New York's Cooperative and Condominium Community

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City Council Mulls Reviving J-51 Tax Break for Affordable Co-ops and Condos

New York City

J-51 tax break, co-op and condo boards, renovation costs, Local Law 97, carbon emissions.

"Losing J-51 has been a severe blow to our economic well-being," says the co-op board president at Penn South.

May 31, 2024

Affordable co-ops and condos are finally getting some good news in their struggle to comply with the city's sweeping Climate Mobilization Act and its enforcement arm, Local Law 97.

At a city council hearing on Thursday, Kim Darga, a deputy commissioner of the city's Housing Preservation and Development department, told lawmakers that a bill to reboot the defunct J-51 tax break would be a "critical" tool for affordable co-ops and condos to reduce their buildings' carbon emissions enough to comply with Local Law 97 and avoid crippling fines.

“Major capital improvements such as installation or replacement of heating systems, plumbing, wiring, elevators, windows or roofing are exactly the types of critical upgrades that impact housing quality for residents of the entire building,” Darga said, as reported by Crain's.

State lawmakers let the original J-51 tax break lapse in 2022, but last October, Gov. Kathy Hochul signed a bill that would allow the city to create a new version of J-51. The bill now before the city council, Intro. 654, sponsored by Pierina Ana Sanchez, a Bronx Democrat, would authorize a new version. It has the backing of Mayor Eric Adams’ administration.

Under the new J-51, tax abatements would last up to 20 years and cover as much as 70% of the costs of renovation work in eligible buildings, which include low-cost rental apartments, co-ops and condominiums. Darga urged the council to pass the program “as soon as possible,” since renovations must be completed by July 2026 to be covered, as the law is written.

Changes in the revamped J-51 program include targeting the tax benefit more narrowly to buildings with low-cost housing — for example, rental buildings are eligible only if at least half of the units are rent-stabilized at between 20% and 80% of the area median income, or if the building receives government subsidies through a program such as Mitchell-Lama. Eligible apartments in co-ops and condos must have an average assessed value of less than $45,000. (The assessed value, which is used to compute property taxes, is a fraction of an apartment's market value.)

About 700,000 homes would be eligible under the new rules, which includes about 70% rental units and 30% co-ops or condos.

Although tenant advocates once criticized the old J-51 as wasteful and insufficiently targeted to low-income housing, there appeared to be little opposition to the new version during Thursday’s hearing.

One supporter for rebooting J-51 is Ambur Nicosia, board president of the massive Penn South co-op complex in Chelsea, who said her board has been forced to raise residents’ maintenance fees to cover the costs of a utility project that would have fallen under J-51 before the program expired.

“Losing J-51," Nicosia said, "has been a severe blow to our economic well-being."

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