Gov. Kathy Hochul finally provided some details about her proposed revamped property tax break and carve-outs for housing projects in New York.
As part of her executive budget, the governor has pitched reforming the State Environmental Quality Review Act, or SEQRA, and the property tax abatement known as J-51.
On the former, housing projects in the city would be exempt from environmental review if:
— They have 250 or fewer units, if located in a low-density district.
— They have 500 or fewer units, if located in a medium- or high-density district.
Such projects, however, still must go through review if located in coastal flood zones, in areas zoned for industrial use or if the project has more than 50,000 square feet of nonresidential space.
The proposal targets smaller projects than a bill previously proposed that sought to exempt projects with up to 1,000 apartments, though that measure only applied to affordable housing.
Meanwhile, the proposal to revamp J-51 does a few things:
— Under the current program, the value of the tax abatement is capped at 70 percent of the cost of building renovations. These totals are limited by what the city considers a “reasonable” price for various repairs. The governor’s proposal would bring the value of the tax break up to 100 percent of that cost.
— Condos and co-ops are eligible under the current program if units have an average assessed value of $45,000. The executive budget legislation raises that threshold to $60,000.
— In 2023, the state authorized the city to adopt a reformed version of J-51, which turned the combo abatement and exemption program into simply an abatement that was available to a smaller pool of buildings. It took the City Council more than a year to pick up on the issue, agreeing to adopt the program in December 2024.
The 2023 program applied to improvements completed after June 29, 2022, and on or before June 29, 2026. The late adoption, combined with the slow rollout of a new schedule of reasonable costs that determined the value of the tax break, meant landlords have a shorter window to use the abatement.
The executive budget proposal seems to acknowledge this by creating a 10-year window, instead of four. The new incentive would apply to work completed after June 30, 2026, and before June 30, 2036. Critically, the bill also doesn’t require the city to enact the tax break if the state approves the legislation.
As written, the bill also technically excludes any project completed on June 30, 2026, from either the current or new program, Rosenberg & Estis’ Benjamin Williams pointed out to me today. Whoops!
Landlords also shied away from the program in recent years because they found the city’s reasonable cost schedule to be wildly out of date. The governor’s bill mandates that the city update its schedule of reasonable costs every three years.
What it doesn’t do: Landlords have argued that the eligibility restrictions meant that the break wasn’t widely available. They have also called for broader relief for rent-stabilized properties. Hochul’s budget doesn’t change the eligibility parameters. To qualify, buildings must be 50 percent affordable, part of the state’s Mitchell-Lama program or receive “substantial government assistance.”
The reform proposals also leave intact a prohibition on landlords doubling up on the tax abatement and rent increases through the Major Capital Improvement program. New York Apartment Association’s Jay Martin said the provision makes the program unworkable.
Still, the bill allows landlords to file a waiver certifying that they will not try to collect MCI rent increases for the same rehab work after the state has confirmed they can receive J-51 benefits. So, owners can decide to forgo J-51 if they believe pursuing an MCI is the better deal.
What we’re thinking about: This week, Mayor Zohran Mamdani told reporters that he didn’t have any plans, at that time, to attend the Real Estate Board of New York’s gala on Thursday. How much work was “at this time” doing in his response? Does he have different plans at this time? Do those plans include showing up to the Waldorf Astoria New York and granting a TRD reporter an interview? Can it? Hello? Send guesses to kathryn@therealdeal.com.
(I was told on Wednesday, however, that Leila Bozorg, deputy mayor of housing and planning, plans to attend.)
A thing we’ve learned: New Jersey Gov. Mikie Sherrill held her inaugural ball at the American Dream shopping mall on Tuesday.
Having the event at a mall is very New Jersey, and having it at a mall where the drive there is likely to inspire road rage is also fitting. Reporter dispatches from the event show guests in gowns and tuxedos in front of a Wetzels Pretzels. At the start of the night, a performer crooned Frank Sinatra while background dancers wearing military outfits, a nod to Sherill’s time as a Navy helicopter pilot, languorously swiveling their hips. I don’t know if I’ve ever seen anything so delightfully discordant.
The night apparently also featured the new governor rapping alongside former members of the group Naughty by Nature.
Elsewhere in New York…
— Amtrak on Wednesday announced three finalists that will compete to overhaul Penn Station, Gothamist reports. Grand Penn Partners (backed by the National Civic Art Society and Trump donor Thomas Klingenstein), Penn Forward Now (led by Fengate Capital) and Halmar International are vying to be the project’s master developer. The winner will be selected in May and announced in June.
— The city is suing to stop a reality television show about the NYPD, hosted by celebrity psychologist Dr. Phil, from airing, the New York Times reports. Former Mayor Eric Adams signed off on the show, dubbed “Behind the Badge.”
Closing Time
Residential: The top residential deal recorded Wednesday was $15 million for a 4,042-square-foot condominium unit at 470 Columbus Avenue on the Upper West Side.
Commercial: The top commercial deal recorded was $77 million for a bulk sale of sponsor-sale condos at 1 Park Row in the Financial District. Eenhoorn Properties purchased 58 of the 64 residential units, the retail unit and three office units.
New to the Market: The highest price for a residential property hitting the market was $10 million for a 2,005-square-foot condo at 760 Madison Avenue in Lenox Hill. Madeline Hult Elghanayan and Sabrina Saltiel with Douglas Elliman have the listing.
Breaking Ground: The largest new building permit filed was for a proposed 470,705-square-foot, 14-story mixed-use project at 2560 Boston Road in the Allerton section of the Bronx. Ariel Aufgang filed the permit on behalf of Slate Property Group.
— Matthew Elo
