J-51 Becomes Law

SPEAKER_00 0:00

New J 51 tax abatement has just become law. And now is a critical time for co ops and condos to review the work that they've done, that they're doing, that they're thinking about doing in the future to see if they can be eligible for very valuable property tax abatements, which would reduce their property tax liability and compensate them for the work that they are doing to their property.

SPEAKER_01 0:26

This is the Co-op and Condo Insider, the podcast dedicated to New York's cooperative and condominium communities. This is your trusted source for the latest insights, strategies, and stories shaping the world of shared housing. You will hear from the people who are leaders in this community. Information and insights you will not hear anywhere else. If you want to stay ahead of the curve, you're in the right place.

SPEAKER_02 0:48

The views and opinions expressed on this program do not necessarily reflect those of the host or any affiliated individuals or organizations.

SPEAKER_03 0:57

Welcome to the Call Up and Condo Insider. Today's podcast is especially timely. It is about the new J51 legislation, which became law on October 24th, 2026, creating an important opportunity for eligible cooperatives and condominiums undertaking capital improvements. Welcome to the show. My name is Geoffrey Mazel. This is where we explore real-world issues facing the co-op and condominium community across New York City. I'm thrilled to be joined by our guest today, Ben Williams. Ben is a member of Rosenberg and Estes PC, a longstanding real estate firm that I have had the pleasure and displeasure of dealing with many times over the years. And they are formidable opponents if you have litigation or any issues with them, and really one of the finest law firms in this field in the city of New York. Ben is the leader of the firm's property tax department. And we're really here to talk about this amazing development, the new and improved J51 bill, which again became law October 24th, 2026. Ben, welcome to the Golden Condo Insider, and thank you for joining us.

SPEAKER_00 2:14

Thank you, Geoff. I'm happy to be here and happy to talk about J50. Well, we'll be the first people talking about it since the past six days ago. Yeah.

SPEAKER_03 2:24

That's the goal of this show, and it's really the goal of why I started the podcast to give one place to go to understand an issue that you read bits and pieces of, but to hear experts like yourself speak about it is critically important to the co-op community.

What J-51 Pays Back

SPEAKER_03 2:42

So Ben, let's start with the basics. What is the J51 tax abatement tax credit program? How would you describe it?

SPEAKER_00 2:52

It basically gives you money. If you're an eligible building that is doing or did eligible work, it gives you money back for that work that you did. Paid through reduced property taxes. So if you're if you're a co-op or condo, they're not giving everybody money back for doing work. If you're a co-op or condo, you have to be considered an affordable co-op or condo. And they define that based upon an assessed value test. So if you're under the assessed value threshold, then you're affordable, you're a lower-valued co-oper, and you can get money back for the work that you do. But if for premium luxury co-op and condos, they're going to be assessed too high. So they're not going to be eligible.

Effective Date And Filing Window

SPEAKER_03 3:49

So the new legislation became law October 24th. When does it take effect?

SPEAKER_00 3:56

Takes effect January 1st, 2027. So we have about two months for HPD to publish its rules and its updated application materials and hopefully even a certified reasonable cost schedule so that when January 1st comes, then anybody who completed work between June 30th, 2026 and January 1st, 2027 has four months to submit their application for J51. This that'll be the first round of J51 applications. And I think this was done intentionally, and it was a last-minute change to the bill because we saw what happened with the last J51 reform program. So then the city had to go and have city council hearings and the city council had to vote on it and sign it into law. And when the J51 reform program was signed into law in December 2024, it became effective immediately. So anybody who had completed work between June 2022 and December 2024 now had to scramble and only had four months to apply. And HPD didn't even have rules out. They didn't even have application materials. They didn't even publish that for a couple months later, giving us essentially two months to complete everything. So we were submitting for our clients dozens of applications all on the very last day, just trying to get everything together. So this will give us a little bit of breathing room to be able to get applications ready for the May 1st filing deadline.

SPEAKER_03 6:00

So it would be sequential with when the filings are due. So let me ask you.

SPEAKER_00 6:07

I think also if filings are going to be completed, they can't even be completed before January 1st, then by the time that they're filed and HPD reviews them and approves them, and then it takes a few months after that, even before the benefits get put on. Now we're looking into the next fiscal year. So I think that will also push out so they can budget a little bit better for the abatement program because they I don't know how much they were budgeting for this new program in fiscal 27, which ends June 30th.

