http://www.nydailynews.com/front/sto...p-210219c.html
BY WILLIAM SHERMAN AND BOB PORT
DAILY NEWS STAFF WRITER
Sunday, October 24th, 2004
Foreign countries that own prime city real estate worth more than $200 million have found an easy way to avoid property tax in New York City - just refuse to pay.
When the city sends a bill, deadbeat nations often just ignore it. When a city tax assessor knocks, they often will not open the consulate door.
In fact, at least seven countries currently have balances due of $106 million in property tax, according to city computer records obtained by the Daily News.
For New York City, those debts present a challenge. By law, the city cannot foreclose or even enforce a lien on a foreign nation's property, even when it is rented or used for commercial purposes - uses that make it partly subject to property tax.
New York is looking to Washington for help.
"It is simply outrageous for property taxes to be blatantly ignored," said Sen. Hillary Clinton. "New Yorkers face severe financial penalties if they do this, and so should diplomats." "It makes no sense the way we let foreign diplomats get away without paying property taxes and parking tickets," agreed Sen. Chuck Schumer.
"Regardless of who you are or where you're from, no one should be above the law in New York," Schumer said.
Schumer and Clinton successfully amended the 2005 congressional Foreign Operations Bill in the Senate earlier this year to freeze foreign aid to countries by amounts they owe New York City for property tax or parking tickets.
To unfreeze Uncle Sam's aid, the countries would have to settle their bills. The proposal must survive a conference committee, where House members could strike it.
Hungary has racked up New York's biggest tax debt: $49.7 million in back property tax for its eight-story, 86,400-square-foot UN mission and consulate on 52nd St. between Second and Third Aves.
By law, each nation is exempt from tax on office space used by its UN delegation and its local consulate. Also exempt are one residence for one UN ambassador and one residence for a consul general.
But that's where the law intends the free ride to end. There are no tax breaks for homes or apartments used by UN or consulate staff, by guests or for any shared, unused or rented space, unless they are specifically agreed to by treaty. There's also no break for space used for commercial enterprises, such as airline offices or banks.
City officials say they have billed Hungary based on the full value of its midtown site because the Hungarians refuse to let city inspectors take inventory of who lives there and how the building is used.
A Hungarian official giggled when asked about her country's $50 million debt. "Yes, we know about it," she said, referring questions to the Hungarian chief of protocol.
"I'm not in charge of these things," said Chief of Protocol Rita Silek. "I can't tell you anything about this," she said, referring questions to Hungarian Consul General Peter Sarkozy. Sarkozy did not respond to phone calls.
The city is suing three countries in federal court over property taxes: India, the Philippines and Mongolia.
For years, the Republic of the Philippines housed a bank, a restaurant and Philippine Airlines in its huge, 35,000-square-foot edifice on Fifth Ave. at 46th St.
Since then, the country has cleaned up its tax act, but the city insists it is still owed $24 million in back taxes and ever-growing interest charges.
"The United States government has a beach club in the Philippines and presumably there's a restaurant there and other things, and the U.S. doesn't pay the Philippines taxes there," said Robert Kandel, a real estate attorney defending the Philippines, India and Mongolia in court. The Indian UN mission is a big mystery for the city. Indian officials have barred New York City property inspectors at its ornate, two-story brass front doors.
The 26-story tower on 43rd St. near Second Ave. contains seven stories of offices topped by 17 floors of apartments, according to a security officer, who guards the lobby entrance and the red granite-covered garage entrance.
That's one heck of a big townhome for one UN ambassador, a city official observed.
Attorney Kandel said India's space, like Mongolia's, is used to house diplomats and is protected from New York City's taxing power by the right those nations have to security and foreign sovereign immunity.
He said the entire Mongolian UN mission lives on the premises at an elegant five-story townhome on 77th St. just east of Fifth Ave.
Meanwhile, the city's tax collectors are forced to play an endless cat-and-mouse game with some foreign governments, who know they can simply ignore the city and likely escape any consequences. The Russian UN mission owns a compound in Riverdale on W. 255th St. that is tax-exempt by treaty but currently owes $789,000 in water and sewer charges, according to a city source.
"Don't think that because we haven't sued them, we're not going after them," a city official explained.
Nigeria is a case in point.
The African oil-rich nation owns the Nigeria House, a modern 21-story tower at 44th St. and Second Ave. After pressure from the city, Nigerian officials finally consented to a city property tax inspection.
The result: The city found Nigeria rented two floors to the United Nations, a taxable commercial use of space, and gave space to Nigeria Airways and other business concerns.
The tax bill is now a clear-cut $689,000, according to the city. Trouble is, local tax collectors can do little to force Nigeria to pony up quickly.
"Finance collects over 97% percent of the property taxes owed to New York City," Finance Commissioner Martha Stark told The News. "While most countries pay their taxes, those that do not are on notice that we are pursuing legislation and litigation to ensure they pay the money they owe New York City."
The city sued Turkey in April 2003 for $70 million in back property tax but settled for only $5 million.
In the end, what a country really owes and what the city collects can take years to resolve, because foreigners cannot be forced to cooperate, or even communicate.
7 WHO ARE SHAMED
Foreign missions are exempt from New York City property tax - but only to the extent that each property is actually used for diplomatic purposes. The city believes this money represents nondiplomatic property taxes.
1 Hungary $49.7 million
2 Phillipines $24.1 million
3 India $22.2 million
4 Guinea $5.4 million
5 Mongolia $2.8 million
6 Nepal $836,000
7 Nigeria $689,000
Deadbeat Nations in the Big Apple
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