City Moves to Resurrect Tax Breaks for Renovations, But Housing Stakeholders Are Split

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The city’s lawmakers and housing agency seem poised to reintroduce and pass a more affordability-focused J-51 tax program to help fix up apartments—but some housing stakeholders are lukewarm on the prospect.

William Alatriste/NYC Council Media Unit

Kim Darga (center), deputy commissioner for the city’s Department of Housing, Preservation and Development, testifying before the City Council at a hearing on the J-51 program last month.

Resurrected from the ashes of 2023’s otherwise failed state housing budget, the Adams administration and City Council are evaluating a previously expired tax abatement that could help facilitate renovations in rental apartments, co-ops, condos, and the conversion of nonresidential buildings to apartments.

Established in the aftermath of World War II in response to a shortage of moderate-income rental housing, New York’s J-51 tax abatement incentivized property owners to renovate tenement buildings and bring them up to code. But state lawmakers let the program sunset in 2022 as participation dwindled over its last decade, with abatements alone down over 77 percent in that period.

Now, with the state’s blessing, Councilmember Pierina Sanchez, who chairs the Committee on Housing and Buildings, has proposed legislation to bring J-51 back. At a May 30 hearing, she and her colleagues heard testimony from the Department of Housing, Preservation and Development (HPD), which would administer the latest rendition of the benefit—with some notable changes.

“As our city evolves, so must J-51,” said Kim Darga, HPD’s deputy commissioner for development, during the department’s opening testimony. “This will be a better, more efficient, more targeted J-51 that we think more building owners will choose to use, helping us meet many of our housing goals at once.”

With a focus on low-cost, affordable housing, the proposed new J-51 would be granted to residential buildings in which half the units rent to households earning up to 80 percent of the area median income (AMI), about $111,840 for a family of three. 

The abatement could also cover buildings already receiving “substantial government assistance,” Darga said, such as Mitchell Lamas buildings, which provide affordable rental and cooperative housing to moderate and middle-income families, as well as coop and condo buildings with an average value of $45,000 or less per unit—up from $35,000 in the expired version.

According to HPD, around 700,000 homes in the city would be eligible for the proposed abatement, 70 percent of which are rental units and 30 percent of which are coops and condos.

Additionally, the proposed tax break would be limited to an abatement, or a tax reduction for a period of time, as opposed to an exemption, which had previously been an option. An exemption reduces the taxable value of the property.

Sanchez’s legislation would reduce property taxes by 70 percent of the building’s eligible improvement costs, applied at a little more than 8 percent each year for up to 20 years but only after the work has been completed, inspected, and approved by HPD. Improvements might include a new heating system, plumbing, windows, or roofing.

Darga testified that a new J-51 could also benefit building owners trying to comply with Local Law 97. That law goes into effect this year and aims to reduce the city’s carbon footprint by setting a cap on the amount of emissions larger buildings can emit over a period that becomes more strict over time. 

The benefit could help pay for much of the “base system type work” needed to come into Local Law 97 compliance, Darga said. Brooklyn Councilmember Lincoln Restler agreed, saying the Adams administration has so far “not done enough to make financial incentives available to buildings that want to comply.” 

Meanwhile, advocates for rent-stabilized tenants hope that the new J-51 abatement could provide landlords with an alternative to Major Capital Improvement, or MCI, requests. Through MCIs, landlords can increase rents to cover building-wide work while passing a portion of the cost onto tenants in the form of rent increases.

Adi Talwar

New boilers, and new ways of controlling boiler performance and ensuring that heat is delivered efficiently to buildings, are likely to be on the to-do list for many property owners facing the new requirements of Local Law 97.

The new J-51 would continue to give building owners the option of using either method to help pay for renovations. However, the two cannot be used simultaneously on the same improvement, and owners would need to waive the collection of MCI rent increases in order to apply for J-51 for the same project.

Additionally, the new program would give HPD new means of enforcement compared to its predecessor. Not only would the agency be able to revoke the benefit from non-compliant building owners, as was the case in the past, but they would also be able to impose fines, extend the mandatory rent stabilization period, or even require the building to add additional rent-stabilized affordable units.