Why State And City Both Vote

SPEAKER_03 6:42

So why does the J51 statute have to pass both the New York State Legislature and the New York City legislature?

SPEAKER_00 6:53

You may remember the earlier version of this bill was an would have automatically enabled it. It wouldn't have required city approval. And then they changed that at the last minute when this J51 passed the state. I assume that the reason they did it was so that the city has a say in it. So it's not just the state legislators mandating that the city has to have a J51 program. The state says you could the city can have one if they want, and then the city then has to go and vote. What do you think?

SPEAKER_03 7:33

I use this word Byzantine, which I don't know, people don't like when I say it. It sounds Byzantine. The state sets uh tax laws and the city implements them. So it's either, but uh it does come from the state, the authority comes from the state. And you could either do home rule messaging or you could do or the city has to pass their own legislation. I think the state in this instance uh uh tried to do it on their own because they didn't want to have the delay that they had last time, but the city council was ready for it. And uh this law passed in uh June 2026 uh in the state uh legislature uh and it was literally on a hearing calendar by the beginning of September in New York City, which is that's the first, literally the first hearing they could have. I think uh the law this time from what I saw from my vantage point, and again, I'm looking I was involved in the advocacy of it, uh everybody wanted to get something done and we're cognizant of deadlines, and we're very cognizant of what happened uh the prior go-round, which would have been four years ago, but it was actually two years ago because the city sat on it for two years.

HPD And DOF Roles

SPEAKER_03 8:49

So let's go back to you mentioned HPD uh guidelines. What is HBD's role in the enforcement and implementation of the J51 program?

SPEAKER_00 9:03

The Department of Finance is also involved, but they're just given the slip by HPAD that says go ahead and give them the abatement. So HPD is the main agency that is overseeing the J51 program. That is the agency that you submit your applications to, and they're gonna review that to see if you're eligible and that your work was eligible. They'll send their inspectors out to check out the work that you did. And so they're the overseeing administration handling this. Yeah, it's not the Department of Finance in this. The HPD, if they grant, they'll end up uh granting you the your J51 benefits, and then they'll tell the Department of Finance to implement it and put it on the next tax bill. And Department of Finance mainly handles ICAP, ICIP, the old one, and not-for-profit exemptions and then personal exemptions and abatements. So that's how they divvy up the work there. But yeah, HPD mostly handles the residential side, so that's why they're dealing with it, they're the main agency.

Eligibility Reviews And Common Misreads

SPEAKER_03 10:17

So if a co-op thinks they may be eligible, they're doing work. Who would they contact to file the claim or the application? Would that be somebody like yourself and your law firm handles that? Or would they go to an outside expediter? Like who processes these and what's really the best practice to get the best results?

SPEAKER_00 10:42

The HPD publishes the application materials, but there's so many different forms. They all have different names. There's the B1 and the E3 and the D5B and the E2, and you only use some forms in certain circumstances, and it's a little complicated. That presumes that you're eligible, right? So, really, the first question is we're planning on doing work, or we are doing work, or we've finished work. Can we get a J51 for this? Right. If you can ask that question, then you're already ahead of most of the properties. I found that with the last J51 reform program, that most buildings had no idea they were even eligible for J51. No idea. So I run the taxertiari group, and I went through and reviewed some of my co-open condo clients and rental buildings too, also couldn't get J51, certain kinds of rental buildings. And I went through some of them and I asked who did some work, who's doing some work, and is their assessment below the threshold? And I will call some of them and say, Hey, did you know about the J51? You might be able to get a J51 for the new boiler that you put in last year. And most people had no idea. So if you if my the what I decided after the last J51 came out was the best thing I could do was to add to get the word out, to tell people about it. I hosted a webinar, I would send email blasts out, I'd call managing agents that I knew to tell them about J51 because it was under the radar and nobody was thinking about it. And so once you know about it, some people then assume they're not eligible. So that's that's the next hurdle to get through. So what once you know about it, then you say, okay, a lot of people say, Oh, we're not eligible, we're assessed too high. They may not be looking at the right assessment in the right year because there's lots of different assessments. There's an actual assessed value, a transitional, a billable, a taxable, there's a market value. So there's a which one do you look at? Do you make adjustments if there's commercial space? So some people just assume that their building isn't eligible, or they assume that the work that they did is not eligible, either that they finished it a while ago, or that it was too small, or why would we get an abatement for it? Isn't this a program to incentivize us to do work? We already did it, so why should we get an abatement for it? So people call me right now that the program passed six days ago. I've already gotten a couple calls, mostly from people who don't think they're eligible, but just want to kick the tires a little bit. And I'll do a comprehensive eligibility review. We review the property. Is the property eligible? Is the work that you did eligible? And what are the potential benefits that you can get from filing if you are eligible? And sometimes the work may not be eligible, but maybe it doesn't meet the minimum work per dwelling unit threshold, right? You have to be approved at least for $1,500 per apartment. So maybe they'll have some more work coming down next year, and then maybe we could add the two together, and then maybe all of a sudden we get $1,500 per apartment, and then they can apply for both of those projects. So that's how we counsel people. The law's complicated. So that's why I recommend that people talk to a lawyer to review this. And I used to be an engineer, so I'm I'm one of the only lawyers that are or were engineers. So I review the plans and I talk to the engineers and architects that are on the project. So we go over the work and see how we can fit it into HPD's program.

