Tenants in a politically potent and exclusive Queens co-op have agreed to pay $140,000 to settle a $1 million bill for an obscure tax that the city didn’t collect for 17 years.
The deal with North Shore Towers lifts a financial cloud from the 1,884-unit complex, a sprawling and ritzy gated property on the Queens-Nassau border that includes its own golf course as well as a huge number of voters likely to support Mayor Bloomberg in 2005.
North Shore – whose residents include the parents of Sen. Charles Schumer – is so large that it generates its own power.
And that’s what brought city tax auditors to its office in August 2003.
“We get a knock at the door,” recalled general manager Glen Kotowski.
“They want to look at our fuel tax records. We always paid the state’s fuel tax of 4 percent and change. They said, ‘What about the city utility tax?’ That was unknown to us.”
North Shore found itself liable for a 2.35 percent city fuel tax – all the way back to when it was converted to a co-op in 1987.
Even with the penalties waived, the tab came to $1,024,000.
In one of those quirks of financial fate, North Shore was on the hook because it metered individual apartments to conserve energy and “sold” electricity to its tenants.
That put it in the same tax bracket as Con Ed.
Energy-producing co-ops that include electricity costs in owners’ monthly maintenance bills aren’t subject to the tax.
Kotowski said North Shore officials decided to raise the issue with Bloomberg directly when he visited the complex Aug. 24 for a town-hall meeting.
The strategy worked.
Bloomberg brought along Finance Commissioner Martha Stark, and she announced to an overflow crowd that her agency was writing off 11 years’ worth of bills.
That would have brought the tab down to $237,000.
Still not low enough, argued City Councilman David Weprin (D-Queens), who represents North Shore.
He helped negotiate a deal for the co-op to pay $140,574, representing three years of tax and interest.
Weprin called that a “fair” resolution.
So did the Finance Department spokesman Sam Miller.
“We encourage other housing developments that sell electricity to voluntarily pay the utility tax and avoid an audit. Finance is keeping a close eye on this issue as more developments build private generators,” Miller said.
But Weprin is now weighing legislation to prevent the city from imposing the tax on co-ops that produce energy exclusively for residents.
“Our contention is there really is no sale,” Kotowski said.