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Community Boards and The Internet

Two-thirds of all New Yorkers are said to be online. But many of them can only access the Internet from work, a library, a school, or a community technology center. Many technology experts believe that the efforts to cross the digital divide should include getting more computers in private homes.

Perhaps it is ironic that if this happens, -- if more New Yorkers can stay at home and still get online -- more will become active participants in their communities.

That, anyway, is the hope of the members of New York's community planning boards, and they are preparing for it. About ten out of 59 community boards have web sites, and one group is reaching out to the rest. It is called the Prototype Community Board Website Development Project, and its aim is to improve the ability of under-funded and short-staffed community boards to communicate with each other and with their communities. The program is currently supported by new Department of Information Technology and Telecommunications (DoITT) Commissioner Gino Menchini.

The Battle for .NYC
Community Board leaders are trying to build support for the .NYC (pronounced dot NYC) Campaign, an effort to secure the top-level domain name .nyc for New York City. In April 2001, Community Board 3 in Queens passed an Internet Empowerment Resolution that has recently gotten the support of Queens Congressman Joseph Crowley. Now, the challenge is to convince the three NYC Congressmen that serve on the House Commerce Committee -- Representatives Ed Towns (10th), Eliot Engel (17th) and Vito Fossella (13th)--of the importance of the .NYC Campaign.

Currently, organizations in New York City use generic domain names like .com, .edu, .gov and .org to identify their presence on the Web. However, .nyc would allow citizens to find local organizations more easily on the Internet and bring local control to the communications network. For example, if managed by city government, the .nyc domain name would raise much needed revenue for the city by registering domain names categories such as schools.nyc, libraries.nyc, government.nyc or shopping.nyc. The domain could also be managed by a local private sector or third-party organization. In addition, the .nyc domain name could help to build a powerful brand on the Internet for the New York. Currently, Los Angeles has secured the .la domain name that was originally issued to the country Laos.

The international domain name system is managed by the Internet Corporation for Assigned Names and Numbers (ICANN), a non-profit, private-sector corporation. Recently, ICANN has been criticized for being slow and inefficient and lacking transparency and is currently trying to reform. Thus, the organization has issued far fewer domain names than expected this year. New York City can assert its influence in the organization primarily through the United States Department of Commerce. Therefore, if community boards are serious about the battle for .nyc, they will need to raise awareness among communities and congressmen in the 10th, 17th and 13th districts.

Pay Phone Update
On March 11th, Verizon raised pay phone rates to 50 cents for an unlimited local call up from 25 cents for a three-minute call. This is the first rate increase since 1984 and New York was the last state to increase prices. In 1996, most states increased pay phone prices to 35 cents as a result of deregulation in the phone industry and recently all have adopted the 50-cent rate. Verizon cites competition from new communications technology such as cell phones as the primary reason for increasing the price of calls on its 110,000 pay phones. While Verizon is committed to keeping pay phones in communities where they are needed, the 50-cent rate may prevent the poor from using the phones. An additional 50 cents will be charged for directory assistance from pay phones.

Cable TV Update
Cable television subscriptions are up three percent as a result of the destruction of the antenna on the north tower of the WTC. Currently, about 21 percent of households get television over the airwaves rather than through cable. As a result, over the next five years New York City will pocket $51 million in franchise fees from cable companies. This will help aiding in the city's recovery from the budget crisis. For every $10 per month a cable customer pays, 50 cents goes to the city in franchise fees.

Cable Internet Access Update
The FCC recently exempted cable companies from having to allow Internet service providers (ISPs) access to their lines. According to the Federal Communications Commission, this step was necessary to promote investment and growth in high-speed Internet access. However, this move contradicts the FTC conditions of the AOL Time Warner merger that required the company to open its lines to other ISPs in order to increase competition in the cable market. This highlights an important difference between the telecommunications and cable markets. Historically, telecom has been widely regulated while cable has not. This may mean less choice of ISPs for consumers in New York.

Laura Forlano is a doctoral student studying communication technology policy at Columbia University.

New York's Secret Tax


Residents in New York City's one million rent-stabilized apartments complained bitterly about the rent increases that the Rent Guidelines Board voted for last June. "I can't afford this increase," said Cita Karan, an adjunct professor at CUNY who earns less than $25,000 a year and pays $1,200 a month rent. "Students I teach quit school because they can't afford housing."

It may be the most famous fact about the city that many New Yorkers struggle to pay rent and find affordable housing. But instead of placing all blame on the Rent Guidelines Board, renters would be well advised to look at a payment most do not even realize they make, one that is certainly larger than the latest rent increase-- their property tax. Yes, renters are paying property taxes. And the burden on renters is disproportionately high compared to what is paid by owners of condos, co-ops and especially houses.

Out of the rent Cita Karan pays each month, $132 of that is estimated to go to property taxes. By contrast, someone who owns a house worth the same amount as Karan's apartment would pay an estimated $30 in taxes.