Timing Rules And Assessed Value Planning

SPEAKER_03 14:46

So the takeaway from this podcast is stop what you're doing, figure out if you're doing any capital work, figure out and stop and speak to a J51 specialist. Just to, again, as you called it, kick the tires. Because if you are eligible and you are doing work, you're going to save your building potentially hundreds of thousands or millions of dollars over time.

SPEAKER_00 15:15

And the biggest impediment, so now that the program is renewed for 10 years, right? We have a 10-year runway now. It's less than 10 now, but you have to complete your work before June 30th, 2036. For projects that are going to be starting soon. I'm not going to give you the exact date right now because I got to kind of dive into the law just passed, but only buildings that satisfy certain pre-commencement requirements are even going to be eligible. So sometimes we'll find people have already started the work, or let's say you start working a year from now and you haven't done the pre-commencement HPD requirements, you may be ineligible. You may have lost your eligibility at all totally. So one of the things that we'll look at is the timing of when you started the work. Did you send, did you satisfy the pre-commencement requirements? So we'll do planning. Also, the assessed value right now under the new program, the maximum assessed value per apartment of 60,000. That was a big change. That's gonna add maybe a thousand more eligible buildings. That you may be at 59,000 today, but you may be at 61,000 next year. We don't know next year's assessments yet, but if you're close, we can review and say, oh, if you were thinking of doing a roof in two years, maybe start it now. While you're eligible now. Because you won't be eligible in a year from now if your assessed value is too high.

SPEAKER_03 16:59

So the assessed value is basically the assessed value at the time the work is commenced or that or the preconditions are satisfied.

SPEAKER_00 17:08

Some people assume it's the assessed value when you complete the work. It's not, it's when you start the work. And it's measured on the fiscal year basis. So right now we're in fiscal year 27. That runs from July 1, 26th to June 30th, 27th. The tentative assessment role came out January 15th, 2026. The assessments were finalized May 25th, 2026. So you have a little bit of advanced notice of what your upcoming assessment is going to be. And the measurement is the year that you commence the work. So in a couple months from now, in January 15, 2027, we'll get the tentative assessments for the next year. If you see that your assessment is going to go up too high, you're going to want to get your shovel in the ground, so to speak, before June 30th, 2026. Seven. So you can be under the this current assessment. So we'll play with the timing, right? It's complicated.

SPEAKER_03 18:15

But that that's a great point. And there's a lot of moving parts here. Yeah. Especially if you need financing and the like. But that is a point that, again, a co-op board attorney, I really have not thought about. But if you're close, you should really focus on doing the work when you know you have that window of eligibility.

SPEAKER_00 18:36

You should see what are your projects over the next five years or so, and then compare it to your assessment. If you're underassessed, there's always a risk that the city may more correctly assess you at some point in the future, ruining your eligibility. Nevertheless, that $60,000 threshold is inflation protected. That was one of the nice features that was added. But that's just tied to CPI. So if the $60,000 increases to $63,000, and you were at $59 today and you're at 64, it doesn't really matter. It is what it is. So you have to play with what we have and what we expect the CPI might be. Some buildings may not be ready to do it, but you're as a co-encondo attorney, you talk to the boards all the time, you know what kind of work they may have coming up, right?

