 100% that what looks like a condo is not always a condo.
As it was pointed out, Guard Hill in Mt. Kisco LOOKS like a condo development, but is NOT. It’s a Homeowners’ Association, all taxed fee simple. These exist, and I believe Summit Greenfield could make Chappaqua Crossing such an association.
Old Farm Lake, Ledgewood Commons and Pheasant Run, on the other hand, are CONDOS.
Dear “condo v. fee simple,”
Mr. Greenstein is correct.
Old Farm Lake, Ledgewood Commons and Pheasant Run ARE all condos. You may be right that they didn’t HAVE to be. They could have been set up as “Homeowners’ Associations” and all be taxed fee simple. But they are NOT. Your first paragraph is a bit confusing.
Guard Hill, on the other hand, IS a HOA with fee simple taxes.
No reason Chappaqua Crossing can’t make theirs a HOA.
No reason the town board cannot force them to do so.
The town board is playing a very risky game with the developer. The board must demand fee simple for ANY residential, although ANY residential at all will put all subsequent control in the hands of Summit Greenfield to plead for more residential as they allow their commercial operation to languish.
Fee simple, fee complicated.
Chappaqua cannot absorb the impact of another 100-250 homes.
Roads are crowded and over-capacity. Traffic is dangerous. There’s nowhere to park downtown. Fire and ambulance (currently volunteer memberships) would be proportionately over-taxed. Water, sewage, similar strains. Schools, it’s obvious. This is a semi-rural hamlet – it was not built to be a Scarsdale, a Riverdale, or a Yonkers, which is where this is all leading.
These businessmen bought what they bought. The rest is cynical horsetrading and we’re going to be the losers. Putting outrageous demands on the table as you belly into town with your six-shooters sparkling on your hips, and then slowly escalating them down doesn’t make the demands any less outrageous. Let them start on their Plan B, get all of the residential demands off our table, and leave what’s left of this pleasant town to prosper without blatantly overcrowding it.