Proposed Amendments to Rules Governing Tax Exemptions Under RPTL Section 489 (J-51)

Proposed Rules: Closed to Comments

Comment By: 
Tuesday, October 15, 2013
Download Copy of Proposed Rule (.pdf): 



Statement of Basis and Purpose of Proposed Rule


Real Property Tax Law §489 ("J-51") authorizes municipalities to enact local laws providing a reduction in real property taxes as an incentive to rehabilitate multiple dwellings. The City of New York has enacted such a local law in Administrative Code §11-243. HPD determines eligibility for J-51 tax benefits and is proposing amendments to Chapter 5 of Title 28 of the Rules of the City of New York (the "J-51 Rules") in order to implement recent amendments to State and local law, Chapter 4 of the Laws of 2013 and Local Law Number 48 of 2013. The proposed amendments also reflect programmatic changes in application requirements.


Professional Certification


To ensure accuracy and expedite application processing, the proposed rule amendments require submission of an affidavit of a registered architect or licensed professional engineer for purposes of determining the start dates and completion dates for J-51-eligible work in instances where either a Department of Buildings' permit (for start date) or a certificate of occupancy or other Department of Buildings' sign-off (for completion date) are not required by law. These dates are relevant for purposes of meeting both statutory and regulatory filing and work completion deadlines. HPD will retain the discretion to request additional documentation to support such dates, such as owner's affidavits, work contracts, invoices, cancelled checks and contractor's affidavits.


The proposed rule amendments also require submission of a Certified Public Accountant certification to verify the cost of J-51 eligible work other than for (a) governmentally-assisted work, for which a disposition of funds statement or HPD Commissioner certification will suffice, or (b) projects eligible to use the short form. The CPA certification will replace the submission of paid bills, cancelled checks, installment agreements and work contracts and thereby expedite the processing time for J-51 applications. However, HPD may still, in its discretion, require this additional documentation.


Work and Application Filing and Completion Deadlines


The proposed rules implement Chapter 4 of the Laws of 2013 and Local Law Number 48 of 2013 by extending the date by which J-51 work must be completed from December 31, 2011 to June 30, 2015. They also implement these statutory amendments by reducing the time in which J-51-eligible work must be completed from 36 to 30 months following the start of construction. Governmentally-assisted projects or projects of housing development fund companies will still have 60 months to complete the work.


The proposed rule amendments reduce the time by which J-51 applications must be filed for most projects from 48 to 36 months following the start of construction. Loft conversions will still have 12 months following completion to file J-51 applications, and HPD will still have the discretion to extend the application filing deadline for governmentally-assisted projects to not later than 72 months following the start of construction.


The proposed rule amendments reduce the application completion period from 24 to 12 months after the initial filing date. Coop City, a State Mitchell-Lama development that consists of over 15,000 dwelling units, would now have 24 instead of 36 months to complete a J-51 application.


Cooperatives and Condominiums


The proposed rule amendments implement the restrictions imposed by Chapter 4 of the Laws of 2013 and Local Law Number 48 of 2013 on benefits for homeownership projects with average assessed values equal to at least $30,000 per dwelling unit.


For work completed on or after December 31, 2011, such cooperatives and condominiums will only be eligible if the work was carried out with substantial governmental assistance. Certain homeownership projects, such as Mitchell-Lama mutual companies and Article V mutual redevelopment companies, are exempt from this restriction.


Inspections and Inspection Fees


The proposed rule amendments clarify the requirement that J-51-eligible work be inspected by HPD prior to issuance of a certificate of eligibility and reasonable cost. They also implement the legislative change authorizing HPD to impose a fee equal to two times the actual cost of inspecting any conversions, alterations or improvements that are claimed in the J-51 application if such work is not completed at the time such inspections take place.


Ineligible Conversions


The proposed rule amendments implement the restrictions imposed by Chapter 4 of the Laws of 2013 and Local Law Number 48 of 2013 on benefits for conversions from nonresidential to residential buildings. Any such conversion completed on or after December 31, 2011 will only be eligible for J-51 benefits if the work was carried out with substantial governmental assistance.


Certified Reasonable Cost Schedule


The proposed rule amendments implement an updated schedule for Certified Reasonable Costs for projects that complete construction on or after December 31, 2011. Rental units, which become rent stabilized due to receipt of J-51 benefits, and affordable homeownership units, will get an adjusted cost schedule to reflect their commitment to affordability as well as cost adjustments since the last time the schedule was updated. This increase is being funded by the reduction in benefits to market rate cooperatives and condominiums as well as the elimination of certain items of work from the cost schedule.


DOB Forms


The proposed rule amendments reflect the form change names by the Department of Buildings for electrical inspections.




The proposed rule amendments capitalize defined terms utilized in the J-51 Rules.



Public Hearing

Notice of Opportunity to Comment on Proposed Amendments to Rules governing tax exemptions under 489 of the Real Property Tax Law of the State of New York.

Public Hearing Date: 
Tuesday, October 15, 2013 -
1:00pm to 4:00pm

Elaine R. Toribio
TIP Director
100 Gold Street
Room 8-D09
New York, N.Y. 10038
(212) 863-7698

Department of Housing Preservation and Development
100 Gold Street, Eighth Floor, Room 8-811
New York, NY 10038