While the industry fretted over 421a and good cause eviction in the final months of the legislative session, state lawmakers quietly let another real estate measure expire.
The decades-old tax exemption program J-51, which incentivized landlords to renovate apartment buildings, dies today. To qualify, work needed to be completed no later than June 29.
There was an effort to save the program — one that came closer to succeeding than the bid to rescue 421a. Earlier this month, the Assembly approved a bill to allow New York City to renew the exemption and abatement for projects completed between now and June 29, 2026.
The bill, sponsored by Queens Assembly member Edward Braunstein, included a series of changes to the program, including requiring rental buildings that receive the benefit to reserve at least half of their units for households earning no more than 80 percent of the area median income.
But the Senate never took up the issue.
“Allowing J-51 to lapse was a great disappointment. This excellent program has for decades helped buildings to modernize,” Mary Ann Rothman, executive director of the Council of New York Cooperatives & Condominiums, said in an email.
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The program, available for apartment buildings or commercial-to-multifamily conversions, provided a 14- or 34-year exemption from increased property taxes resulting from major renovations or construction.
This is not the first time since J-51’s adoption in 1955 that the tax break has lapsed. It last expired in June 2020; the state waited a year before reviving the city’s authority to renew it.
In December, the City Council revived the tax break through June 29, applying it retroactively to projects that missed out on the program when it lapsed in June 2020.
The tax break’s expiration coincides with efforts by the city and state to encourage the conversion of hotels and offices to affordable housing.
J-51 provided abatements for such conversions, a hot-button political issue as offices remain empty and residential rents continue to rise.
The City Council established a task force in January to examine whether “commercially unviable” space could be turned into affordable housing. A statewide program to fund conversions gained little traction. And earlier this month, Mayor Eric Adams outlined a vague proposal to incentivize such conversions, but has yet to follow up.
Affordable housing supply is constrained by apartments that remain unrenovated for a variety of reasons, among them provisions in the 2019 rent law. Nearly 43,000 rent-stabilized units are vacant and unrentable.
Looking ahead, property owners are concerned about funding upcoming renovations to cut carbon emissions as required by Local Law 97 — the city’s expansive 2019 Climate Mobilization Act — without J-51.
“We are also hoping that the city will initiate a parallel program to help with energy conservation and carbon reduction measures,” said CNYC’s Rothman. “We’ve suggested that it be called E-51 and that it be far more widely available to cooperatives and condominiums than J-51 has been in recent years.”
City officials have indicated that they would like to reform the program, which has seen dwindling participation in recent years, but have made little progress.