This should come as welcome news to tenant advocates who’ve long held that HPD and the state’s Homes and Community Renewal agency (HCR) left J-51 largely unenforced during its prior tenure. 

“Tens of thousands of apartments were removed from Rent Stabilization, despite having received the benefits, even at times while they were in receipt of the benefits,” said David Hershey-Webb, a law partner at Himmelstein McConnell Gribben & Joseph, which represents tenants.

First reported in a scathing 2016 article by ProPublica, an estimated 50,000 apartments took advantage of the J-51 tax break over two decades while landlords continued to charge market rents. When then-Gov. Andrew Cuomo led an effort to return these apartments to stabilization, less than half complied.

Hershey-Webb stressed that, unless HPD collaborates with HCR to develop a more effective enforcement mechanism, “The same thing is going to happen.”

While the new means of enforcement might sound promising, Darga admits that they are only “starting to think” about how they would actually implement some of the new enforcement levers at their disposal and were looking at models to enforce compliance on a bigger scale.

Speaking with Tricia Dietz, assistant commissioner at HPD after the hearing, she noted that the agency had strengthened its enforcement of rent stabilization over the years for other tax incentive programs, including actively reviewing annual rent registrations in collaboration with the HCR’s Division of Housing and Community Renewal (DHCR).

The agency is assessing the implementation of a similar practice for the new J-51 program, if passed, “to ensure that the buildings that participate in J-51 are registering their units annually with DHCR.”

During the hearing, Darga touched on the criticism that the current “certified reasonable costs schedule,” or CRC, which dictates the reimbursement amounts for property owners undertaking improvements, was long out of date. She said they’d be updating it and that they “hope the CRC schedule will be more tuned to actual costs going forward.” 

According to Dietz, HPD believes that the new J-51 is more efficient and straightforward for interested landlords. By “streamlining” the benefit levels and requirements, the new system allows owners to more easily determine their eligibility and have a clearer expectation of the abatement they could receive.

In written testimony, the Real Estate Board of New York (REBNY), a powerful industry lobbyist, encouraged the Council to proceed with Sanchez’s bill but said that the program is “not a panacea” and that the affordability requirements, along with an inability to pair MCI with J-51, limit the program’s impact. 

It is “imperative” that city estimates for reasonable repair costs reflect “rising maintenance and construction costs and enable owners to make much-needed capital upgrades,” REBNY wrote. 

William Alatriste/NYC Council Media Unit

Councilmember Pierina Sanchez, who chairs the Committee on Housing and Buildings, has proposed legislation to bring J-51 back.

Eligible building owners would have to apply within four months of completing an improvement and submit proof of costs to HPD. The improvements would need to have been completed within  30 months to qualify. Owners can’t get the benefit if they have any open building violations with HPD, and all applications would come with a $1,000 fee.

If approved by the City Council, the new J-51 would apply to improvements and renovations completed after June 29, 2022, when the predecessor program ended, and before June 30, 2026.

While the revived program appears to have the backing needed from the Council and Mayor Eric Adams to pass by the June 30 deadline next year, Darga acknowledged to Councilmember Alexa Aviles that her team is “still evaluating resources” to administer the program. 

“It’s a blessing and a curse,” said Jay Martin, executive director of the Community Housing Improvement Program (CHIP), a landlord trade group representing the owners or managers of some 400,000 rent-stabilized properties in the city. 

He contended that the tax benefit works when inflation is low and, consequently, costs are manageable, but that in the current financial climate, with high loan interest rates to finance repairs, rising expenses, and insurance rates, “it’s really hard to see costs going down anytime soon.”

Still, others remain optimistic that the new J-51 will offer landlords a much-needed means of financing improvements without passing the cost on to tenants. 

Barika Williams, executive director of the Association of Neighborhood & Housing Development (ANHD), a member group of nonprofit developers and tenant organizations, welcomed the changes to the program in light of sky-high rents.

“This is a smart and streamlined way that the city can look at that and say, ‘We have some way of addressing this,’” Williams said.

J-51 has been a popular benefit for ANHD members in the past and offers landlords some peace of mind when funding improvements, she added, as they know they will recoup the cost in a few years.

