Relates to exemption from taxation of alterations and improvements to certain multiple dwellings to eliminate fire and health hazards

Summary of specific provisions

Add, a new subdivision 4-d to Real Property Tax Law § 489. Paragraph (a) limits the provisions of this bill to multiple dwellings owned and oper- ated by a mutual redevelopment company established pursuant to article five of the private finance housing law with at least 2,800 units.

Paragraph (b) provide, a J-51 tax exemption for any increase in assessed value that results from the alterations and improvements.

Paragraph (c) provides for a tax abatement that shall not exceed the greater of 150 percent of certified reasonable cost or 35 percent of actual cost of alterations or improvements. The abatement is to be applied as a credit against real estate taxes at a rate up to 8 1/3 percent a year. If the designated amount cannot be credited each year for any reason, (e.g. it exceeds amount of tax payable) it can be used in any of the following B years.

Paragraph (d) would exempt the work from current provision, making J-51 benefit, available only if the property has no violation of local codes concerning its physical condition. This provision would permit benefits to start before violations are fully cleared. Violations must be cleared upon completion of alterations or improvements.

Paragraph (e) would waive limits on the amount of abatement or exemption grant:ed to any apartment unit pursuant to subdivision 11, paragraphs (b) and (e) of this section, which restricts the amount of abatement or exemption granted to any apartment unit, since the new language in para- graph (d) imposes a limit on benefits.

Paragraph (f) limits benefits to work completed by 2015.

Justification

Penn South Houses is a non-profit cooperative development in Manhattan. It is nearly 50 years old and requires extensive work on its heating and ventilation systems.

Without this legislation. the necessary work would require substantial rent increases. A large portion of Penn South's residents are limited income seniors with Senior Citizen Rent Increase Exemption benefits, so

these rent increases would result in considerably increased SCRIE tax abatements. Also, the amount of rent surcharge paid by higher-income residents would be reduced, because more of their monthly payment would be going to regular rent. Penn South pays a portion of its rent surcharge income to the City. Thus, if this bill is not enacted, that would cost the City an amount comparable to the J-51 benefits contem- plated by this bill. So while this legislation provides substantial protection co the development's residents, it would not significantly affect the City financially.

As the only remaining Article V limited equity coop, Penn South, a 2,802-unit development located in Manhattan, is the only development subject to this legislation. Since its residents are concerned with the continued maintenance and affordability of their buildings and not the resale of their units (from which they are not permitted to profit), this legislation will enable necessary repairs to be undertaken with J-51 benefits thus preserving this unique and affordable housing resource.

New York City's allowances for J-51 benefits would only cover a small portion of Penn South's planned HVAC replacement. This legislation would give the City authority to expand the J-51 abatement for this project,

Prior legislative history

New bill.

Fiscal implications

None.

Effective date

This bill shall take effect immediately.