Confirms eligibility for and directs the New York city department of finance to provide exemption from taxation for certain residential dwelling units

BILL NUMBER:S5669A

Title of bill

An act to confirm eligibility for and direct the New York city department of finance to provide exemption from taxation of certain residential dwelling units in the county of Richmond

Purpose

Confirms eligibility for and directs the New York city department of finance to provide exemption from taxation of certain residential dwelling units

Summary

Section 1 confirms eligibility for J-51 exemptions and abatements for eight class A multiple dwellings comprised of more than 1,100 units and occupied exclusively by low-income tenants receiving benefits under Section 8, where certificates of eligibility for moderate rehabilitation with enriched benefits were issued by the New York City HPD on July 28, 2000 and January 30, 2002. Provides the standard 5-year graduated phase-out of benefits at the end of the 34-year terms of eligibility for each project. Further provides that exemption benefits shall be based upon all increases in the buildings' assessed valuation, without regard to whether such increase was the result of physical or equalization increases, and that any exemption benefits created by this act for previous tax years shall result in the creation of credits to reduce taxes for the remainder of the benefit period.

Section 2 provides that this act shall take effect immediately

Justification

The J-51 Program provides an incentive in the form of real estate tax exemption(s) and/or abatement(s) to property owners who either rehabilitate existing multiple dwellings or convert other buildings to multiple dwellings to promote the creation and preservation of affordable housing in the city of New York.

Parkhill I and II and St. George Plaza are an 8-building complex in Staten Island containing 1,118 HUD Section 8 low-income dwelling units. The buildings are restricted to serving only "very low income" tenants and limited in the amount of profit that may be distributed to building owners by a user agreement in effect until April 2063. That agreement requires any excess, including recovered tax benefits, to be deposited in a HUD-controlled residual receipts account used to fund repairs, maintenance and upkeep of the properties.

In 1997 and 1998, the owners made approximately $11 million in government funded renovations to the properties, which qualified the properties for enriched real estate tax benefits under the J-51 program. Despite the issuance of Certificates of Eligibility in 2000 and 2002, and the full compliance of building owners with the terms of the J-51 program, the properties have not received the benefits to which they are entitled, and their assessments have increased by more than 400%

The loss of the promised tax benefit (approximately $8 million over the previous 4 years) has resulted in monies being diverted from the reserve accounts that are otherwise used to fund repairs, maintenance and upkeep of the properties. The property owners have also had to cut funding for community-based activities and manned security at the properties, which threatens to result in deterioration and increased crime at this large, low-income complex.

This legislation is necessary to remedy this inequity, promote investment in affordable housing and ensure that residents receive the services they need for a safe and secure community.

Legislative history

New bill.

Fiscal implications

None to the state.

Effective date

This act shall take effect immediately.