Comprehensive Bill Will Expand City’s Stock of Affordable Housing and Encourage Development
New York, NY – January 29, 2013 – (RealEstateRama) — Assembly Speaker Sheldon Silver (D-Manhattan) and Housing Committee Chairman Keith L.T. Wright (D-Manhattan) today announced passage of landmark legislation (A.3354) to provide hundreds of thousands of New York City homeowners with significant property tax relief and create new affordable housing while spurring economic development and expanding the Loft Law. The bill expands New York City’s Condominium and Cooperative real property tax abatement program by phasing out benefits to non-primary residences and spreading the benefit to hundreds of thousands of low and middle income homeowners. The value of the tax abatement will be phased in over three years based on the assessment of the home.
“I am pleased that this legislation will cut taxes for the vast majority of condo and co-op owners who pay a disproportionate share of the city’s property tax burden,” said Silver. “At the same time, the bill will expand our stock of affordable housing by requiring developers of certain projects to set aside a predetermined number of units for low income housing or contribute to the construction of new affordable housing.”
In addition to extending the Condominium and Cooperative real property tax abatement program, Silver and Wright said the bill addresses housing affordability in three key ways. First, it allows more tenants residing in lofts to participate in the expanded Loft Law, which passed in 2010; second, it creates a new and revised J-51 tax abatement and exemption program that is more focused on affordable housing; and, finally, it requires New York City to take steps to improve the enforcement of laws and regulations relating to rent-regulated units.
“I am pleased to see the passage of this legislation, which increases the availability of affordable housing in New York City; protects loft tenants; and encourages affordable development in a city that desperately needs it. The revisions included will keep the J-51 program alive, improve the enforcement of laws and regulations relating to rent-regulated units, and extend an expired tax abatement for cooperative and condominium housing. This bill allows us to maintain and increase much needed affordable housing in our city and I look forward to working with the Division of Housing and Community Renewal to continue to implement favorable tenant rent regulations that have long been sought after,” said Wright.
Tax Relief for Hundreds of Thousands of Homeowners
The revised Condominium and Cooperative real property tax abatement provisions would limit units eligible for an abatement to those utilized as primary residences, and would allow an owner two additional units in the same building to be eligible for an abatement. Co-ops and condos with assessed values of $60,000 or less (roughly $600,000 in market value) would see an increase in the percentage of the abatement compared to the 2011-2012 abatement amounts. The amount of the increase would depend on the assessed value of the unit; those assessed between $15,000 and $60,000 ($150,000 – $600,000 in market value) would receive the greatest increase.
This bill phases out benefits of non-primary residences beginning in FY 2012-2013 (FY 2012-2013 – 50 percent reduction, FY 2013-2014 – 75 percent reduction, FY 2014-2015 – no benefits) and would phase-in certain enhanced abatements for primary residences with up to two other units within the same building beginning in FY 2012-2013 through FY 2014-2015. Benefits are as follows:
|Fiscal Year||Average Assessed Value of Units||Abatement|
|Less than or equal to $50,000||25.0%|
|More than $50,000 but less than or equal to $55,000||22.5%|
|More than $55,000 but less than or equal $60,000||20.0%|
|More than $60,000||17.5%|
|Less than or equal to $50,000||26.5%|
|More than $50,000 but less than or equal to $55,000||23.8%|
|More than $55,000 but less than or equal $60,000||21.2%|
|More than $60,000||17.5%|
|Less than or equal to $50,000||28.1%|
|More than $50,000 but less than or equal to $55,000||25.2%|
|More than $55,000 but less than or equal $60,000||22.5%|
|More than $60,000||17.5%|
Expanding the Loft Law
The measure expands New York City’s Loft Law by increasing the ability of loft tenants and landlords to register their units and to transition the units to building-code compliance and to rent-regulated status. It allows lofts that consist of at least 400 square feet to be eligible for Loft Law protections. Currently the threshold is 550 square feet, which prevents a substantial number of more affordable lofts from registering. In addition, the proposal reduces the percentage of rent increases a landlord may impose when reaching various points in the process, which recognizes that the initial rents for lofts currently entering the system are significantly higher than they were when the original Loft Law was enacted in 1982.
Revising the J-51 Program and Increasing Affordable Housing
A revised J-51 proposal (the program expired at the end of 2011) would primarily work to increase or maintain affordable housing. Tax benefits will no longer be available to developers who are converting commercial buildings to residential use unless those conversions receive substantial governmental assistance, which means they participate in programs aimed at preserving or creating affordable housing.
Under current law, only cooperative and condominium units with an assessed value of less than $40,000 are eligible for J-51 benefits, so it is already aimed at homeowners with moderately valued units. The new measure will further limit any benefits to co-ops and condos valued between $30,000 and $40,000 to units receiving substantial governmental assistance. These changes will reduce the cost of the J-51 Program to New York City, and thus allow it to increase the Certified Reasonable Cost (CRC) schedule of allowable reimbursable expenses to provide greater incentives for landlords to use the J-51 program, which in turn will increase the number of units subject to rent regulation.
The bill also encourages the inclusion of affordable housing in some new luxury construction underway in Manhattan. The legislation grandfathers five projects into the 421-a tax abatement and exemption program. These projects are located in lower and mid-town Manhattan; the receipt of 421-a benefits would trigger a requirement that the developers also build affordable units.
Assemblyman Edward Braunstein said, “This new and improved co-op and condo tax abatement will provide much-needed relief for hundreds of thousands of co-op and condo owners, many of whom are middle-class and seniors on fixed incomes. I want to thank Speaker Silver and Mayor Bloomberg for working together to pass this progressive piece of legislation.”
Assemblyman Ron Kim said, “This bill is a step toward fueling more affordable housing by providing a comprehensive package that will benefit working families. This will also help co-op and condo owners in my district by closing some of the loopholes in our current tax abatement system. I appreciate all of the work that the Speaker and Chairman Wright put in to move this bill forward.”
Assemblyman Michael DenDekker said, “I’d like to thank Speaker Silver and Chairman Wright for their leadership on this important tax abatement issue. Legislation of this kind helps hard-working, middle-class residents who reside in cooperatives or condominiums. This legislation is good for my constituents, and good for all New Yorkers.”
Assemblyman Steven Cymbrowitz said, “This bill advances the Assembly’s commitment to affordable housing by extending an important tax relief measure to co-op owners and making available more affordable housing units through programs that promote the construction and redevelopment of existing housing stock in New York City. I commend the Speaker and Chairman Wright for their leadership on this important issue.”
Assemblywoman Helene Weinstein said, “The extension and increase of this long-established property tax abatement program for New York City coop and condo owners will provide tremendous relief to many families and seniors in my district.”
Assemblyman David Weprin said, “This bill is an important advance in preserving affordable housing in New York City. Extending tax relief to co-op and condo owners and residents will help our middle class families tremendously. The Assembly leadership should be commended for getting this legislation passed.”