“It’s a great way to finance some of this stuff,” Williams said “It’s not always the smoothest and most streamlined. But it’s definitely one of the programs that we know folks tend to use.”

To reach the reporter behind this story, contact Chris@citylimits.org. To reach the editor, contact Emma@citylimits.org

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Supreme Court will take up state bans on gender-affirming care for minors

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WASHINGTON  — The Supreme Court on Monday jumped into the fight over transgender rights, agreeing to hear an appeal from the Biden administration seeking to block state bans on gender-affirming care.
The justices’ action comes as Republican-led states have enacted a variety of restrictions on health care for transgender people, school sports participation, bathroom usage and drag shows. The administration and Democratic-led states have extended protections for transgender people, including a new federal regulation that seeks to protect transgender students.

The case before the high court involves a law in Tennessee that restrict puberty blockers and hormone therapy for transgender minors. The federal appeals court in Cincinnati allowed laws in Tennessee and Kentucky to take effect after they had been blocked by lower courts. (The high court did not act on a separate appeal from Kentucky.)

“Without this Court’s prompt intervention, transgender youth and their families will remain in limbo, uncertain of whether and where they can access needed medical care,” lawyers for the transgender teens in Tennessee told the justices.

Actor Elliot Page, the Oscar-nominated star of “Juno,” “Inception” and “The Umbrella Academy,” was among 57 transgender people who joined a legal filing in support of Supreme Court review.

Arguments will take place in the fall.

Last week, South Carolina became the 25th state to adopt a law restricting or banning gender-affirming medical care for transgender minors, even though such treatments have been available in the United States for more than a decade and are endorsed by major medical associations.

Most of the state restrictions face lawsuits. The justices had previously allowed Idaho to generally enforce its restrictions, after they had been blocked by lower courts.

At least 24 states have laws barring transgender women and girls from competing in certain women’s or girls’ sports competitions. At least 11 states have adopted laws barring transgender girls and women from girls’ and women’s bathrooms at public schools, and in some cases other government facilities.

The nation’s highest court has only rarely taken up transgender issues. In 2020, the justices ruled that a landmark civil rights law protects gay, lesbian and transgender people from discrimination in employment.

In 2016, the court had agreed to take up the case of a transgender student, backed by the Obama administration, who was barred from using the boys’ bathroom in his Virginia high school. But the court dropped the case after a directive advising schools to allow students to use the bathroom of their chosen gender, not biological birth, was scrapped in the early months of the Trump administration. The directive had been a key part of an appeals court ruling in favor of the student, Gavin Grimm.

In 2021, the justices declined to get involved in Grimm’s case after the appeals court again ruled in his favor. At the time, Justices Samuel Alito and Clarence Thomas noted they would have taken up the school board’s appeal.

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Mexico-U.S. Migration Crackdowns Unlikely to Change Under New President Claudia Sheinbaum

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On June 2, Claudia Sheinbaum from the governing Morena Party won Mexico’s presidential election in a landslide, setting her up to become the country’s first woman president in October. A former mayor of Mexico City and an engineer, her victory is being widely hailed as a turning point for the country. Despite the accolades, the sobering reality is that Mexico’s harmful migration policies are likely to continue. President Andrés Manuel López Obrador (AMLO), who is ending his six-year term, did not meet progressive expectations for a humanitarian approach to this issue. Instead, he embraced a militarized approach, which all indications show his successor intends to maintain.

During his 2018 presidential bid, AMLO campaigned against U.S. President Donald Trump’s anti-immigrant policies and rhetoric, aiming to position himself as a champion of migrant rights. He published a book, Oye, Trump, to protest the wall. At first, he followed through. While talking about the government’s approach to migration, AMLO’s secretary of the interior, Olga Sánchez Cordero, stressed that migration policy would be based on two axes: the protection of the rights of migrants and development cooperation with Central American countries. Sánchez Cordero announced a full restructuring of Mexico’s Instituto Nacional de Migración (INM) so that “migrants are not criminalized,” and a record number of humanitarian visas were subsequently issued.

