'Flip Tax' Rule Change Hailed As A Victory For Affordable Housing

Homeowners, co-op apartment dwellers and local elected officials lauded a recent agreement clearing the way for the Federal Housing Finance Agency to allow transfer fees from sellers to condominium and cooperative associations.

The fees, also called a 'flip tax,' are levied by owners' associations to help cover operating costs.

However, a proposal floated a few months ago by FHFA regulators would have forced most condo and co-op buildings to abandon the flip tax by barring government-backed giants Fannie Mae and Freddie Mac from investing in mortgages on properties where the transfer fees were in place.

When word of the proposal hit city homeowners, condominium and cooperative associations, a persistent campaign to seek an exemption for the flip tax began.

"Co-ops in New York City keep costs in check and enhance both quality of life and property values through capital improvements financed by flip taxes," said Councilman Mark Weprin, D-Oakland Gardens. "Due to New York City’s unique concentration of co-ops, [we] asked for an exemption, which the proposal now includes."

The fight for a flip tax exemption also made for some interesting political bedfellows, with former Council District 23 candidate and Glen Oaks Village Association president Bob Friedrich joining his former rival in calling for the rule change.

Friedrich is the founder of the President Co-op Council, which he said included 22,000 units of housing. Besides Glen Oaks Village, other cooperatives in northeast Queens and western Nassau County include Deepdale Gardens, Clearview Gardens and North Shore Towers.

Bayside attorney and Community Board 11 member Steve Behar, whose parents have lived in Bell Park Gardens for 40 years, also hailed the rule change.

"[The] decision to exempt flip taxes paid to homeowner associations, condominiums, and cooperatives ... fixes the unintended consequence of their proposed rule and will allow co-ops and condos to maintain solid balance sheets and keep maintenance fees low," Behar said.

Underlining efforts to secure an exemption for the flip tax was the decades-old shrinkage of available and affordable housing for the city's middle class — a group that includes most firefighters, police officers and teachers.

"Co-ops are the last bastion of affordable housing," Friedrich said. “This isn’t just a victory for us, but for all of the people who live in our communities."