- REAL ESTATE EDUCATION
- GIVING BACK
The Real Estate Board of New York to The Committee on Housing and Buildings of the New York City Council Regarding Pre-Considered Intro. No. T2021-8260
November 29, 2021
The Real Estate Board of New York (REBNY) is the City’s leading real estate trade association representing commercial, residential, and institutional property owners, builders, managers, investors, brokers, salespeople, and other organizations and individuals active in New York City real estate. REBNY thanks Chair Cornegy and the New York City Council Committee on Housing and Buildings for the opportunity to provide testimony in support of Pre-Considered Intro T2021-8260, which would renew the J-51 tax abatement and exemption program until June 30, 2022.
The legislation under consideration by the Council today will ensure that buildings that complete work after June 29, 2020, can apply for J-51. J-51 is a critical tool for improving the aging building stock of New York City and is used widely throughout all five boroughs. The program has supported 51% of co-ops citywide, including Article V Redevelopment Companies, Mitchell-Lama co-ops, and naturally occurring affordable housing1.
Rental income and capital investment are the lifeblood of ensuring high-quality rental housing, and programs like J-51 help preserve homeownership as a primary wealth-building tool for low- and middle-income households. J-51 allows multifamily rental owners and low- and middle-income owners to afford increasingly expensive capital upgrades. The program allows them to do so without spending retirement savings or other funds, nor does it pass the cost onto equally cash-strapped tenants. Continuing the J-51 program will prevent thousands of New Yorkers from facing increased rents and property tax bills to offset the cost of critical infrastructure upgrades. Providing direct assistance in the form of tax programs such as J-51 is therefore critical to maintaining affordability alongside quality living conditions.
The program has high utilization in neighborhoods such as Co-op City and Hudson Manor Terrace in the Bronx, Glen Oaks Village and Forest Hills South in Queens, and Penn South in Manhattan. Passing an extension of the J-51 program today will support a pathway to homeownership and economic mobility for communities of color, middle income and low-income households, and working-class New Yorkers. Immediate renewal of this program will safeguard the vibrancy of New York’s housing stock and maintain stability for many hardworking New Yorkers negatively impacted by COVID-19.
REBNY does want to note that the program is not perfect and consideration for changes in the future are duly warranted. As we approach continued reauthorization by the State in 2022, REBNY would encourage the Council and the City to consider reforms to future iterations of the program as part of that process to ensure optimal functionality. A new J-51 should consider reforms to the Certified Reasonable Cost (CRC) formula to ensure a streamlined, greener, and more cost-efficient program that uses public resources efficiently while leveraging the power of the private sector as best as possible. The current CRC formula is dated in part because it has not been reformed to be consistent with the rent regulation reforms passed in 2019. The application process and requirements for the CRC are confusing and ought to be streamlined to reduce barriers to entry and increase utility of the program. Reforms to both programs could make J-51 a more efficient tool for rehabilitation and deploy the use of private capital in a more targeted way.
A future iteration of the program could also ensure new construction and create opportunities for substantial rehabilitation contributing to climate adaptation. Adopting sustainability-driven measures as criteria for accessing programs should provide an opportunity for universal agreement. Additionally, providing direct subsidy dollars for system-wide upgrades in existing buildings to reduce emissions or electrify spaces will ensure this complicated work is done. Programs like J-51 should and must be reformed to make it financially feasible to bring buildings into the 21st century and to also meet sustainability goals.
Despite the need for programmatic reform to J-51, REBNY would strongly encourage the Council to proceed with immediate renewal of the current program. Now more than ever, New Yorkers need safe and affordable homes in which to live. Extending J-51 now will provide stability to vulnerable New Yorkers hardest hit by COVID-19 and economic opportunity to thousands of New Yorkers citywide. As always, REBNY and our members stand ready to collaborate with the Council and the City on ways to improve access to housing for all New Yorkers. REBNY looks forward to working with our partners in government to ensure key programs like J-51 remain and are functioning optimally to put these homes within reach.
Thank you again for the opportunity to testify today and for your consideration on these points.