Last year, the state legislature took the first step to revive the tax break J-51.
At the time, lawmakers approved legislation that authorized the City Council to enact a new version of the program. That legislation applied to major renovation work on residential buildings completed after June 29, 2022 and before June 30, 2026.
We are now two years into that timeframe, and the City Council is just now considering a bill that would actually allow landlords to apply for the tax break.
The program approved by the state legislature was different from the expired J-51 in a few key ways:
- The new program is only an abatement, whereas the old J-51 was both an abatement and exemption. Projects that receive the new J-51 will get a tax break worth up to 70 percent of the cost of major building renovations. The annual abatement amount can not exceed eight and one-third percent of the renovation cost and lasts for up to 20 years.
- To be eligible, rental buildings must be at least 50 percent affordable, part of the state’s Mitchell-Lama program, or receive “substantial government assistance.” Those affordable units are rent stabilized for at least 15 years and must be set aside for those earning between 20 and 30 percent of 80 percent of the area median income.
- Condos and co-ops must have an assessed valuation of less than $45,000 per unit, which is a slight increase from the old J-51.
- The Department of Housing Preservation and Development has a few more ways to enforce compliance with the program’s various restrictions, aside from revoking the tax break. Those include extending the rent stabilization requirements.
During a hearing on Thursday, HPD’s Kim Darga said the agency is hopeful the revamped program will attract more property owners than its predecessor has in recent years (participation in J-51 waned considerably).
She pointed to the fact that, as part of the rulemaking process, the agency will create a formula for updating the the “certified reasonable cost schedule,” which determines how much a property owner can be reimbursed for specific types of work. Property owners have complained that this list is woefully out-of-date, and HPD believes the new system will better reflect that actual costs of such work.
Darga also expressed hope that the new J-51 will help property owners comply with emission caps under Local Law 97.
Landlord groups are not so sure. The Community Housing Improvement Program testified on Thursday that the program’s affordability standards are so narrow that most rent stabilized buildings likely won’t be able to take advantage of the tax break.
“Most glaringly, the bill requires that owners certify the income of tenants in order to qualify for
the program,” Adam Roberts, policy director for CHIP, read from prepared testimony. “Owners cannot mandate that their tenants provide updated salary information. Without this information, there is no means of proving that tenants fall within the necessary AMI marketing bands to qualify for J-51, even if the legal rents fall into those bands.”
Council member Lincoln Restler asked during the hearing if the rules around assessed valuations would severely narrow the pool of co-op and condo buildings that would be eligible for the tax break. HPD indicated that a substantial number of buildings would qualify, though a representative for the agency could not confirm the proportion of properties in the city that would be eligible.
What we’re thinking about: Will the City Council pass a measure this year that will require whoever hires a broker to pay said broker? Send a note to kathryn@therealdeal.com.
A thing we’ve learned: Vertical Developments and Urban Network Capital Group are building an Elle-branded condo tower in Miami, Katherine Kallergis reports. TRD-themed condo next?
Elsewhere in New York…
— A jury found former President Trump guilty on all 34 counts of falsifying business records, the New York Times reports. The jury concluded that Trump forged documents to hide a hush money deal with porn star Stormy Daniels.
— After facing criticism for its delayed response to smoke from Canadian wildfires last year, the Adams administration says it has implemented a number of changes to prepare for air quality issues this summer, Gothamist reports. The city plans to spring into action in the event that air quality concerns arise this summer, by distributing masks, sending out warning alerts and making accommodations for schools and events.
— EK Group hopes to build a $250 million tech campus, housing and retail project on the former Kenwood Convent site in Albany, the Times Union reports. The company, headed by Michael-Henry Elghanian-Krayem, envisions a campus for a technology company or workforce development center as the project’s anchor, to be followed by 1,000 residential units and retail space.
Closing Time
Residential: The priciest residential sale on Thursday was $17.8 million for a 5,200-square-foot condominium unit at 135 East 79th Street on the Upper East Side.
Commercial: The largest commercial sale of the day was $21.4 million for a bulk sale of 13 condo units at 23-15 44th Drive in Long Island City.
New to the Market: The highest price for a residential property hitting the market was $17.5 million for a 6,000-square-foot townhouse at 83 Jane Street in the West Village. The Hudson Advisory Team at Compass has the listing.
Breaking Ground: The largest new building application filed was for a 29,600-square-foot, seven-story, mixed-use building at 111 South 6th Street in Williamsburg. — Matthew Elo