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State Legislature Lets J-51 Tax Abatement Die — For Now

Bill Morris in Legal/Financial on June 6, 2022

New York State

J-51 tax abatement, state Legislature, middle-income co-ops and condos.

For more than half a century, the J-51 tax abatement has helped middle-income co-ops and condos defray the cost of capital projects. For now, it's dead.

June 6, 2022

New York State’s on-again, off-again J-51 property tax abatement is off again — at least until next year. After a marathon all-night session at the close of the recent legislative session in Albany, the state Assembly passed a bill that would have extended and expanded the tax abatement, a prime tool for moderate-income co-ops and condos to defray the cost of capital projects. But the state Senate declined to consider the bill, and it died a quiet death in the early morning hours of June 4.

“I’m disappointed,” says Edward Braunstein, the Assembly member from northeast Queens who sponsored the bill. “Barring a special session of the Legislature, which I don’t foresee, we’ll have to wait and take it up next year.”

The J-51 program was instituted in 1955 as an incentive to get rental landlords to improve their properties. Since then it morphed into a tool that has helped co-op and condo boards and landlords upgrade facades, roofs, boilers and other structural elements, and it has also helped developers convert buildings from commercial to residential use. It did this by freezing the property tax assessment of qualifying buildings at the rate before the improvements began, resulting in a lower property tax bill. Braunstein’s bill would have raised the maximum assessed valuation for qualifying properties from $40,000 to $45,000. (The assessed valuation is part of the formula that determines a property’s tax bill; it is a percentage of the market value. Any property with an assessed value of $45,000 would be considered solidly middle class.)

The possible demise of the tax abatement is a source of dread for its advocates. “If J-51 ceases to exist, that would be a disaster for middle-class co-ops and condos,” says Warren Schreiber, co-leader of the Presidents Co-op and Condo Council, which represents more than 100,000 units of housing in the city. “Without that program,” he adds, “a lot of capital improvements wouldn’t happen.”

That dread is compounded by the fact that advocates have been pushing city and state legislators to make the tax breaks available to pay for retrofits that will reduce building carbon emissions enough to comply with Local Law 97, part of the city’s sweeping Climate Mobilization Act. Buildings that fail to comply will face stiff fines beginning in 2025. 

Linda Lee, a member of the City Council representing eastern Queens, insists that the J-51 tax abatement is not dead. “As disappointed as I am that the Senate failed to act in this regard,” she says, “I want to applaud Assemblyman Braunstein's efforts in Albany to push it through. Going forward, we must unite to reinstate J-51, raise the threshold to allow more properties to qualify, and modernize the program to incentivize upgrades that bring buildings into compliance with Local Law 97 and prepare New York City for the worst effects of climate change.”

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