NYC J-51 Reboot Falls Flat for Rent-regulated Owners

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Hey there, let’s get into today’s news at the intersection of policy and real estate:

A J-51 one reboot made it into the state budget.
The Mamdani administration is targeting parts of Brooklyn and the Bronx for its first neighborhood rezonings to boost housing.
The Powerhouse Apartments project in the Bronx became the first to secure city approvals through a sped-up review process for affordable housing.

In this edition we mention: Executive Vice President of the New York Apartment Association Jay Martin, Hankin & Mazel partner Geoffrey Mazel, State Sen. Brian Kavanagh, Assembly member Ed Braunstein, Department of City Planning Director Sideya Sherman and others.

We Heard

J-51 reboot: The State Legislature is in the process of approving a revival of the J-51 property tax break as part of the state budget Wednesday, with lawmakers voting to extend the renovation incentive through 2036 and expand eligibility to more co-ops and condos. But Albany stopped short of a broader overhaul sought by owners of rent-stabilized buildings. The revamped program largely mirrors Gov. Kathy Hochul’s executive budget proposal. It would renew J-51 for 10 years — a notable departure from the program’s usual four-year extension cycle — and increase the benefit cap to cover up to 100 percent of what the city deems a “reasonable” rehabilitation cost, up from the current 70 percent ceiling. Under the proposal, the annual abatement would still be capped at 8.33 percent of renovation costs over the life of the benefit, which can stretch up to 20 years. The biggest sticking point for multifamily owners remains eligibility. The revised program keeps intact the current requirement that rental buildings be at least 50 percent affordable to qualify for the tax break. That’s a far cry from what some lawmakers pushed for. A Senate proposal — along with legislation sponsored by State Sen. Brian Kavanagh and Assembly member Ed Braunstein — would have expanded eligibility to buildings where at least 90 percent of units are rent-regulated. Keeping the affordability threshold unchanged effectively freezes out aging rent-regulated buildings in need of capital work, said Jay Martin, executive vice president of the New York Apartment Association. “It’s a zero for us,” Martin said. “This is a resource we’re not going to have for another 10 years. It’s not great.” Martin argued the tax break remains “too prohibitive” for rent-restricted properties, pointing to restrictions that still prevent landlords from raising rents on stabilized units to recover major capital improvement costs while receiving the benefit. But the program does address the industry’s complaints that J-51’s reasonable cost schedule lagged far behind actual renovation costs by requiring it to be updated every two years. Co-ops and condos fared considerably better in the final deal. Under the current program, those properties qualify only if they have an average assessed value of $45,000. The budget agreement raises that threshold to $60,000, in line with Hochul’s proposal, though short of the Senate’s push for a $75,000 cap indexed to inflation. Instead, lawmakers landed on a compromise: the new $60,000 threshold will increase annually based on changes to the consumer price index. “It’s a very good result for co-ops and condos,” said Geoffrey Mazel, a partner at Hankin & Mazel and an executive member of Co-ops and Condos United of New York, which has lobbied for changes to the program. The revised J-51 would also cap abatements for co-ops and condos at 50 percent of a building’s annual property tax bill — a limit Mazel said is unlikely to dampen participation. He added that the new version also covers filing fees that many owners viewed as burdensome under the current structure. The City Council still must approve the tax break. The state revived the last version of J-51 in 2023, but the Council took more than a year to adopt it — a delay reflected in the program’s new 10-year runway.
Rezoning plans: The Mamdani administration said Wednesday that it is advancing neighborhood rezoning plans aimed at boosting housing production south of Prospect Park in Brooklyn and across a stretch of the north Bronx. Department of City Planning Director Sideya Sherman described the corridors as “transit-rich areas saddled by outdated zoning” where new housing has been limited. The South of Prospect Plan is a new initiative focused on portions of Coney Island and McDonald avenues, stretching roughly from Caton Avenue and Fort Hamilton Parkway to Avenue I. The plan is designed to capitalize on new transit links expected from the Interborough Express, the Metropolitan Transportation Authority’s proposed light rail line that would snake 14 miles through Brooklyn and Queens. The local City Council members — Rita Joseph, Shahana Hanif, Farah Louis and Simcha Felder — jointly announced the planning effort, indicating at least an openness to considering potential zoning changes to their communities. City Planning is launching a months-long community engagement process starting with a public survey, with a draft proposal expected sometime next year. Meanwhile, the White Plains Road Plan will build on community planning work spearheaded by City Council members Kevin Riley (chair of the chamber’s land use committee) and Eric Dinowitz. Planning officials expect to roll out a zoning concept map later this year based on community feedback.

Move over ULURP: The City Council on Wednesday approved the city’s first housing project to use a new fast-track land use review process, shaving months off the typical approvals timeline. The Powerhouse Apartments project in the Bronx cleared the Expedited Land Use Review Procedure, or ELURP, in 90 days — less than half the 200-plus days usually required under the Uniform Land Use Review Procedure, ULURP. Developers Lemle & Wolff Companies, HELPDevCo and True Development New York plan to build 84 affordable units at 351 Powers Avenue, a city-owned parking lot in a medium-density residential district. The Bronx project did not require a zoning change, but under prior rules it still would have gone through the full ULURP process because it involves the disposition of city-owned land. Voters approved ELURP in November as part of a trio of housing-related ballot measures designed to accelerate development. Under the new process, the local community board and Bronx Borough President Vanessa Gibson reviewed the project concurrently, over 60 days. The application then moved to the City Council for a 30-day review because the project sought an Article XI tax exemption. Other ELURP applications that aren’t seeking that kind of tax exemption can receive final approval from the City Planning Commission. Absent recent reforms, the Powers Avenue project underscores the hurdles even a small, 100 percent affordable housing project on city-owned land must clear, even without a zoning change.

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The Catch-Up

The Charter Revision Commission appointed by former mayor Eric Adams on his final day in office has scheduled public hearings across the city, setting up the legally tenuous panel to weigh potential amendments — including changes to land use and affordable housing rules — to the City Charter over the next month, reports City & State.

But not so fast. The state Legislature is considering giving Mayor Zohran Mamdani the power to shut down his predecessor’s last-minute City Charter review commission, reports NY1.

A Two Trees project on the Williamsburg waterfront has scored a lucrative tax break thanks to a measure tucked in the state budget, reports Gothamist.

The Trump administration has selected a Penn Station redesign that keeps Madison Square Garden in place, but demolishes the theater to create a new grand entrance on Eighth Avenue, reports Newsday.

President Donald Trump will return to New York on Friday to campaign for Rep. Mike Lawler at Rockland Community College, where he will focus on affordability and tax cuts, the New York Post reports.

The Kicker

“I think that the pied-à-terre tax is a fine thing for New York to do,” said Amazon founder Jeff Bezos during a CNBC interview.