Several paragraphs were inadvertently dropped from a story in yesterday's Real Estate section quoting experts as saying a new tax on the sale of co-ops proposed by Mayor Marion Barry could make it difficult for low-income tenants to buy their apartments collectively. The omitted paragraphs follow:
Cooperative housing experts argued, however, that co-ops already are at a disadvantage compared with condominiums because banks generally won't finance them.
"If the mayor's tax proposal is piled on top of that, one of the offsetting arguments we've used for selling co-ops will be gone," said G. V. Brenneman, president of Brenneman and Associates and first vice president of the Washington Board of Realtors.
It could particularly have a "dampening effect" on the ability of lower-income tenants to band together as a cooperative organization and buy their apartments, he said.
At the other end of the housing market, the tax also could be a wet blanket at the exclusive Watergate, also a cooperative. Efficiencies there start at about $100,000, and asking prices go as high as $750,000 for a co-op, Brenneman said. "When you put a 2 percent tax on top of $300,000, that's $6,000, and I don't think that's hay to anybody," he added.
William M. Karas, executive vice president at Edmund J. Flynn Co., said it could particularly affect potential owners at "low yield" cooperatives, where shareholders can buy in at a below-market price but when they leave sell their interest back to the co-op organization for no profit.