New York City real estate developers may be defrauding the government out of hundreds of millions of dollars every year in unpaid taxes, a retired Internal Revenue Service agent told NY1.
“If I were a resident of New York, I would definitely be outraged,” Jerry Curnutt, the former IRS agent said. “These folks know the rules, and to not pay what you owe is egregious.”
Curnutt said many real estate partnerships in particular are avoiding the taxes they owe. If an individual decides to partner up with someone to develop a property, he said, they get a loan from a lender. They then deduct a portion of that loan each year when they file taxes. However, when they sell the building, they owe the government the cumulative amount they saved from the deductions. [more]

From the November issue: New York’s real estate market is at something of a crossroad. For more than a year now, the industry has been dealing with the fallout from Wall Street and the credit crisis, leaving brokers, developers, city officials and everyone in between groping for strategies to keep financially afloat. While it’s hard to fault real estate professionals for throwing any ideas they have at the problem to see which ones stick, some of those approaches have worked better than others. This month, The Real Deal dissected some of the biggest policies and proposals that are being used — or considered — to help shore up the industry.

From the August issue: One of the most confusing — and contradictory — aspects of the current
real estate market is the dropping supply of available apartments,
which seems inexplicable in the face of slow sales and plummeting
prices. Yet inventory has been declining since the spring, when it peaked
at over 11,000 listings. While the subsequent drop seems to signal a
market turnaround, market analysts told The Real Deal that the current level of inventory has more to do with sellers taking their listings on and off the market.
This fall’s real estate market was “very reactionary,” said Sofia
Kim, vice president of research at the real estate listings Web site
StreetEasy. “People were putting their places on the market out of
fear.” Now, many sellers are taking their listings off the market when
they can’t sell them at the desired price, deciding to wait — and in
some cases, collect rental income — instead. Meanwhile, as new condos
come online, their developers are waiting to market them until previous
rounds of units have been sold. [more]

From the July issue: Divorce can be ugly, especially when one party doesn’t want to be known as a divorcée.
As construction projects turn south, developers and their marketers
are increasingly splitting up, leading to battles over termination
fees. These fees, which are often specified in the original marketing
contract, used to be viewed by developers as the cost of changing their
brokerage midway through a project, said real estate attorney Gary
Rosenberg. Typically, when the developer terminates an agreement with
their marketing firm without cause, payment is due.
However, as the market slows, developers often don’t have cash on
hand to make that payout, which can be on the order of $500,000. Comments

From the July issue: With construction on hold at many New York projects, a growing number
of developers and brokers are getting into the business of running
properties for someone else.
The growth of the so-called “asset management business” comes as an
increased number of properties have turned into virtual zombies —
either unable to complete condominium sales or, in the case of
commercial buildings, unable to retain or even find tenants.
Unlike receivers, which are appointed by the court during
foreclosure proceedings and are often lawyers, asset managers can be
hired by a wide range of players — from lenders to institutional owners
to the court-appointed receivers themselves — at any time. And, while
receivers are charged with overseeing finances and administrative
duties, sometimes they farm out those jobs to asset managers who, as
real estate professionals, will handle property maintenance,
construction, rent collection and accounting. [more]

Despite the economic credit crunch, two developers are laying the groundwork for the construction of hundreds of apartments in Fort Greene. GFI Capital plans to build 375 units on the block bounded by Fulton Street and Atlantic, Clermont and Vanderbilt avenues. Andrew Zobler, GFI’s CEO, said he expects renters to be interested in his units but doesn’t know where he’ll find financing. Developer Martin Dunn wants to build townhouses in Navy Green, a 455-unit development south of the Brooklyn Navy Yard. Dunn said he doesn’t expect there to be a demand for his units for several years. The Real Deal’s June issue looked at developers using the downturn to prepare for future projects. [more]

From the June issue: These days, one or two buyers can make or break an entire project by
helping developers reach crucial benchmarks in the selling process. In
response, sponsors are doing everything in their power to win over
these tipping-point buyers. To keep their projects on track, sponsors
at new development
buildings have started wining and dining these golden buyers, offering
them generous incentives, huge discounts and even free furniture. “I
see a pattern, where as soon as we reach 50 or 60 percent, just
to get to the sprint line, developers are willing to do just about
anything,” said Brooke Jacob, CEO of mortgage company Everest Equity. Comments

Labor unions and non-profit developers are on opposite sides of a bill now in the state legislature that would require developers to pay construction workers the prevailing wage, which would be much higher than non-union pay. Developers of low- and moderate-income housing say the bill would reduce production of housing and force rents up, but labor unions say that higher wages would improve construction workers’ standard of living. The bill will be debated in committee hearings in Albany today. [more]

From the May issue: Like timeshares on steroids, condo-hotels appeared to offer the perfect real estate trifecta when the market was strong.
The units — which look like high-end hotel rooms but are sold as
condos that buyers can stay in for about a third of the year — were
long a win for developers, buyers and lenders.
Developers won because they were poised to reap profits both from
condo sales and from the money generated on the nights the rooms were
occupied by hotel guests. Buyers won because they were securing what
appeared to be an appreciating real estate investment and had access to
full-service hotel amenities. And financiers won because they were
lending money on what seemed like two sure bets: the condo market and
hotel market in Manhattan.