SPEAKER_03 19:30

I'm very proactive and always thinking about, especially a lot of my clients are on the bubble. So it's something I always encourage them to be very aware of because when they miss out, either usually because of eligibility and they're close, or if they uh did the work before this new statute, it's a big swing. It's a big financial swing. So it's something that it's just a lot of planning.

SPEAKER_00 19:59

I do find that uh some boards are very proactive, and some will try to kick the can as long as possible regarding doing the work. And you have boards somewhere in between those two extremes.

SPEAKER_03 20:12

And again, a lot of it has to do with financing. A lot of the low interest mortgages from the uh COVID era, the three and four percent mortgages, those are gone. And to refinance now is six and a half percent, seven percent, whatever it is. So it's a timing issue also with interest rates. As I said, it's a lot of moving forwards. Uh but I think now that we have clarity with respect to the J51 program for 10 years, which uh prior programs were four years, it's a great tool to really think about going forward.

SPEAKER_00 20:48

Uh yeah, so I I just worry with 10 years, people will say, Oh, I don't have to worry about it. I have 10 years uh to complete my work. I'll just start it in eight years from now. And then something happens and they lose eligibility.

SPEAKER_03 21:02

Yeah, so I when I was involved a lot when the uh program went from wide open, full full participation, to I think the original eligibility cap was I want to say 32,000 average assess valuation. And I had co-ops that had I'm thinking one or two particularly multiple tax lots, and they would do work on one lot one year and then go to the next lot the next year, and they wouldn't be eligible. Same co-op. So again, it's a lot of moving parts, it's complicated. I think our takeaway from today's show is understand the statute, understand how it applies to your co-op and seek professional help just to start planning your projects around this program.

Eligible Upgrades And Energy Work

SPEAKER_03 21:50

So just again, let's maybe just step a step back. What types of projects are generally eligible? And I know in this round Uh there was a huge push from the environmental uh lobby and community in support of J 51, which made uh co-op advocates life much easier because uh usually we're on the opposite sides of issues. Well what sort of energy efficient or uh local one ninety-seven copline projects do you foresee as fitting into this program going forward?

SPEAKER_00 22:25

This was a big conversation topic at the May 2024 City Council hearing before J51 reform program was passed. This is before we knew the new certified reasonable cost schedule. Because HPD publishes the list and they say, here is what you can get. Here's the type of work, right? And here's the maximum unit cost that you can get for that work, right? You can get the lesser of what you actually spend or what HPD allows on a per unit basis. And they had a lot of discussion about making sure that the new CRC certified reasonable cost schedule would encompass energy efficiency type work. And it had about 160 different line items on it. It did have some energy efficiency, eligible construction items, and people are using that heat pumps. I see some buildings that are going to switch to heat pumps. However, it's limited. Their schedule only goes up to one and a half ton. And I know some buildings that are doing two ton. We're hoping that in the next iteration of the CRC, which is supposed to be under the new law, update it at least every two years, which is also a nice ad that they have. Meaning they don't just set one CRC and that's going to be it for 10 years. They'll have to update it with new work and maybe modify some things. Some of the energy efficiency work that I'm seeing buildings do are windows. That's a big one. Because you can get $1,500 per window. And so most windows cost a little bit less than that. So people are maxing out and getting their entire window project reimbursed as an abatement. They have to be not any kind of window though. It has to be low E double glazed. So it has to meet certain energy efficiency requirements. We're seeing properties doing right-sized boilers and burners. They have very old boilers and burners. And so with a right-sized boiler and burner, they're much more efficient. And there's different dollar amounts that can get depending on how many BTUs of your new boiler or burner that you're replacing. I mentioned heat pumps. People are doing new roofs with insulation because that increases the energy efficiency of the building. A lot of people, local law 11, I don't know if you consider that energy efficiency. They have to do brick replacement and pointing and waterproofing of the facade and parapet work and coping. To the extent that you are doing some facade insulation, that could increase the energy efficiency. So we're seeing a lot of that kind of work, new elevators. But HPD will give you full replacement elevators, but they have to be gearless elevators for replacements. So when you're bidding out the work, you should be aware of if you're doing a replacement geared elevator, that's not gonna qualify for reimbursement under the CRC as it is right now. Has to be gearless. I don't know.

