State Legislature Passes Bill Extending the J-51 Program

The New York State Senate and Assembly recently passed legislation extending the J-51 property tax exemption and abatement program. The J-51 tax incentive is an as-of-right tax exemption and abatement for residential rehabilitation or conversion to multiple dwellings. J-51 participants are exempt from tax increases resulting from residential renovation or conversion work for either 14 or 34 years. They can then receive a break on existing real estate taxes of 8.3 percent or 12.5 percent of the cost of the work for up to 20 years. Under the state bill, work must be completed by June 30, 2022, to be eligible.

The program expired a year ago for work completed after June 29, 2020. This means that any work completed after that date is not currently eligible for the J-51 benefits and only work that was completed by June 29, 2020, is eligible for J-51 benefits. According to HPD, since the program lapsed, HPD has continued to accept J-51 applications. But it hasn’t processed any applications for work that was completed after June 29, 2020. The $500 application fee is still required to be submitted with your application and is nonrefundable regardless of whether the law is changed or the application is approved. 

The recently passed bill, sponsored by Senator Toby Ann Stavisky (D-Queens) and Assemblyman Edward Braunstein (D-Bayside), would extend the exemption one year, to June 30, 2022. “The J-51 program was designed to help property owners improve their property. It incentivizes property owners to amend and modernize their buildings to eliminate fire and other hazards. These incentives have helped ensure the safety of New York City tenants and provide needed building renovations. They have also helped provide affordable housing while reducing blight within our communities,” said Senator Stavisky in a statement.

Assuming the governor signs the legislation, it’s unclear whether the New York City Council will reauthorize the program. Some state actions require the approval of localities through “home rule” resolutions. Such measures are mandated under the New York constitution when the legislature seeks to enact certain laws that affect specific counties. The state included language in last year’s state budget that authorized cities to renew the tax break through June 30, 2021. But the City Council did not do so.