"Absentee homeowners" in The Rockaways accused of taking advantage of city program to cash in on major tax break
NEW YORK -- A controversy over property rentals is heating up in a beachfront community in The Rockaways.
Some homeowners are being accused of taking advantage of a city program to cash in on a major tax break, CBS2's Lisa Rozner reported Wednesday.
It's prime waterfront property: several homeowner communities made up of around 1,500 homes known as "Arverne by the Sea" in the Rockaway peninsula were built in the early 2000s as part of an urban renewal project.
The city designated it an "urban development action area project," which means homeowners would get a huge break on their taxes.
"We were also first-time homebuyers, so that was helpful," homeowner Adam Linet said. "Our tax rates are probably around 25 percent of what they would normally be."
It was a great deal, which is why the Department of Housing Preservation and Development required every homeowner make it their primary residence.
"One of the same zip codes that has among the deepest pockets of poverty in the entire city of New York. So, this was a real opportunity for folks who had been stuck in generational poverty," Assemblyman Khaleel Anderson said.
In February, a Department of Investigation report uncovered at least 15 homeowners violating the primary residence requirement, receiving in total more than $1 million in tax exemptions. Seventy properties had tax bills mailed outside of the development and one couple even turned its home into a fully licensed bed and breakfast.
Three months after the findings, Inn Your Element is available on reservation web sites. CBS2 also found on Airbnb entire homes available for $350 a night, another for $288, so residents believe there are many more homeowners violating the policy.
"I don't feel safe when so many people are coming in and out of a house," one woman said. "There are addresses that have been turned into three rental units rather than two."
"We have trash issues. We have quality-of-life issues with noise complaints," Linet added.
Finance records show one man who is a real estate investor according to LinkedIn owns at least three properties and also has an address at a luxury high-rise rental building in Manhattan.
Emails and calls to him and other alleged absentee homeowners were not returned.
And as we approach the busy summer rental season, residents wonder how much more money the city will lose.
Some homeowners' associations have imposed penalties in the past.
"If you weren't compliant, we, you would not get parking tags," said Edwin Williams, former president of the Palmer's Landing HOA.
But concerned residents in the community known as "The Dunes" say board members aren't acting on the issue, even though there are strict fines for things like overgrown weeds and loose wiring.
"Hedges that grow over the fence line you could get a fine for," homeowner Bill Zlata said.
When Rozner asked if there is anything "that says you cannot be renting out your property while you are not living there full time?" Zlata responded, "No."
"Even if they gave them a $100 fine, that would be $72,000 a year and we have major issues," one woman said.
Belinda White, one of the board members, told CBS2, "I'm not making a comment right now because it's under investigation. So when the investigation is completed, the board will comment."
"But the investigation is over. The results are here," Rozner pointed out.
"But it is ongoing. I have no comment," White responded.
The board recently notified residents it sent notices to owners explaining short-term rentals are not permitted, and that owners of multiple properties are not permitted to vote in board elections.
City Comptroller Brand Lander said a recent audit of another HPD program also found a lack of oversight and enforcement.
"HPD has to do a better job, has to get this money back from the people that cheated on the rules of the program and rented out their units instead of living in them, and then has to put that money to, actually, affordable home ownership for people who genuinely need it," Lander said.
HPD said it is asking homeowners to confirm in writing that they occupy the residence and will now do that every year.
An HPD spokesperson told CBS2, "Homeownership is a powerful tool for stabilizing neighborhoods and helping low- and moderate-income New Yorkers build wealth and we are taking steps to protect these programs from attempts to cheat the system." He added HPD was the one to report the problem to DOI, and "[the agency] has strengthened and will continue to strengthen our homeownership programs to expand our monitoring and enforcement tools and more effectively deter people from using important public subsidies for the wrong reasons."
The city's Law Department said it's exploring whether it can recoup the $1 million in tax breaks from alleged violators.
The Department of Finance is also going to regularly notify HPD of homeowners receiving tax exemptions who are getting their tax statements sent to a different address. Other homeowner associations CBS2 contacted did say they were sending notices to alleged violators.
Airbnb told CBS2 it shares listings with the city quarterly, and they can be removed at any time, but the city needs to make the request.