Exempts from taxation alterations and improvements to multiple dwellings

This bill also would make significant reforms to the former J-51 Program. It would reduce the period of time for applicants to complete eligible conversions, alterations or improvements from thirty-six months to twenty-four months, while authorizing the local legislative body to grant extensions to governmentally-assisted projects. The bill would require any local law or ordinance providing for J-51 benefits to: (1) limit benefits for most cooperatives and condominiums to governmentally-assisted eligible alterations and improvements; (2) limit benefits to governmentally-assisted nonresidential to residential conversions; (3) impose a penalty equal to 10% of claimed costs on applicants whose projects are not completed at the time that the local housing agency inspects the items of work for which benefits have been sought; and (4) provide that the revocation of benefits does not exempt any multiple dwelling, building or structure from continued compliance with the requirements of Real Property Tax Law Section 489 or of any local law or ordinance providing for these benefits. Finally, the bill authorizes any local law or ordinance providing for these benefits to require the electronic filing of applications.

Reasons for support

The continuing shortage of affordable housing in the City of New York requires the extension of tax exemption programs that serve as an incentive to owners to maintain and upgrade existing multiple dwellings. The new Housing Preservation Act benefits would apply to a variety of improvements, including, but not limited to, the installation or replacement of heating systems, plumbing, wiring, elevators, windows and a range of other major capital improvements. The Program would issue fourteen or thirty-four year exemptions from taxes on any increase in assessed valuation resulting from those alterations certified by the City's Department of Housing Preservation and Development ("HPD") and an abatement of property taxes for construction costs certified by HPD.

The proposed legislation would retroactively extend the Program from June 1, 2011 to June 1, 2015. The precursor to the program been primarily responsible for the rehabilitation and upgrading of New York City's housing stock since 1955. It has also been essential in

ensuring that affordable housing will continue to be available to the residents of New York City.

The proposed legislation also reduces the time frame for completing conversions, alterations and improvements from three to two years. The three year period is unnecessarily lengthy for the typical project. Applicants have the option of dividing complicated projects up into their component parts in order to meet the shortened completion deadline. Additionally, the local legislative body is authorized to grant extensions to governmentally-assisted projects.

The proposed legislation also requires local laws or ordinances offering these benefits to limit these benefits to governmentally-assisted alterations or improvements performed in most cooperatives and condominiums. Market rate cooperatives and condominiums need not rely upon an incentive program in order to make the necessary repairs, since such owners are incentivized already to maximize their return on equity. For the same reasons, the local law or ordinance would also have to limit J-51 benefits to governmentally-assisted conversions from nonresidential to residential buildings.

The proposed legislation requires such local laws or ordinances to impose a penalty equal to 10% of claimed costs on applicants whose work has not been completed when the local housing agency conducts an inspection. Since these applications cannot be filed until the work is completed, applicants should not be trying to get a jump start on the process by starting it prematurely. This wastes the local housing agency's limited and valuable resources.

The proposed legislation also requires local laws or ordinances offering Program benefits to provide that revocation of these benefits does not exempt a building from continued compliance with the State or local Housing Preservation Act law. Hence, for example, if program benefits were revoked for any reason, a rental building that had received such benefits before they were revoked still must comply with the rent regulation requirements of the Housing Preservation Act Program for rental buildings.

Finally, the proposed legislation authorizes a local law or ordinance providing for Housing Preservation Act benefits to require the electronic filing of applications. Electronic submission would significantly streamline the processing of Program applications.

Accordingly, the Mayor urges the earliest possible favorable consideration of this proposal by the Legislature.

Effective date

Immediately, with provisions.