New York City Council Supports Tax Breaks for Energy-Efficient Building Upgrades

A bill giving tax breaks to co-ops and condos in return for energy-efficiency upgrades has a strong chance of passing in the state Senate, thanks to support from a majority of New York City Council members. If enacted, the Green Buildings Act would offer a lifeline to apartment buildings struggling to meet Local Law 97’s carbon-emission requirements.

A plea for help. In letters to Gov. Kathy Hochul, Majority Leader Stewart Cousins and Speaker Carl Heastie, council members cite the urgent need for the city’s shareholders and unit-owners to get financial help in the form of tax breaks to meet the “impractical standards” and “prohibitive compliance costs” of current carbon-emission laws. The letters, as well as recent comments from Mayor Eric Adams in support of the bill, suggest it has momentum to pass in the New York State Legislature. “We have very strong signals from the mayor’s office and 33 council members, out of 51, in support of the legislation,” says Geoffrey Mazel, a founding partner of Hankin & Mazel, who was involved in drafting the bill.

Introduced by Assembly Member Edward Braunstein, the bill outlines the types of buildings eligible as well as the upgrades that would merit a tax break. As written, the law would give tax breaks to all the city’s residential buildings, even single-family homes. “It’s about time there’s a focus on the building smaller than 25,000 square feet,” says Mary Ann Rothman, the executive director of the Council of New York Cooperatives and Condominiums. 

Qualifying upgrades. Window replacements, building-envelope upgrades, energy-efficient heating and cooling retrofits, solar panel and green roof installations, and thermostat control upgrades would all qualify and help to reduce a building’s tax liability. The level of abatement would be tied to the percentage of the emissions cut, and an energy-efficiency improvement board would be established to hand out the tax benefits. “Something like this is inevitable,” Mazel says. “The question is how broad the bill will be.”

This concern is echoed by Charles Herzog, the board president of Celtic Park, a 757-unit co-op in Woodside, Queens. “A big concern has been the cost of these tax abatements, which may result in the law being limited in scope,” he says.

Indeed, the Department of Buildings estimates that $15 billion needs to be invested by 2030 in order for buildings to move away from fossil fuels and meet emission caps. “If you do the math, the abatement is massive,” Mazel says.

Tax abatements on that level of construction, even over a 10-year period, would be sizable. As a result, Mazel says he anticipates the benefits being watered down. “The devil is always in the details,” he says.

The challenge ahead. In supporting the bill, which has gathered more than 20 sponsors, the City Council’s Common Sense Caucus points out that the tax breaks mirror the expired J-51 tax abatement and exemption program, which incentivized landlords of rent-regulated buildings to make repairs and renovations. The program has been replaced by the more limited Affordable Housing Rehabilitation Program, which is currently awaiting City Council approval. Mazel says he expects this tax abatement bill will meet similar headwinds. “In light of the financial circumstances in the city and the trend in the Legislature, it will be more targeted at some point,” he says. This would likely limit the benefits to those most in need.

With the bill currently under review by the state Legislature, negotiations on the finer details are not yet underway. This will likely come down to how the regulations are written. Rothman says she is hopeful that the bill will stay in its present form, reaching a broad group of buildings. “An awful lot of people are very, very worried about the cost of compliance with Local Law 97,” she says.