Not only is this inequality dazzling, but it is very close to a complete secret. Renters might complain, if they knew about it. But nobody -- neither landlord, tax officials, nor elected officials -- tells them about the substantial share they must pay of their building's property taxes.

To its many supporters, including almost all elected officials, the city's property tax system is just fine, helping to promote home ownership, and providing, as it always has, the single largest source of revenue for the city government. Critics, on the other hand, charge that the system is unnecessarily complex, inequitable, and inefficient.

For renters, who represent two-thirds of all New Yorkers, the property tax is simply a mystery.

TAX BURDEN

How did we get such a difference in tax burdens? State and city officials responsible for property tax laws have consistently catered to owners rather than renters. But renters in New York City, in spite of their numbers and clear economic interest, have never really raised a fuss. The city's property tax law is incredibly complicated.

Most renters fail even to see themselves as property taxpayers since the building's owners pay the tax directly, and then of course pass the cost onto their tenants in the rent. Estimates vary, but in 1993, economist Howard Chernick estimated 75 percent of the cost is passed on to the renter.

The last comprehensive study of the city's property taxes was done in 1993, a joint project of the City Council and then-Mayor David Dinkins. It found the system "inordinately complex ... poorly understood by taxpayers," and marked by a wide disparity in tax burdens.

A BRIEF HISTORY OF PROPERTY TAXES

In the early days of New Amsterdam, Peter Stuyvesant's government made money by taxing liquor. It was only when the city went into debt that it tried to raise the money with a property tax. But angry citizens rose up and stopped the tax.

The city developed the first comprehensive system for assessing and collecting property taxes in 1859, and as late as the 1950's, property taxes still accounted for 70 percent of the city's revenue. But other taxes have been added one by one -- the first sales tax was instituted in 1934, local income tax in 1966 -- and now property taxes provide just about a third of the city's revenue, though that still represents the largest single source of funds.

The system of property taxes as we know it comes from a 1981 state law. The law was supposed to make the property tax system more rational and equitable. The political intent, however, was to protect homeowners.

TAX CLASSES

First, all property was divided into four broad classes:

  • Class 1: one-family to three-family houses.
  • Class 2: all other residential properties, broken further into three subgroups; coops, condos, and rentals.
  • Class 3: utilities.
  • Class 4: all other properties, including commercial property and vacant land.

Under our current system, Class 1 buildings have the best property tax deal. Class 2 coops and condos have good deals, but not as good as the owners of houses. Class 2 rentals, and Class 4 commercial properties get the largest share of the tax burden.

For city house owners, the estimated tax rate averaged 0.55 percent, according to the Independent Budget Office. That means the annual taxes on a $300,000 house in New York City would average $1,650. This is less than a thir d of the average tax rates in surrounding areas: Long Island, for example, had an effective rate of 1.90 percent, or, for a house again costing $300,000, average taxes of $5,700.

The argument of elected officials who support the current property tax structure is that unlike any other city, New York City has over 20 other taxes. Other residents in the state, for example, pay no local income tax. So, as a study by the Independent Budget Office showed, if we add the local personal income tax burden to the property tax burden, then the average New York City homeowner actually winds up paying slightly more than the average homeowner in the rest of the state.

But if the system was designed in part to fix inequities between homeowners in New York City and homeowners in the rest of the state, the inequities between New York City homeowners and New York City renters were ignored. The poorer New Yorkers wind up paying the most tax. The average New York renter earns $33,000 a year, compared to an average of $60,000 for house owners and $177,000 for coop/condo owners, according to the Independent Budget Office.

One simple alternative to the present system would have been to treat all property the same, assessing them all at market value. Then, depending on how much the city wanted to spend any year, it could determine one property tax rate for all owners.

Another simple alternative would have been to have two classes -- residential and commercial.

COOPS, CONDOS AND COUNCIL

In 1996, the City Council gave a tax break to coop and condo owners, trying to lower the imbalance between coop and condo owners and house owners. It has not worked exactly the way they planned. The Independent Budget Office has shown that now, some coop and condo owners in the city's most expensive neighborhoods, like 5th Ave. and Central Park West, actually have a lower tax rate than house owners.

And coop and condo owners in different boroughs now pay different amounts. Coop and condo owners in the Bronx and Queens have much higher rates (1.99 and 1.63 percent respectively) than those in Manhattan (0.95 percent).

The City Council's efforts were certainly well intentioned, and not useless. It did help move coop and condo tax rates closer to the rates of house owners. But the rates are still uneven, and no one is talking about changing the tax rates for the renters.

There is only one property tax issue on the political table today -- to further lower the property tax burden on coop and condo owners to equal the level currently enjoyed by house owners.

