Gov. Kathy Hochul has signed legislation that will authorize the city to replace the J-51 program, which expired in June 2022, with the Affordable Housing Rehabilitation Program. The new program, Crain's reports, will mirror J-51 by providing co-op and condo boards and landlords with property tax exemptions in exchange for renovating multifamily buildings.
The new program could help co-ops and condos in particular, many of which have been struggling with increasing costs for repairs, insurance, energy, labor and compliance with numerous city mandates, especially Local Law 97. Yesterday Habitat reported that since the onset of the pandemic, co-op and condo boards have been forced to raise monthly charges at triple the rate of inflation.
The J-51 program is not the highest-profile affordable housing tax break that recently expired. That would be 421-a, which provided an incentive to developers in exchange for making 30% of the units in their buildings affordable. Although Hochul supports replacing that program as well, the state Legislature has shown virtually no appetite for doing so. Critics have derided the program as welfare for developers — and an inadequate answer to the city's chronic shortage of affordable housing.
Love it or loathe it, the death of 421-a is having a negative effect on the city's housing crisis. the city is on pace to produce just 10,000 new residential units this year, according to a report from the Real Estate Board of New York (REBNY). This puts the city far behind the 50,000 units per year it would need to produce to meet Mayor Eric Adams' moonshot goal of building 500,000 homes over the next decade. REBNY cites the June 2022 expiration of the 421-a affordable housing tax break as a turning point for the city's housing construction.
The return of the J-51 tax break, under a new name, could help. Many co-op and condo boards have used the tax break to defray the cost of needed improvements to their buildings. Warren Schreiber, co-leader of the Presidents Co-op and Condo Council (PCCC) and board president at Bay Terrace Co-op Section 1 in Queens, says the co-op has benefited from the J-51 program in the past. “It doesn’t just benefit co-ops and condos," Schreiber says, "it also benefits landlords who own rent-stabilized buildings. It allows us to afford capital projects that benefit all residents. It allowed my board to replace our windows and roofs without a maintenance increase or assessment."
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