J-51 Tax Abatement for Co-ops and Condos Is Stuck in Limbo

J-51 tax abatements and exemptions, a prized tool for New York co-ops and condos to defray costs of capital improvements, expired on June 29, 2020. “Any work completed after that date is not currently eligible for the J-51 benefits,” the city’s Housing Preservation & Development website states. To the consternation of many co-op and condo advocates, the City Council has not taken action to revive the tax breaks.

Landlords of rental properties are equally vexed. Jay Martin, executive director of the Community Housing Improvement Program, which includes 200,000 rent-stabilized apartments that have benefited from J-51, tells Real Estate Weekly: “This moderate tax break will help maintain and modernize thousands of homes. It’s a disgrace that the City Council has dragged its feet on reauthorizing it.”

Warren Schreiber, co-leader of the Presidents Co-op and Condo Council (PCCC), which represents more than 100,000 housing units in the city, says his group is pushing city government to act. “I just don’t see why the city would let this program lapse,” Schreiber says. “It doesn’t just benefit co-ops and condos; it also benefits landlords who own rent-stabilized buildings. It allows us to afford capital projects that benefit all residents. It allowed my board at Bay Terrace Co-op Section 1 to replace our windows and roofs without a maintenance increase or assessment. A lot will depend on (Council Speaker) Corey Johnson.”

Johnson’s office did not respond to a request for a comment for this article.

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The J-51 program was initiated way back in 1955 as an incentive to get landlords to improve their properties. Since then, the tax abatements and exemptions have been made available to co-ops and condos and to developers converting commercial structures into residential units. For buildings that qualify, their property tax assessment is frozen at the rate before the improvements were made, which results in a lower tax bill. The program has lapsed and been renewed many times. Most recently, the state Legislature, led by the two Queens Democrats, Sen. Toby Ann Stavisky and Assembly member Edward Braunstein, agreed last summer to extend the state program until June 2022. The extension made the tax breaks available to apartments with an assessed value up to $40,000, up from the previous limit of $35,000. (The assessed value is part of the formula that determines a property’s tax bill; it is a percentage of the market value.) In extending the program, the state also authorized local governments to renew the program in their local jurisdictions. So far, the New York City Council has not done so.

“There is an urgency to revive J-51,” says Geoffrey Mazel, a partner at the law firm Hankin & Mazel and counsel for the PCCC. “It’s targeted to help middle-class co-ops, and my understanding is that many City Council members with a lot of co-ops in their districts are trying to get this moving forward. In the end, Corey Johnson must move this bill.”

There are signs that movement may be coming. Sen. Stavisky tells Habitat: “I have had very productive discussions with the City Council on this matter.”

Barry Grodenchik of the City Council, a Democrat from northeast Queens, adds, "I've had discussions with city officials, and I'm hopeful we can get an extension passed before the end of the year. I've drafted a bill that would, like the state extension, run through June 30, 2022 and increase the eligible property assessment from $35,000 to $40,000. This is very important to me. We're talking about the homes of tens of thousands of my constituents."