However, this stance was dropped in 2019 after Trump threatened to impose tariffs on goods if the Mexican government didn’t take action to curb migration. Fearing a trade war, AMLO gave in to Trump’s demands. He agreed to let Trump bounce vulnerable asylum-seekers back into dangerous Mexican border towns to await far-off U.S. court dates, and he deployed Mexico’s National Guard to the country’s border with Guatemala. He also appointed Francisco Garduño, who had previously been in charge of prison policy, as the new head of INM, confirming the securitization of migration policy that has now been in place for the past 5 years.

Sheinbaum ran on a platform of continuity, and the election was considered a referendum on AMLO’s political project. Although she rarely discussed foreign policy, Sheinbaum consistently echoed AMLO’s positions when questioned directly. She did not offer original ideas or commit to making changes to migration policy. At the presidential debates, she avoided giving even the slightest criticism of AMLO’s migration policy. Like AMLO, she argued for a long-term strategy that addresses the root causes of migration, poverty, and violence, but no immediate solutions were offered for migrants in Mexican territory who are often preyed on by the cartels.

Isabel Gil Everaert, a sociologist at the National Autonomous University of Mexico, examined Sheinbaum’s electoral platform and found few mentions of migration in the document, as well as a refusal to acknowledge the new complexities of the issue, with Mexico becoming the destination “elected by or imposed on”  many migrants. Sheinbaum’s espoused view during the campaign that “Ultimately, migrants want to go to the U.S.” conveniently distances Mexico from its human rights responsibilities—especially if she continues to comply with U.S. dictates to bottle up migrants south of the Rio Grande.

Mexico’s current migration policy is characterized by militarization and human rights violations. During their journey north, migrants are subject to kidnapping and violence by cartel members, along with arbitrary containment, detention, and expulsion by Mexican authorities—currently at the behest of President Joe Biden’s administration. Further migrant crackdowns are expected over the next few months as Biden campaigns for reelection and demands more cooperation from the Mexican government to keep the numbers down at the border.  

“These are very violent arrests that undermine people’s dignity and clearly violate their human rights,” said Alberto Xiconténcatl Carrasco, director of Casa del Migrante de Saltillo—a migrant shelter—in the northern border state of Coahuila.

A caravan of thousands of Central American migrants fills the highway after they were blocked from advancing by a wall of Mexican police in riot gear, outside Arriaga, Chiapas, Mexico, in October 2018. (AP Photo/Rebecca Blackwell)

In order to avoid being rounded up by Mexican authorities and bused back to the southern border—a controversial program that the government has publicly acknowledged—migrants resort to traffickers, increasing the cost and risk of their journey. Migrants have also adapted their routes, jumping on trains or walking through difficult terrain. “Not everyone makes it,” said Carrasco. “The stories we hear from people who have managed to reach Ciudad Juárez are that many are intercepted along the way by Mexican immigration authorities. Migrant kidnappings also occur in certain zones.”

Those seeking asylum do not fare better than economic migrants. The backlog of asylum applications in the United States, along with shifting asylum policies, has been forcing migrants to wait for prolonged periods of time just south of the U.S. border. In March 2023, a fire at the prison-like estación migratoria of INM in Ciudad Juárez resulted in the deaths of 40 migrants and the injury of at least 26 others. An academic and former head of INM, Tonatiuh Guillén López, has argued that a policy that prioritizes people’s lives could have prevented the tragedy: “The Mexican State cannot avoid direct responsibility for this crime, given that the deaths occurred within its facilities, during the (abusive) exercise of migratory functions, and within the framework of a severe, militarized immigration policy,” he wrote for the news outlet Nodal. To date, the government has provided compensation to some of the families of those lost in the fire, but INM head Garduño has been shielded from accountability.

One cannot overstate the U.S.’s influence on AMLO’s migration policy. Both the Trump and Biden administrations have pressured Mexico into controlling migration flows. With Trump, the pressure on migration was direct and aggressive. According to Gil Guerra, an immigration policy analyst at the Niskanen Center, “The Trump administration made it clear to AMLO and [Former President Enrique] Peña Nieto before him that getting migration and the border under control was more of a priority” than other important issues on the bilateral agenda. 

