tax-incentives-J-51-reform

Housing Preservation & Development


Tax Credits and Incentives

J-51 Reform


J-51 Reform

Real Property Tax Law § 489(21) and New York City Administrative Code § 11-243.2 have established the J-51 Reform tax incentive program (“J-51 R Program”), which offers an as-of-right real property tax abatement for residential rehabilitation of Class A multiple dwellings. J-51 R Program benefits are available to projects completing workafter June 29, 2022, and on or before June 29, 2026.

*Important Program Update: Applications for J-51 R benefits must be filed on or before April 30, 2025 for projects that completed construction on or before December 30, 2024 and within four (4) months of the Completion Date for projects that completed construction after December 30, 2024. Pursuant to NYC Administrative Code § 11-243.2(t). HPD intends to adopt rules governing the administration of the J-51 R Program. While HPD is currently accepting applications for filing, HPD will not review or approve such Applications until after such rules are adopted, and Applications must ultimately comply the adopted rules in order to be found eligible for J-51 R Program benefits.

J-51 Reform

Expand AllCollapse All

Eligible Projects

Eligible Construction means alterations or improvements to an eligible building that:

are specifically identified on the certified reasonable cost schedule*;

meet the minimum scope of work threshold of $1500 per dwelling unit;

have a completion date that is after 6/29/2022 and prior to 6/30/2026 and that is not more than thirty months after their commencement date; and

are not attributable to any increased cubic content in such eligible building.

Eligible Rental Building:

Class A multiple dwelling in which all of the dwelling units are operated as rental housing;

Not operating in whole or in part as a hotel; and

Satisfies one of the following conditions:

not less than fifty percent of the dwelling units in such building are qualifying rental units with maximum rents at or below 30% of 80% AMI and registered with DHCR; or

owned and operated by a Mitchell Lama limited profit housing company or redevelopment company; or

receives substantial governmental assistance.

Certain rental units must remain subject to rent stabilization for at least the duration of the J-51 R Restriction Period and the landlord must permanently waive the MCI rent increase for any Eligible Construction receiving J-51 R benefits.

Eligible Homeownership Building:

Class A multiple dwelling operated as condominium or cooperative housing;

Not operating in whole or in part as a hotel; and

Has an average assessed valuation no greater than forty-five thousand dollars per dwelling unit as of Commencement Date.

Eligible Regulated Homeownership Building:

Class A multiple dwelling owned and operated by a Mitchell Lama mutual housing company organized under Article II of the Private Housing Finance Law (“PHFL”), or

Class A multiple dwelling owned and operated by a mutual redevelopment company organized under Article V of the PHFL.

*Disclaimer: Pursuant to the authority granted to HPD by Real Property Tax Law § 489(21) and New York City Administrative Code § 11-243.2 (collectively, the “J-51 R statutes”), HPD intends to propose a rule to publish the Certified Reasonable Cost Schedule for the J-51R program on HPD’s website. The tentative Certified Reasonable Cost Schedule linked here is provided for purposes of interim guidance to assist properties in applying for J-51 R program benefits, but it is subject to change and shall not become effective until HPD adopts applicable rules in accordance with the requirements of the J-51 R statutes and New York City Charter § 1043. All applications submitted for J-51 R program benefits in the interim shall ultimately be governed by such adopted rules.

Program Benefits Granted

Benefits granted include:

Abatement of existing real property taxes by up to 8 1/3 percent of the total certified reasonable cost of the work each year for up to 20 years, up to a total of 70 percent of such approved certified reasonable costs.

Notices

The J-51 R Program is governed by Real Property Tax Law §489(21) and Administrative Code §11-243.2 (collectively, Statutes) as well as Chapter 62 of Title 28 of the Rules of the City of New York (Rules). In the case of any inconsistency between the Statutes and the Rules, the Statutes always govern.

How to Apply

Timing Requirements

Applications for J-51 R benefits must be filed on or before April 30, 2025 for projects that completed construction on or before December 30, 2024 and within four (4) months of the Completion Date for projects that completed construction after December 30, 2024.

Applicants must submit the completed J-51 R application and all required forms via email to J51_customer_service@hpd.nyc.gov and all affidavits must also be printed, signed and notarized, and mailed to HPD at:

Attn: Division of Housing Incentives
Re: J-51 Reform Application
Department of Housing Preservation and Development
100 Gold Street, Room 8C-09
New York, NY 10038

Pre-Commencement of Eligible Construction Requirements

These items must be submitted to HPD prior to the commencement of applicable Eligible Construction.

D4a - Notice of Intent

D4b - Affidavit confirming Notice to Tenants

D4c - Notice to Tenants

Application

These items should be submitted after completion of applicable Eligible Construction.

