After decades of operating under its predecessor and nearly three years with no active program in place, New York City’s landmark real property tax abatement initiative for building upgrades—widely known as “J-51”—has been comprehensively revamped and relaunched. Although a few lingering questions remain unresolved as of mid-April 2025, owners, developers, and affordable housing stakeholders should be aware of how this new J-51 “Reform Program” emerged, the major legislative milestones it has passed, and the practical implications right now.
A Brief History of J-51
First introduced in 1955, J-51 was designed to encourage owners of multiple dwellings to undertake significant capital improvements—such as upgrading heating systems, replacing roofs or wiring, and installing new elevators—by offering property tax incentives. Over the years, J-51 underwent several expansions and adjustments to eligibility criteria. However, the program ultimately expired on June 29, 2022, leaving many property owners without a go-to, as-of-right tax abatement mechanism for essential upgrades.
In the face of rising construction costs, increasingly stringent building maintenance requirements, and ongoing affordability challenges, the drive to replace J-51 gathered steam. Both state and local legislators recognized the need for a revised benefit that would better align with modern housing needs—especially for buildings housing low- and moderate-income New Yorkers—while incorporating clearer compliance measures and stronger tenant protections.
The 2023 State Legislation
June 2023: The New York State Senate and Assembly passed legislation to amend the Real Property Tax Law and authorize a new tax abatement program. Titled the “Affordable Housing Rehabilitation Program” in the law, this measure effectively laid the groundwork for a renewed J-51 incentive—albeit with reforms designed to tie tax benefits more closely to preserving affordability in rental units and facilitating building upgrades that maintain habitability.
October 2023: The bill reached the Governor’s desk and was signed into law. Owners and advocates alike were notified that the new state framework would rely on local enactment to become fully operational in New York City. Although the state law reauthorized J-51 for rehabilitation work completed after June 29, 2022 (and before June 30, 2026), it required City legislation to fill in vital program details—chiefly the local application procedures and the “Certified Reasonable Cost” schedule for eligible construction work.
City Council Action
March 2024: The New York City Council introduced Intro. 654-2024 in the Committee on Housing and Buildings. The “Reformed J-51” bill proposed a purely as-of-right tax abatement. Gone was the prior J-51 exemption component, which had often been unpredictable. Instead, the renewed program would allow owners to abate up to 70% of approved, certified rehabilitation costs over a period that could stretch to 20 years, so long as they complied with new affordability and tenant protection requirements.
May 2024: The Council’s Housing and Buildings Committee held a public hearing, where stakeholders, including many property owners, tenant organizations, and industry attorneys, testified on the proposed local law’s scope and procedures.
December 2024: The City Council passed the final bill, and the Mayor signed it into law shortly thereafter as Local Law 122 of 2024. Its effective date, December 30, 2024, triggered a crucial four-month application window for projects that had completed construction between June 30, 2022, and December 30, 2024—owners of those projects must file by April 30, 2025 to secure benefits.
Where We Stand in Mid-April 2025
As of this writing, owners who wrapped up eligible rehabilitation work before year-end 2024 have only a few weeks left to file. HPD’s new website, launched in February 2025, outlines the interim application materials and an initial “tentative” Certified Reasonable Cost schedule. In March 2025, HPD held a public hearing on proposed rules—Rosenberg & Estis, P.C. was among those offering testimony and written comments, urging practical enhancements to address the real-world pressures on building owners seeking to preserve affordability.
However, HPD has not yet officially adopted the final rules. Under the statute, any property owner who submits a J-51 application will eventually have to comply with the fully adopted regulations—even though those are still pending. This presents uncertainty for owners aiming to finalize their filings now. Many face a dilemma: either invest in preparing the application immediately, despite the incomplete rules, or risk missing the looming April 30 deadline and forfeiting abatement eligibility.
Looking Ahead
While no one disputes the importance of a renewed tax incentive for critical building rehabilitations—especially for older rental properties—practical challenges remain. Key takeaways as of mid-April 2025 include:
- Deadline Pressures: For work completed before December 30, 2024, owners must file by April 30, 2025 or lose the potential abatement.
- Rules Adoption Pending: Final HPD rules and the definitive Certified Reasonable Cost schedule are not yet published. Owners may need to revise submissions once the rules are formally adopted.
- Strengthened Tenant Protections: Under both the State’s Affordable Housing Rehabilitation Program and the City’s Local Law 122, landlords must certify compliance with stricter affordability and rent stabilization obligations, as well as anti-harassment laws.
- Affordability Requirements: Properties applying under the new J-51 program must meet updated affordability thresholds. For rental buildings, at least 50% of units must be rent-stabilized at or below 80% of AMI. Cooperatives and condominiums, meanwhile, are subject to an assessed valuation limit of $45,000 per dwelling unit.
Although many owners find the timing awkward, most see the new “J-51 R Program” (or “Affordable Housing Rehabilitation Program”) as a major step forward—one that encourages vital upgrades without forcing the cost burden onto tenants. Despite the final puzzle pieces still falling into place, it represents, in the long run, renewed support for New York City’s multi-family housing stock and broader affordability goals.
Conclusion
For building owners uncertain how best to proceed, the immediate action item is clear: if your capital project finished between June 30, 2022, and December 30, 2024, confirm your eligibility and assemble a J-51 application before the April 30, 2025 deadline. And if your project is underway now or planned soon, keep close watch on the forthcoming HPD rules. Rosenberg & Estis, P.C. will continue to monitor this evolving regulatory environment and stands ready to assist clients in navigating the J-51 Reform Program’s complexities.