But meanwhile legislators are silent on the other issues. No one questions why property tax revenues have actually declined between 1993 and 2000, while the city has had one of the biggest real estate deals in history.

Property taxes -- the one major tax whose rate is under the city's control -- represented 45 percent of all city tax revenues in 1993; in 2000 it was 35 percent.

Few people talk of simplifying the system, addressing the inequities within classes and across boroughs, or telling renters what they are actually paying in real estate taxes. These questions await another property tax reform commission, or a fiscal crisis, or an economic slump, or political action by tenants who finally wake up to what they are paying.

Glenn Pasanen, associate director of City Project, a City budget watchdog group, writes Gotham Gazette's Finance topic page

Budget Shenanigans


The final budget from the Giuliani administration was passed after the usual alterations and "enhancements" by the City Council. For the cultural community, those alterations resulted in a restoration of the Mayor's propose d cut of $20.1 million to the Department of Cultural Affairs in the expense budget and an allocation of over $200 million for capital for the cultural groups. For the first time, the amount allocated to cultural groups not in city owned buildings appears to equal, if not slightly exceed, the funds for the 34 in city owned buildings.

The restoration is welcomed by the cultural community, which has come to regard the City Council as saviors in the annual budget ritual. In fact, there may be no other constituency in the city looking forward to term limits with both unrelieved relief and deep anxiety. Few, if any, regret the loss of a mayor who consistently sought to severely decrease their funding. None, however, look forward to thirty-five new council members, whose knowledge of the arts and cultural field is likely to be limited at best.

This latest budget was complicated by an unwanted and unnecessary 25 percent increase by the mayor for energy for the 34 cultural groups in city owned buildings. This appears to be a budgetary maneuver. Once allocated as energy, these funds are not transferrable to other operational aspects of a cultural institution's budget, so the $5 million has the effect of appearing to increase cultural spending. In reality, this appears to be a way for the Mayor's Office of Management and the Budget to increase the energy aspect of the city budget, which if unused -- as it most certainly will be for cultural groups -- can then be transferred by the administration to other areas of spending, including non-energy needs.

While the Council was aware of this situation, either they were unable to pry loose from OMB just how much money was squirreled away in this manner, or other aspects of the budget negotiations took priority. What is clear from OMB testimony, is that any citywide process of the kind described, if as oddly skewed as the cultural projections, has millions diverted to energy increases which will be unnecessary. That may be welcome news for the next mayor if the economy continues to drag along. It is not welcome news to the cultural groups, who would have preferred to see an accurate projection so those funds could have been allocated to the increases they so badly needed.

In the last eight years, the cultural groups have received only one general increase in funding and that was a modest amount from the Council last year. Efforts to achieve an increase this year failed due in part to the tax cut package, which limited the funds available to the Council, and to the preference by the Council for individual enhancements to specific arts and cultural groups.

Once called "add-ons", the Council allocated $8.7 million to 198 groups, ranging from $650,000 to Lincoln Center, as well as $506,700 for Jazz at Lincoln Center, and various amounts totaling $637,000 for American Museum of Natural History. Wave Hill in the Bronx got only $2500, but the Brooklyn Botanical Garden is mostly likely happy with their $165,000 and the Bronx Zoo at $400,000 is probably not complaining. Most groups received far less, sometimes as little as $1000. However, in the last three years, the Council has moved from an add-on list totaling $5 million to one at $8.7 million -- a 74% increase!

The cultural groups welcome the "add-ons" but rarely see the total picture. The same process of designating expanding funds to particular groups outside of an agency evaluation process is also increasingly evident at the state level. This process of "add-ons" and "member items" threatens the very heart of what most arts and cultural groups believe is essential -- public support for the use of tax dollars to fund the arts.

Public support for arts funding is based on the assumption that such funding is provided fairly and through some kind of evaluative process, and it is that evaluative process that the cultural community has used to defend itself against efforts at censorship.

Many in the cultural community feel they have no choice but to seek "add-ons" and "member items" since increases through the Department of Cultural Affairs and the State Council on the Arts have been either nonexistent or minimal. However, political clout or the ability to hire a well connected lobbyist is not a guarantee of artistic quality, nor of service to a community.

Elected officials mean well, but both they and the cultural groups may be inadvertently damaging the public perception of how tax dollars are used in the arts when they bypass the evaluative process. In doing so, the short term benefits may have serious long term costs. In the meantime, it is safe to predict that only the short term will matter. Political and cultural leadership to look at the broader picture are lacking even in the city that likes to call itself the cultural capital of the world. So, as the Giuliani administration draws to a close, it leaves the cultural community financially worse off than when it entered office, and perhaps weakened in a significant way. The legacy of the City Council is at least one of real concern about the fiscal impact of cutting funds to the arts and cultural community.

Norma Munn is Chair of the New York City Arts Coalition, founder and President of the Artists Community Federal Credit Union, and former Chair of The City Club of New York. 



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