Pay a fee in the amount of $1,000 plus $75 for each additional dwelling unit in excess of six. The fee must be sent by wire or automatic clearinghouse (ACH) transfer to the City of New York. In order to properly credit your wire or ACH payment, include the property address indicated in the "comments" or "remarks" field of the transfer. Additional wire details are provided in the application.

Submit a completed application with the below supporting documentation, as applicable. You may not need to complete every form. Consult the Documents Guide below for reference.

Documents for All Applications

B1 - Application in fillable PDF “live” electronic format

B2 - J-51 R Workbook

C4 - Affidavit of Non-Duplication

D3a - Affidavit of Ownership and Energy Star Compliance

D3b - Affidavit of No Harassment

D5a - Affidavit of Violation Clearance for Owner

D5b - Affidavit of Violation Clearance for Architect and Engineer

E2 - Certificate of Compliance with DOB Regulations

E3 - Architect’s/Engineer’s Affidavit concerning Commencement and Completion Dates

Proof of Eligible Construction Costs

MDR Registration

Applicable Permits

Certificate of Occupancy

DOB approved Plans

Affidavit of Lead-Based Paint Hazard Abatement

Required for Rental Buildings Only

DHCR Rent Registration

D7a - Owner’s Declaration of Waiver of MCI Rent Adjustment

Required for Homeownership Buildings Only

Opinion of counsel

Copy of the cooperative or condominium’s offering plan or documentation demonstrating that the building is not subject to the requirements of § 352(e) of the General Business Law

Proof of Average Assessed Valuation at commencement of Eligible Construction

Required for all Regulated Homeownership Buildings or Substantial Governmental Assistance projects

Applicable Regulatory Agreement(s)

Documents Guide

The J-51 R Program is governed by Real Property Tax Law §489(21) and Administrative Code §11-243.2 (collectively, Statutes) as well as Chapter 62 of Title 28 of the Rules of the City of New York (Rules). In the case of any inconsistency between the Statutes and the Rules, the Statutes always govern.

J-51 R PRE-COMMENCEMENT OF ELIGIBLE CONSTRUCTION REQUIREMENTS

**

Form D4a. The Notice of Intent to File for J-51 R Tax Abatement, must be filed with the J-51 Unit not less than fifteen (15) days before the start of rehabilitation. Failure to demonstrate the filing of this form within the indicated time frame will result in the assessment of a penalty equal to one hundred percent of the filing fee.

Form D4b and D4c. Affidavit Confirming Notice to Tenants (D4b) and Notice to Tenants (D4c)– An applicant must complete the Notice to Tenants not more than one hundred eighty days nor less than thirty days prior to the Commencement Date of applicable Eligible Construction. The Notice to Tenants must be sent by registered or certified mail, return receipt requested, to all tenants residing in the building to be rehabilitated and post a copy conspicuously in the building lobby prior to the Commencement Date; if more than one hundred eighty days elapses between the date the Notice to Tenants is mailed to any tenant and the date rehabilitation actually commences, a new Notice to Tenants must be completed and mailed and posted, provided that, in the case of a loan program supervised by HPD, HPD may provide the required Notice to the Tenants. An affidavit confirming the requisite Notice to Tenants (Form D4c) must be completed and filed with HPD. Failure to notify residents and submit these forms in compliance with the timing deadlines established in the Rules will result in loss of J-51 R benefits.

** These pre-commencement of Eligible Construction requirements do not apply to projects with a Commencement Date on or before December 29, 2024.

J-51 R APPLICATION FORMS

Form B1. J-51 Application. Answer all questions completely, inserting the notation “N/A” or “none” for any items or questions that do not pertain to your particular application. Form B1 must be submitted as electronic fillable PDF “live” form.

Form B2. J-51 R Workbook. This is an Excel worksheet for applicants to provide itemized claimed costs for rehabilitation work, rent information for all units in the building, and homeownership unit information, at the time of application. To ensure proper benefits, record all claimed costs and rent information accurately and legibly. Must be submitted as electronic Excel form.

Form C4. Affidavit of Non-Duplication. This affidavit must be filed for any building that has received any form of J-51 or J-51 R benefits in the past certifying that work submitted in this application is not duplicative of work receiving benefits under previous applications. This affidavit must be signed by the owner(s). We cannot accept affidavits signed by a managing agent or attorney. If the building is a cooperative or condominium, the affidavit must be signed by an officer of the Board of Directors.

Form D3a. Affidavit of Ownership and Energy Star Compliance. This affidavit is required of all projects and must be signed by the owner(s). We cannot accept affidavits signed by a managing agent or attorney. If the building is a cooperative or condominium, the affidavit must be signed by an officer of the Board of Directors.

Form D3b. Affidavit of No Harassment. Any owner (including general partners and corporate officers) with an interest of ten percent (10%) or more in the premises must be listed on Page 2 of the Form D3b; one owner must also sign Page 2 in the space provided. Cooperative or condominium buildings must have an authorized member of the Board of Directors sign. Shareholders owning more than ten percent (10%) of the shares must also be listed.