AMLO’s compliance with Trump’s demands on migration opened the way for a pragmatic and publicly amiable understanding between the two governments, culminating in AMLO’s visit to the White House in July 2020 after a new free trade agreement between the United States, Canada, and Mexico came into force. In a move that baffled observers, AMLO thanked Trump for not imposing anything on Mexico and even called him a friend. 

Despite previously pledging to roll back Trump’s anti-immigration measures, Biden, after taking office, pressured Mexico into keeping its existing migration policy. Biden took early steps to halt the construction of the border wall and restart the processing of green cards, but a post-pandemic migration surge and the fear of appearing unable to control the border caused him to adjust his approach. As Gema Kloppe-Santamaría, professor of U.S.-Latin American relations at George Washington University, explained, “Biden has continued with a very restrictive immigration policy, asking Mexico to cooperate by acting as another border for the United States.” In Mexico, this cooperation has resulted in increased military involvement in managing migration and more human rights violations. 

“There’s complete alignment on what we have to do with respect to how we conceptually address a problem. The first is root causes. … People want to stay where they are, but they’re driven out because of poverty and political issues,” said Biden’s ambassador to Mexico, Ken Salazar, in his first public remarks after Sheinbaum’s victory. Mirroring former President Barack Obama’s “Alliance for Prosperity” development program, the Biden administration provided over $1 billion in fiscal year 2022 to address the root causes of migration in Central America. Such aid is often politically contentious in Congress, and the dollar amounts are dwarfed by the remittances that migrant workers, legal and otherwise, send home from the States. Democrats tend to use these aid packages as a fig leaf for migrant crackdowns.

Experts predict that with Sheinbaum, Mexico’s migration policy will stay as it is now, no matter who wins the U.S. election in November. Like AMLO, she “has shown no disposition” to confront the United States or deny its requests, concluded Carrasco. What’s more, AMLO has confirmed there are advantages to be had in exploiting the U.S. dependence on Mexico’s cooperation in migration, such as fending off criticisms of the Morena government’s positions on other issues. “AMLO’s management of migrant flows remains pivotal for U.S. expectations,” contended Guerra from the Niskanen Center. Though activists in Mexico have constantly denounced the government’s handling of the issue, the topic has remained peripheral in the national conversation. AMLO and Sheinbaum’s political party has yet to pay any electoral price for human rights violations derived from this approach.

Diana Alarcón, International Affairs Coordinator for Sheinbaum’s Dialogos por la Transformación team, confirmed that regarding migration policy, Sheinbaum’s vision is in line with AMLO’s. “[Sheinbaum’s government will be] consolidating what has been started in this government,” namely “addressing the causes of migration and why people leave their communities.” Alarcón said that reinforcing interinstitutional coordination mechanisms is part of the agenda. But no specific plans have been announced to reverse the militarization of migration policy or to overhaul the much-criticized INM. 

Biden’s recent push for even more restrictions on asylum at the U.S.-Mexico border signals that pressures will keep mounting on the Mexican government as immigration remains a top electoral issue. 

“Sheinbaum inherits a volatile migration landscape, and if the focus continues to be on control, militarization, and securitization of immigration policy, we will see more human rights violations,” observed Kloppe-Santamaría. It does appear that AMLO’s shift in migration policy has become entrenched. As Sheinbaum takes office, human rights advocates on both sides of the border will have their work cut out for them trying to stop migrants’ lives from being used as a bargaining chip between the Mexican and U.S. governments. 

Princess Anne sustains minor injuries and concussion in an ‘incident,’ Buckingham Palace says

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LONDON — Buckingham Palace says Princess Anne has sustained minor injuries and concussion following an incident on the Gatcombe Park estate on Sunday.

The 73-year-old sister of King Charles III has been hospitalized as a precautionary measure for observation and is expected to make a full recovery.

“The King has been kept closely informed and joins the whole royal family in sending his fondest love and well-wishes to The Princess for a speedy recovery,’’ the palace said in statement on Monday.

It gave no other details.

Anne is one of the hardest working members of the royal family, having stepped in and taken more duties in light of Charles’ cancer diagnosis.

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