SPEAKER_03 25:34

What about installing solar panels on a roof? So for a carport or something like that.

SPEAKER_00 25:42

Installing solar on a roof is not on the schedule. You can get the solar abatement. There's a solar, a separate solar abatement, and that's run through DOB and DOF, not HPD. To the extent that some of that work might not be eligible for an abatement, like you have to improve your electric wiring or have to do roof work to support that. If that is not includable in your solar abatement, then you could separately get J51 for that. But for some buildings, it's not going to be expensive enough to qualify just for doing some of that work. But right now, electric wiring, there's a lot of electric work. I envision that in the next CRC round, though, because electrification is a big component of energy efficiency, or that we'll see more electrification type projects added to the CRC schedule. There's already things in there for new wiring and new panels, but I think they could make that a little bit more robust.

SPEAKER_03 26:54

How

How The Abatement Is Calculated

SPEAKER_03 26:55

long you get the credits for, etc.

SPEAKER_00 27:00

So under this program, again, we don't have a name for it, right? The outgoing program is J 51 reform program. So what is this?

SPEAKER_03 27:12

Re-reform program.

SPEAKER_00 27:13

Re-reformed, yeah. I don't know.

SPEAKER_03 27:15

Um there we go.

SPEAKER_00 27:16

We just made a new so under this new program, you can get a hundred percent of the certified reasonable costs under the J51 reform program. The outgoing program, it was 70%. So again, let's say you had a $1 million project, right? And you can get the certified reasonable costs. So HPD is then going to review the work that you did and how much you spent. The certified number will be the lesser of what you spent as certified by an accountant and proven through invoices and check registers and things like that. Or what HPD allows on a per item per unit basis, on a per square foot, per floor for elevator, that kind of thing per apartment basis. So maybe you spent a million. Maybe your certified reasonable cost comes in at let's say 700,000, right? You didn't get the full thing. So part of what we do is we try to help people maximize to get as close to the million as they can. So once HPD issues their certificate and say, okay, our certified cost is 700,000. That's what we'll allow. Now with the new program, you're at 100%. You can get 700,000 back. So you can get up to eight and a third percent of that per year, up that 700,000, which essentially means you're gonna get the 700,000 spread over 12 years. That's the fastest you can get it over 12 years. I see.

SPEAKER_03 28:53

That was confusing. I didn't think we were explaining that. Okay.

SPEAKER_00 28:56

So you can get the 700,000 over 12 years. It's not inflation, it's just a fixed dollar amount. Most of these buildings that have lower assessments are paying quarterly, so you'll see it spread out per quarter. But then there's certain limits. The abate you can't abate more than half of the taxes. And you can't abate the land portion. There's two portions of every assessment. There's the land portion and the building portion. So if the land portion is very high, that may limit some of the abatement that you get. Or if your abatement is so large that it would be more than 50% of your tax, then you are not going to be able to get that full eight and third for that year. So you actually get to keep that. And they'll hold on to that and let you apply in future years. So the maximum period that you can get it over would be 20 years. Whatever you don't have used up after 20 years just goes away. You lose that. But I can get it as fast as 12 years. Yeah, all of it back. Yeah.

Closing And How To Reach Us

SPEAKER_03 30:05

Ben, thank you for joining the Culp and Condo Insider. I have something very important to tell you. It is now official. You are now officially a Cop and Condo Insider. So congratulations on that. We do have mugs.

SPEAKER_00 30:19

Dream has come true, Geoff. Thank you.

SPEAKER_03 30:22

There is a dream that we do. I'll probably never send it to you, but if you ever come to my office, you're welcome to one.

SPEAKER_00 30:28

Again, an espresso version.

SPEAKER_03 30:31

No, we're not that fancy. We're the J51 crowd, not the theater tear crowd. But anyway, to our listeners, thank you for listening. And please feel free to contact Ben or myself if you have any questions on this or anything else regarding your call for conduct. And again, thank you for listening and have a good day.