City crafting overhaul of landlord tax break

Commissioner says program needs to be “right sized”

Housing Preservation and Development Commissioner Louise Carroll
Housing Preservation and Development Commissioner Louise Carroll

Landlords are finally getting some love from the de Blasio administration.

The city is preparing a proposal to overhaul a tax break program, in part to make it more appealing to owners of apartment buildings.

Department of Housing Preservation and Development Commissioner Louise Carroll said the J-51 tax break needs to be “right sized” because the incentive hasn’t kept up with the market.

“We’re looking at the program holistically, both as to what would be an appropriate reimbursement for the work done, what would be an appropriate tax exemption to incentivize people to take it and what would be the right tax abatement so that the program works,” she said during a Crain’s event Wednesday.

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It’s not clear what the city agency wants to change, but state legislation would be required. A representative for HPD said the proposal will aim to make the benefits “more targeted and cost-effective” for owners while making sure tenant protections are as strong as possible. The agency expects to deliver its proposal to the state Assembly at the start of the next legislative session.

The tax break, which is set to expire next year, is provided to landlords who renovate apartment buildings in exchange for their keeping units rent-stabilized for the duration of the benefit, which can be from 14 to 34 years. In a bill signed by the governor in July, state officials expanded the types of condo and co-op properties eligible for the benefit and authorized local governments to extend the J-51 program through June 2020.

The program has been the subject of several class-action lawsuits in recent years. In July a state Supreme Court judge granted class-action status to tenants of a building owned by the Mycak family’s company Vermyck in a suit accusing the owner of failing to provide a rent-stabilized lease to new tenants. Last month tenants accused landlord Steve Croman of similar violations. In 2016, Gov. Andrew Cuomo launched an initiative to re-regulate up to 50,000 apartments that had been improperly deregulated by landlords receiving J-51.

Mayor Bill de Blasio has not endeared himself to landlords since taking office in 2014. Among other actions, he pushed the Rent Guidelines Board to freeze rents of rent-regulated apartments and established a city program to provide free legal services to tenants in housing disputes.