Another New York Housing-Related Tax Break Has Expired
A New York tax break first established in the 1950s that provided tax exemptions to encourage owners to improve apartment buildings expired this week — even though a replacement bill had started to gain traction in Albany.
The J-51 program lapsed this week despite the New York State Assembly passing a bill that would have extended it until June 2026, The Real Deal reports. But the state Senate didn’t take up the legislation to keep the program, which allowed for a tax exemption of as many as 34 years for major revamps or construction.
The bill to keep the program amended the program to require rentals with the benefit to provide 50% of the units for those making 80% of area median income, per TRD.
The program, which was for both apartment building upgrades and commercial-to-multifamily conversions, had first run out in June 2020, but the New York City Council brought it back to life at the end of last year and allowed it to retroactively apply to projects during its expiration.
“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 to TRD. “We are also hoping that the city will initiate a parallel program to help with energy conservation and carbon reduction measures."
Many are concerned about paying for the required upgrades in Local Law 97 without the tax break, per TRD. The conversion of offices and hotels to housing has become a key part of the government’s approach to the housing crisis, though there has been little movement.
Earlier this year, it became clear that a state plan to encourage hotel-to-residential conversions had generated very little interest. Residential conversion is also pitched as a possible solution for office buildings that are struggling to land tenants.
Many owners were skeptical that would be a worthwhile venture, though some companies are going down that path. Earlier this month, Silverstein Properties and Metro Loft said they would pay $180M for the office building at 55 Broad St. and turn it into 571 apartments, The Wall Street Journal reported.