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Incentive bills die in Albany.

Three revisions of New York City property incentive programs died in the final hours of the New York State Senate session.

The Industrial and Commercial Incentive Program (ICIP), the J-51 and REAP, the Relocation Employee Assistance Program, were among the casualties of the standoff between the governor and the Senate on other issues. A lead paint bill, amended by the Senate to remove the most damaging requirements for the real estate industry, also died.

Both REAP and the ICIP sunset on June 30 and, while the J-51 program actually expired June 1, 1991, the lack of new enabling legislation prevents the city from amending or extending the program, which it wants to do. Work on projects must be completed by Dec. 31, 1993 and there is concern lenders will start to refuse financing for new larger projects that might not be completed on time.

Paul Korngold, a partner in Tuchman, Katz, Schwartz, Gelles & Korngold and a J-51 expert, said the lack of a new bill might not interfere with the installation of a new intercom system but a complete rehabilitation project for larger housing stock could run into financing problems. "Eighteen months, when you start thinking about a project, is not that far away," he noted.

Michael Lappin, president of the Community Preservation Corp., which last year acted as lender of $110 million for 2,400 low- and moderate-income projects primarily in outer boroughs, agreed with Korngold's assessment. If the J-51 is not passed by the end of the year, he said, it could have serious consequences.

"Almost all the projects we fund in New York City would normally be eligible for J-51 and all the loans are contingent upon these buildings obtaining J-51 benefits," he noted. "Fundamentally, you can't do renovation in the outer borough without this benefit."

Lappin said they are examining their current commitments to see if the projects will be completed in time. "At some point, we have to stop closing construction loans if there is any risk they cannot be completed," he said. "It couldn't happen at a worse time because the low- and moderate-income areas desperately need renovation and to shut off one of the few programs that support them is a terrible thing."

Korngold explained that all of these abatement and incentive programs have the ability to trigger the city's economic recovery. They all create jobs, he said, as well as encouragement to purchase ands rehabilitate older buildings, particularly in the outer boroughs. "People need an incentive to do this work," he noted. With these programs on hold for the moment,Korngold said, it will be a real problem for housing and construction.

John Gilbert III, president of the Rent Stabilization Association, said the J-51 had expired for a year when he was an assistant commissioner with DHCR some years ago. Now, he said, he is more concerned about the overall state of relations between the Assembly and Senate.

"A lot of important legislation was held up for political reasons," he said. "I have to believe there will be a settlement and a solution to bring these programs back to life and we will work to do that."

Charles Rappaport, president of the Federation of New York Housing Cooperatives, which was hoping for the J-51 revisions, said: "It's absolutely frustrating. The politicians play politics rather than do what is right. I'd like to send each one of them a copy of John F.] Kennedy's book Profiles in Courage."

Gilbert said the lead paint bill that was passed by the Assembly would have required the inspection of the air, water paint and soil of every household in the State of New York. Painting contractors that did any kind of lead work would also have had to be licensed.

"We got those provisions out of the bill in the Senate ," Gilbert said. "Senator Volker's staff understood what a devastating impact it would have on residential real estate and made those changes."

Gilbert said inspections alone would have cost the industry $100 million dollars. "I don't know that helps kids," he said.

Both the J-51 and the ICIP program had gone through several revisions that expanded or modified the incentives. REAP, a recently enacted incentive program that gives tax credits to relocating companies, was to be extended to "co-sunset" again with the ICIP on June 30, 1999.
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Title Annotation:Industrial and Commercial Incentive Program, J-51 and Relocation Employee Assistance Program expire on floor of New York State Senate
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Jul 8, 1992
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