Authorizes a tax abatement for alterations and improvements to multiple dwellings for purposes of preserving habitability in affordable housing

• Democratic14

◆ The sponsor's argument

Why Brian Kavanagh says this is needed

In 2023, the State enacted a law authorizing the City of New York to adopt a tax abatement program called the Affordable Housing Rehabili- tation Program, known as 3-51R, to succeed the expired, former 3-51 Program, to incentivize a variety of alterations and improvements in multifamily buildings, including the installation or replacement of heating systems, plumbing, wiring, elevators, windows and a range of other major capital improvements. J-51R was designed as a targeted program to more effectively direct benefits to promote affordable, safe, well-maintained, environmentally sustainable dwellings. On December 5, 2024, the New York City Council passed Intro 654-2024 to adopt this new tax abatement program. It was signed into law as Local Law 122 of 2024 on December 18, 2024, nearly a year-and-a-half after State authorization, which has limited the opportunity for property owners to benefit from the program. This bill seeks to extend the program for a decade beyond J-51R's fast-approaching project completion deadline of June 30, 2026. Particularly for buildings that need to work towards energy efficiency and decarbonization in compliance with New York City's Local Law 97, which may involve extensive multisystem upgrades, many projects would be effectively impossible to scope, finance, start and complete by the current deadline. Extending the project completion date to June 30, 2036 and removing the requirement for local adoption will enable more property owners to access the tax incentive. The FY 2026-2027 Executive Budget also proposes an extension of the program, as well as a range of changes in the way it works. The Execu- tive version would: - Remove the requirement that New York City must adopt a new 3-51 program via Local Law; - Increase the average assessed value cap for eligible homeownership buildings; - Direct NYC Department of Housing Preservation and Development to update the Certified Reasonable Cost Schedule at regular intervals; - Allow property owners to recover 100% of certified reasonable costs; - Require applicants to demonstrate compliance with the NYC Housing Maintenance Code; - Resolve a previous 3-51R issue where proposed projects irrevocably waived the option of applying for Major Capital Improvement charges to cover the cost of improvements, even though their 3-51 application might be disapproved; - Set tenant notification requirements; - Require applicants to file a notice of intent; - Facilitate the sharing of information between HPD and DOF for imple- menting the tax abatement; - Add penalty for knowingly making false statements or omissions in the application; and - Add reporting requirements. This bill adopts many of the reforms in the Executive Budget Proposal and includes different and additional provisions based on feedback received from engaging with a broad range of stakeholders on ways to improve J-51. This bill would: - Further raise the average assessed value cap and tie the cap to annual CPI increases thereafter; - Expand the program to buildings with 90% or more of total dwelling units subject to rent regulation; - Increase the frequency of updates to the Certified Reasonable Cost Schedule to every two years to better reflect material and labor costs of allowable works under J-51; and - Lower the application fee and authorize the application fee of approved projects to be included in the aggregate total amount of tax abatement. This is intended to reduce the number of buildings that are eligible for J-51 but may be deterred from applying due to prohibitive application fees. With the inclusion of J-51 updates proposed under this bill, more build- ing and co-op and condo owners in New York City would be able to access the resources they need to repair and upgrade their buildings into safe and environmentally sustainable homes for their residents.

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.