Council makes it official: Buildings must go electric, J-51 is back

Beginning in 2024, new buildings in the city will go electric.

The City Council on Wednesday approved a bill that will phase out gas heat in construction projects. It also approved the temporary revival of a real estate tax break and required the creation of a task force to study whether distressed office buildings can be converted for other uses.

Notably, a measure that would have barred landlords from checking for criminal histories of prospective tenants was dropped. The bill had been revised to allow landlords to consider sex offender registries, but still faced pushback from real estate groups.

Here are the big real estate-related measures approved by the City Council at its final meeting before most members leave office at year-end. The bills are expected to be signed into law by Mayor Bill de Blasio.

Ban on gas hookups

New York City joins Berkeley, San Francisco, Seattle and others in restricting the use of fossil fuel for heat and hot water. New York’s policy will bar natural gas hookups in new buildings shorter than seven stories starting Jan. 1, 2024. New buildings taller than that will need to go electric after July 1, 2027. Projects that get their construction documents approved before those dates are exempt.

The measure gives certain projects with affordable housing more time to get in before the deadline. A building with fewer than seven stories, where at least half of its units are subject to an affordable housing regulatory agreement, is spared from the requirement if construction documents are approved before Dec. 31, 2025. A taller new building with such an agreement will have two more years beyond that.

The Real Estate Board of New York had called for a more gradual rollout of the ban. De Blasio had previously pushed for a prohibition on gas hookups by 2030. A pending state bill would further speed up this timeline, requiring new buildings to be all-electric by 2024, but its prospects in Albany are uncertain.

Revival of J-51

It’s alive! After expiring more than a year ago, the J-51 tax abatement and exemption is back. The Council voted to revive it through June 30, 2022. The incentive is available for residential renovations and conversions, and is considered a lifeline for older co-ops to pay for repairs.

Tenant advocates have argued that the program should be targeted to low-income, residential buildings and that more oversight of the tax break’s interaction with the rent stabilization system is needed.

Office conversions

The City Council passed a bill that mandates the creation of a 12-person task force to study the feasibility of converting vacant office space into affordable housing and other uses. An earlier version of the measure called on the task force to only study conversions to affordable housing.

In June, the state legislature passed the Housing Our Neighbors with Dignity Act, or HONDA, to encourage the conversion of distressed office and hotel buildings into affordable housing. The program requires that at least 50 percent of converted units be set aside for residents who experienced homelessness immediately before moving in. The apartments would be reserved for those making an average of 50 percent and no more than 80 percent of the area median income.

The economics of such conversions, however, are challenging. Though the state allocated $100 million for the program, no conversions have been initiated.

Good cause eviction

The City Council lacks authority to enact good cause eviction, but it approved a resolution urging the state to pass such a measure, which would cap annual rent increases at 3 percent, or 150 percent of the region’s Consumer Price Index, whichever is higher.

A few cities in the state have adopted versions of the policy, and tenant advocates have urged Gov. Kathy Hochul to back a statewide law. She has not yet taken a public position on the issue.