Sales of City Owned Properties Pick Up Momentum
Posted in Commercial Real Estate Trends, Historical Newburgh | Last Updated April 6, 2020
Example of renovated properties in City of Newburgh’s Historic District
The city of Newburgh’s Planning & Development Department is busy these days as sales of city owned properties picks up momentum.
Nobody is complaining because it’s a good kind of busy!
The Department is in the midst of selling a lot of (primarily) residential, city-owned properties. These residences are eventually headed back to the tax rolls.
In turn, this helps stabilize the finances of the city of Newburgh.
Stabilization comes in the form of:
- improved neighborhood property values – when a property is inhabited, it is maintained and is no longer a significant fire or safety hazard; this, in turn, improves the neighborhood
- vandalism and criminal activity decline, as an occupied property does not encourage either.
- tax revenue to the city begins to increase, and these monies help provide increased police presence, services, and road and structural maintenance
City Planning Department offers insights on trend
We recently had the opportunity to speak with David Kohl, an Economic Development Specialist for the city of Newburgh Planning & Development Department.
David provided us with statistics revealing the statement “sales of city owned properties picks up momentum” is not just wishful thinking.
There is a clear, upward trend in the sale of city-owned, residential properties.
And, as the graph below depicts, this huge increase in the purchase of city-owned residential properties occurred in just the last 3 years.
Of course that begs the question we asked David, “where do these buyers come from?”
Apparently, right from the Hudson Valley region.
As of July 2016, 32 of the 46 properties that have a signed sales agreement, represent buyers from the immediate Hudson Valley area.
The balance of the buyers are split between Westchester County and New York City. In response to this, the Planning & Development Department recently made 110 additional properties available, for sale to the general public.
The properties vary in size, type and price. Most are multi-family, single family residences, and there are also some mixed- use properties.
The Department will require those interested in purchasing a city-owned property to first submit an application before submitting any offers.
David explained that the goal is to attract qualified buyers with realistic rehabilitation plans and schedules who can demonstrate a clear path to a successful restoration (we described how the city worked with one young couple who purchased a mixed-use, city-owned property here).
You can access the application and instructions here.
Of the 110 properties being offered for sale, 69 of those are situated in the East End Historic District. These properties represent a great opportunity for both owner-occupier buyers and investors as outlined below.
Properties located in this district can qualify for a unique and overlooked tax exemption program known as RP-444A.
The RP-444A program enables eligible buyers to receive a 100% exemption on all capital improvements from taxation for the first 5 years.
The new owner only pays property tax on the initial assessed value.
Years 6 through 10, owners will see their properties gradually brought up to full assessment, and taxation.
This is a very good deal for someone to make substantial capital improvements without the worry of an immediate tax hike.
Follow this link to the RP-444A application and instructions.
Those buying in the East End Historic District may also qualify for both a NY State Tax Credit and a Federal Tax Credit for any substantial historic renovations. (Read about a recently renovated property that took advantage of some qualifying historic renovation tax credits here).
There are also other types of property tax exemption programs available from the City of Newburgh. You can access the entire list of tax exempt programs here.
Buyers looking to renovate properties that are located in the East End Historic District will also need to submit their proposed rehabilitation plans to the Architectural Review Board for approval.
The City Planning and Development Department has also published a very useful resource guide to help buyers navigate through the whole process of buying a city owned property.