A New Tool to Help Co-ops and Condos Cut Emissions: Tax Breaks

For co-op and condo boards, the first deadline for reporting on their buildings' carbon emissions under Local Law 97 is looming on May 1. While some 90% of the 50,000 covered buildings are already in compliance with 2024's carbon caps, that number will drop to around 50% when the caps become more stringent in 2030. As a result, Bloomberg reports, co-op and condo residents across the city are raising alarms that they could face crippling monthly fee increases to absorb the cost of clean-energy retrofits.

To allay those fears, state and local lawmakers representing New York City are taking a new approach: They're pushing for tax breaks to help cover expensive building projects, without touching Local Law 97's framework. One tax break is already on the books; a second is in the works.

After languishing for more than a year, a bill to reinstitute the J-51 tax break passed the New York City Council and was signed into law by Mayor Eric Adams in December, providing affordable multifamily buildings with a property tax break for major capital improvements. Meanwhile, state Assemblymember Ed Braunstein (D-Queens) plans to reintroduce a bill at the start of the upcoming legislative session that would reduce property taxes for work done to cut carbon emissions, with the reductions geared to the level of emission cuts achieved. It would additionally provide a 20-year property tax abatement for any assessment increases that result from making the improvements. 

The bill has earned the backing of the Real Estate Board of New York, an influential trade group, and the Council of New York Cooperatives & Condominiums. It has also generated some pushback.

The bill would be "incredibly costly to the city,” says Joe Chavez, a deputy director in the city's Office of Climate & Environmental Justice, adding it would have to be narrowed to target specific types of buildings for the city to support it.

The city is pursuing other kinds of incentives, according to Chavez, including advocating for a portion of the planned statewide $5 billion New Efficiency: New York program to help owners of multifamily properties pay for the changes. That funding will be available for five years beginning in 2026. The Adams administration also finalized several rules in December to help building owners comply with the upcoming caps, including allowing owners to meet some requirements by buying emission offsets from a proposed Affordable Housing Reinvestment Fund.

While anxiety levels remain high at many of the city's co-ops and condos, these relief efforts offer a ray of hope. As Alicia Fernandez, treasurer at the 726-unit Queensview co-op, puts it: "Any relief is helpful."