How a cooperative unit's value gets imputed

The formula

Admin. Code 11-3205(f) sets it out: take the building's market value, multiply by the number of shares attached to the unit, divide by the total shares outstanding. The result is that unit's imputed value. The threshold test and the rate both run against that figure, not against what the apartment would fetch on the open market and not against the building's total.

A worked example, illustrative only

The numbers below are invented to show the arithmetic. They are not any real building, and no building's own figures can be read off them.

1. A building carries a market value of $10,224,000.
2. A unit holds 540 shares out of 12,000 total, which is 4.5 percent of the building.
3. 4.5 percent of $10,224,000 is $460,080. That is the unit's imputed value.
4. $460,080 is below the $1 million threshold, so on these illustrative numbers that unit carries no surcharge.

Run the same building against a unit holding 1,400 of the 12,000 shares and the imputed value clears $1.19 million, which is over the line. Same building, same market value, different share count, different answer. This is why the review has to be unit by unit and why a board cannot generalize from the two or three units someone happened to check.

The cliff

Once a unit's imputed value crosses a threshold, the rate applies to the entire imputed value, not only to the part above the line. The adopted rule's preamble is explicit: "If a property or cooperative dwelling unit's valuation exceeds the threshold, the entirety of the property's value is subject to the surcharge." A bracket would soften the boundary. A cliff does not, so a small movement in the building's market value can carry a unit across the line and add a five-figure annual charge in one step.

Thresholds and rates