New York Common Interest Community Associations Sue Town Over Municipal Services
In late January, a group of common interest community associations and owners filed suit against the Village of Piedmont, charging that Piedmont had violated their civil rights and failed to provide equal protection under the law as a result of unfair taxes and assessments. The owners allege that Piedmont has taxed them for services they have not received – such as trash collection and snow removal – and that they are required to pay for such services as part of their monthly maintenance fees and special assessments to the condominium. So what are these owners and associations seeking in damages? $85 million…
In most states, municipalities provide certain municipal services – such as snow removal, trash collection, recycling and street lighting – to residents of traditional single family homes, but do not offer these same services to residents of condominiums or other common interest communities. Yet, owners in these communities pay the same property taxes as single family homeowners in addition to their respective common expense assessments, essentially requiring that owners in common interest community associations pay twice to receive basic municipal services for their common elements, such as a weekly trash pick-up or the plowing of their streets following a snow storm.
Unlike New York, New Jersey addressed this issue of double taxation by enacting the Municipal Services Act, N.J.S.A. 40:67-23.2 to -23.8, which was the first legislation in the country to address municipal services equalization for common interest community associations. Pursuant to this Act, every municipality in New Jersey is required to either provide certain services to each qualified private community within its borders or reimburse the association for these services, including snow removal, trash collection and recycling. The purpose of the Act is to require “that a municipality enact ordinances to provide the same services along the roads and streets of a qualified private community as it provides to other residents along its public roads and streets” and to eliminate “double payment for some services which the residents of qualified private communities now pay through property taxes and fees to their association.”
While not unique, New Jersey is one of only a few states that provide for such benefits to its residents. New York has not yet followed suit, but the Piedmont lawsuit may begin to change people’s opinions about how condominium associations are taxed and receive municipal services. Only time will tell how New York will address the issue of municipal services equalization and the problem double taxation of common interest communities. It is possible that the elected representatives in these states will enact legislation similar to that of New Jersey’s Municipal Services Act, which provides at least some relief to community association members. Until then, owners in these communities continue to pay the same property taxes as single family homeowners on top of their respective common expense assessments, essentially paying double for their municipal services.