City Council Implements New J-51 Program

The new program, which was approved in the 2023 state budget, expires in 2026, presenting an opportunity to build a more effective program

(New York, NY) – The city council voted today to implement the renewed J-51 program that was adopted by the state earlier this year. But the program’s restrictions and uncertainties make it unhelpful for most rent-stabilized housing providers. The New York Apartment Association (NYAA) is calling on lawmakers to immediately start working on crafting a replacement that would provide adequate relief to aging buildings.

“The majority of New York City’s housing stock is more than 80-years-old, and these buildings need significant upgrades in order to remain safe for renters and compliant with existing government mandates,” NYAA CEO Kenny Burgos said. “This is why the J-51 tax break was created, but the program has to make sense. If the program isn’t utilized, it is not a sign that the buildings don’t need upgrades, but rather a sign that the program fails to provide the necessary relief.”

J-51 is intended to provide tax relief to rental buildings, coops, and condos, in exchange for investment in certain building upgrades. Unfortunately, the list of eligible work and cost schedule, which are adopted by the Department of Housing Preservation and Development, that determines the type of eligible work and how much cost can be claimed for each type of eligible upgrade, has historically been woefully misaligned with actual prices, meaning housing providers recouped far less than the actual cost of the upgrade. This ultimately dissuaded many buildings from investing in upgrades, and looks like it will continue under the current version.

“If we ever want to solve the housing crisis in this city, we must be honest about costs,” Burgos said. “A city agency cannot claim it costs $10,000 to upgrade a kitchen, when a state agency says it costs $20,000 and no licensed contractor will do the work for less than $30,000. Above all else, a J-51 tax abatement has to be honest about the costs.”

Under the current program that was approved today, all qualifying projects would need to be completed before the June 2026 deadline. Any already completed projects that would be eligible (the renewed program is retroactive to work completed after June 29, 2022) need to be filed within four months of the law being passed.

However, HPD still needs to adopt rules on eligibility requirements, which are unlikely to be ready within the four month time frame, meaning owners who completed work in the last 2 1/12 years could be precluded from using the program. Further, any project must be completed within 30 months, and no later than June 30, 2026, meaning that most projects, if intending to use the new J-51 program, only have 19 months from today to be completed. And HPD still has to adopt rules around important details of the program, so there won’t be further clarity until well into 2025.

Any future program, if truly intended to provide cost relief to rent-stabilized buildings for building system upgrades, would need the tax relief to be equal to the full cost of the work, include more categories of eligible work, have fewer restrictions on eligibility, more realistic completion timeframes, and more certainty in the availability of the benefit.

A rent-stabilized building that needed to do work from 2022 - 2024 could not budget for a project using the J-51 tax abatement, both because its renewal was not guaranteed and the eligible work and eligible costs remain to be seen if it was renewed. And any building that would use the renewed program likely won’t have enough time to meet the completion date. Housing providers cannot properly plan for significant renovation projects without certainty.

“When these buildings fail, the people who are hurt most are the tenants,” Burgos said. “We need the government to stop saying no, and start saying yes to proposals that work to incentivize the significant reinvestment in the infrastructure of these buildings and the individual units themselves. New Yorkers can have affordable, quality housing if elected officials would let it happen.”

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The New York Apartment Association (NYAA) is a 501(c)(6) not-for-profit organization that represents a diverse coalition of apartment building owners and managers who provide the majority of affordable multi-family housing in the state of New York. To put it simply, we are Housing New York. NYAA was formed through the merging of two organizations that historically represented rent-stabilized building owners: The Rent Stabilization Association (RSA) and the Community Housing Improvement Program (CHIP). The official NYAA website is HousingNY.Org. @HousingNY on X; @HousingNY on Instagram; @HousingNY on Youtube, and @HousingNY on TikTok.