To the Editor:
Re: Phylis Salom’s letter to the editor, June 22.
Ms. Salom accuses those of us who oppose privatization of scaring people by spreading lies about what would happen if we privatize. I suspect that what scares her are the truths we have been spreading.
As I wrote in a recent letter to Downtown Express, a privatized Southbridge would cost us more than an additional $19 million dollars every year because we’d have to pay the full real estate tax and we’d have to take out a mortgage to pay the $28 million dollar real property transfer tax.
Every year in which the (speculative) total amount of flip tax collected was less than
than $9 million dollars the difference would have to be made up by a maintenance increase or a special assessment. This would be above and beyond any increase that we might incur as a Mitchell-Lama co-op.
It is likely that, if we privatize there would initially be a flurry of sales – mostly by people who already have a second home. Once this flurry subsided we would hit a financial “wall.” – and could expect that there would be large maintenance increases.
Not everyone may realize that the flip tax would drop to only 2.5% the second and subsequent times that any apartment is sold. That means that after a number of years a privatized Southbridge would go over a financial cliff.
Some privatizers have said that we need to privatize because we will need to privatize because we will need the money to renovate our buildings. But after the first couple of years of privatization there would clearly be no money left for this purpose.
Mike Altman
