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Incentive bills pass.

New York, State legislators buried the hatchet long enough last week to pass major economic incentive bills for owners and developers in New York City.

The bills include amended and expanded ICIP, J-51 and 421a benefits. The industrial and Commercial Incentive (ICIP) Program is primarily for industrial and commercial owners and will include new renovation benefits while the J-51 and 421a programs aid rehabilitation and new construction of apartment buildings, co-ops and condominiums. The governor has already signed a bill that increases the income eligibility for Senior Citizen Rent Increases - used by low income renters - from $15,500 to $16,500.

John J. Gilbert III, president of the Rent Stabilization Association, said once the regular session was over "cool heads" prevailed and the legislators got down to business. "I'm pleased that the leaders in both houses were able to put aside their differences to get this accomplished and to create incentives to upgrade and build new rental housing in the City of New York," he said.

Real Estate Board of New York President, Steven Spinola, said they were generally pleased with what happened with the 421a and J-51. While the ICIP continues, he said,they would have liked more benefits. "This was a positive indication from government," he noted, "that programs would continue and an indication that some incentives had to be made deeper to encourage construction in the city."

Michael Bailkin, a partner in Stadtmauer Bailkin Levine & Masyr, who deals extensively with incentive benefits, said his first impression was one of relief that the bills finally passed. "Some issues are left which related to particular projects but the passage of the bills and the bills themselves put to rest an area of uncertainty," he said. Bailkin indicated that a number of his clients who own older buildings are seriously contemplating renovation. "The renovation benefits will be very helpful in updating the projects," he added.

The primary change to the ICIP was to cut off benefits for new construction in Manhattan south of 96th street while opening it up to an exemption for the value of the renovation work done to buildings below 96th Street for two years, and below 23 Street for the following five years. Certain buildings which were undergoing renovation work that was halted can also take advantage of the program.

Spinola said some of the projects that might benefit are the gut rehabs such as those underway at the former B. Altman's in its transformation into the New York Resource Center and Science Industry and Business Library; the Barney's makeover of 660 Madison Avenue; and Audubon's foray into energy efficient building materials for its new world headquarters at 700 Broadway. Olympia & York's empty 320 Park Avenue might benefit by reducing costs for a prospective purchaser.

Mutual of America has been in protracted negotiations with Olympia & York for that building and President and Chief Operating Officer, Thomas J. Moran said the idea of obtaining some ICIP benefits was "very interesting."

New York Resource Center Project Manager Daniel P. Weinreb said the passage of the ICIP will represent a major savings for both the building and its tenants. "We're looking at structuring net lease deals which would pass the savings directly to the furniture companies," he said.

J-51 Expanded

Gilbert said the legislature acknowledged that in order to get the economy going, the owners need incentives. The J-51 was extended the strengthened and Gilbert said changes were made to reflect RSA concerns.

The new J-51 deepens the J-51 subsidy for any state or federally subsidized project. Gilbert said the J-51 measure was clarified so that asbestos removal qualifies for benefits and is under City Council control.

Language was also inserted to benefit institutional lenders to obtain cost certification using loan documents, particularly useful when original bills are unavailable or are in the possession of prior project sponsors.

The program is extended to 1996 and the exemption period is also extended from 10 years to 12 years without construction and 12 years to 14 years with construction. Exemptions for moderate rehabilitation are extended from 32 years to 34 years. Spinola said the J-51 benefits really helps beyond Manhattan.

Charles Rappaport, president of the Federation of New York Housing Cooperatives, said he was "moderately" pleased with the J-51. "It's a great improvement and I think it's going to help a large number of cooperatives."

In the final analysis, he said, it doesn't really cost the city anything because of the economics of repairs. "Work will be done, workers will have work to do and the city will collect its sales tax and tax from the workers. It's a ripple effect on the economy of the city."

The Division of Housing Preservation and Development still must incorporate language changes into their regulations, Rappaport noted.

421a: 80/20 to 110 Street

The 421a legislation expands the inclusion area on the East Side to 110 street for 80/20 housing built on site and extends those benefits to 20 years. This would fully exempt those developments from property assessment increases for 12 years with full assessments being phased in equal installments over years 13 to 20.

"The level of benefits has proven to be too low," said Spinola. "By extending it to 20 years it is going to assist construction of low and moderate rental housing."

The measure also requires low income units produced by the Housing Development Corporation funds be occupied by low income tenants for 20 years - five years longer than current

Catie Marshall, a spokesperson for the Economic Development Corp. said they were very happy the bills passed in Albany.

A spokesperson for the City Council said a hearing on the ICIP will take place the first half of August with a vote on Aug. 26. "We anticipate that it will pass," he said.

The REAP, which provides employee credits for moving into buildings eligible for ICIP benefits - 421a and J-51 are not under any time constraints, do not need hearings and will probably be voted on in September.
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Title Annotation:major economic incentive bills passed by New York State legislators
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Aug 5, 1992
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