New housing legislation levels the playing field.
Signed into law by Governor Andrew Cuomo on February 5, the bill renews the co-op/condo abatement and J-51 programs, as well as amends certain provisions for the 421a program.
The Real Estate Board of New York, along with several other groups, worked vigorously for the continuation of the co-op/condo abatement and J-51 programs prior to their expiration in 2012.
Although the co-op/condo abatement and J-51 programs were modified in ways that were not completely satisfactory, we are pleased that these two programs will continue to be available. The passage of this legislation is important to our industry.
Here is a brief explanation of the provisions in the bill:
Co-op/Condo Abatement: Enacted in 1996 as a temporary measure, the co-op/condo abatement provides partial property tax relief to owners or tenant-shareholders of class two condominiums or co-operatives to reduce their disparity in property taxation with residential real property in class one (single-family homeowners).
As part of the new law, the co-op/condo abatement will be extended for three years. However, to be eligible for the abatement, the unit must be the primary residence of the unit owner.
A unit owner may still receive the abatement for up to three units, provided the units are in the same building and one of the units is the owner's primary residence.
In addition, the thresholds for the abatement were modified as described in the chart below.
For non-primary residence co-ops/condos where the unit received the abatement in FY2011, the abatement will phase out according to the schedule in the chart below.
Also as part of this new law, the J-51 program, which provides a tax benefit for the renovation of existing housing, will be extended three years.
However, the legislation eliminated benefits for the conversion of commercial space to residential use and limited the eligibility for condominium and cooperative buildings with units whose average assessed value per unit is greater than $30,000.
However, projects that receive "substantial government assistance," which is defined to include city, state, or federal loans or grants, are not subject to this cap.
Likewise, conversion projects receiving substantial government assistance will still be eligible for J-51 benefits.
J-51 was created in the 1950s when NYC had a substantial inventory of Old Law tenements which did not have central heating, central hot water, or, in some cases, indoor plumbing. When the City required the installation of these improvements, many owners could not pay for the costs of the improvements from their existing rent rolls, which were limited by the rent control system.
J-51 helped fill that financing gap then. It deserved to be renewed as owners of our aging housing inventory must renovate their buildings to meet the new energy standards and heating system requirements imposed by local law. As part of the new law, the 421 a program was extended in certain instances to new residential development in high density 15 FAR districts in Midtown and Downtown Manhattan.
In the modification to the program in 2007, the renewal of this separate provision was erroneously omitted. This legislation restored, in certain instances, the benefits that have been part of the program since 1993.
In addition, this new law restored flexibility in the completion of construction provisions that are crucial to the resumption of stalled housing projects.
By Steven Spinola, president, Real Estate Board of New York
Coop/Condo Abatement Average AV: $50,000 or less $50,000- $55,000- Greater than $55,000 $60,000 $60,000 FY2012 25% 22.5% 20% 17.5% FY2013 26.5% 23.8% 21.2% 17.5% FY2014 28.1% 25.2% 22.5% 17.5% For non-primary residence coops/condos where the unit received the abatement in FY2011. the abatement will phase out according to the schedule in the chart below. Average AV: $15,000 or less Greater than $15,000 FY2012 12.5% 8.75% FY2013 6.25% 4.375% FY2014 0% 0%
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|Title Annotation:||REBNY Watch|
|Comment:||New housing legislation levels the playing field.(REBNY Watch)|
|Publication:||Real Estate Weekly|
|Date:||Feb 13, 2013|
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