Forms D5a and D5b. Affidavit of Violation Clearance. Applicant must submit a Violation Search Report issued by HPD’s Division of Code Enforcement dated no more than forty-five (45) days before the filing date of your J-51 R application. If the search report indicates B or C code violations, provide written proof of correction or clearance from HPD Code Enforcement. For the violations, acceptable proof includes:

Certification from the HPD Code Enforcement Division that the building is free of B and C violations; or

Submit Form D5a Affidavit of Violation Clearance for Owner or Form D5b - Affidavit of Violation Clearance for Architects and Engineers, stating that all previously cited violations have been cleared. The affidavits should include the most recent date from the upper right-hand corner of the first page of the search report as the date of the search.

Form E2. Certificate of Compliance with Department of Buildings Regulations. Complete Section 1 of the form. Depending upon the type of application, the following additional information may be required:

If the application includes items of work that require DOB permits, HPD will require Department of Building’s sign-off of each permit. This may require the applicant to make an appointment with DOB in the borough where the property is located to obtain an approved copy of the E2 for submission to HPD.

If the application requires no DOB permits, submit to HPD verification that there are no outstanding DOB violations in connection with the property. This can be provided in the form of a dated printout, which must be dated no less than thirty (30) days prior to the date of the initial application. If the printout lists outstanding violations, the applicant must ensure that these violations are cured and dismissed by the appropriate DOB inspection unit. Once the dismissal(s) is/are obtained, the applicant must submit them to the J-51-R Unit along with the certified index screen, which should be initialed next to each outstanding violation by a DOB official to confirm dismissal. Upon receipt of this information, HPD will approve the E2 form.

Form E3. Architect’s/Engineer’s Affidavit Concerning Commencement and Completion Date. Where Eligible Construction does not require a DOB permit, an affidavit from an architect or engineer is required to certify the commencement and completion date.

Proof of Eligible Construction costs. As proof of Eligible Construction costs for all work claimed on Form B2, submit a statement by a certified public accountant (CPA), in the form of the provided template (Form D8), attesting to the accuracy of the claimed costs information on Form B2. The CPA statement must be signed and dated by the CPA and provided on the CPA letterhead. Substantial Governmental Assistance projects may submit a Disposition of Funds or Final Requisition for Payment.

MDR Registration. Proof that the building has been registered with HPD in accordance with the provisions of article two of subchapter four of the Housing Maintenance Code.

Applicable Permits. Submit Permit(s) and Sign Off(s) and copies of additional forms and schedules required by Department of Buildings and/or any required City clearance letters, permits or approvals.

Certificate of Occupancy (CO). The CO is required for Eligible Construction completed with an Alt 1 permit and must be issued within four (4) months of submission of the J-51 R Application.

DOB-approved Plans. Eligible Construction with Alt-1 permits require submission of DOB-approved plans, or where work has been completed that cannot be visibly inspected (e.g., floor joists, structural steel), submit one full set of the approved plans for construction, mechanical systems, electrical systems, plumbing systems, etc. that the applicant or the applicant’s architect or engineer has obtained from DOB, and an architect or engineer’s statement regarding the nature and amount of work completed.

Affidavit for Lead-Based Paint Hazard Abatement must be provided by the Owner of the property attesting to work associated with lead-based paint abatement.

Rentals Only:

A copy of the most recent DHCR Form RR-2S Rent Registration Summary, filed by the applicant with the New York State Division of Housing and Community Renewal (DHCR) office in the borough where the property is located.

Form D7a - Owner’s Declaration of Waiver of MCI Rent Adjustment, must be filed. These items should be listed in the appropriate space on the form. A copy of this form must be filed by the applicant simultaneously with DHCR.

Cooperatives or Condominiums Only:

An opinion of counsel is needed which states the property is a legal co-op or condo and meets the requirements of Section 11-243.2 of the New York City Administrative Code, and the date on which the Offering Plan became effective.

A copy of the prospectus or offering plan filed with the Attorney General, and all subsequent amendments which become effective prior to the time HPD issues a Certificate of Eligibility and Reasonable Cost. Co-ops or condos that were formed prior to the date when a prospectus was required by law, or which are exempt for other reasons from the filing requirements, must submit a copy of the “no action” letter from the Attorney General or other documentation demonstrating that the building is not subject to the requirements of § 352(e) of the General Business Law.

Tax History from the Department of Finance showing assessed valuation as of the Commencement Date of Eligible Construction.

Regulated Homeownership Buildings or Substantial Governmental Assistance Projects Only:

Regulatory Agreement. A copy of the applicable regulatory agreement(s) must be submitted for projects receiving Substantial Governmental Assistance, and for those owned and operated by a Mitchell Lama company organized under PHFL Article II, and Redevelopment Company under PHFL Article V.