J-51 rent stabilization question...
  • Anyone know details about the J-51 tax abatement?

    So I have a strange predicament...

    I've been reading so much lately about people in Crown Heights with rent increase problems, that I decided to look back over my huge lease and have come across something rather strange.

    One of the pages (that I signed) is titled "Notice regarding expiration of Rent Stabilization J-51"

    It goes on to say that the building I live in, is rent stabilized "solely by the virtue of the Building's receipt" of the J-51 tax code, and that when it expires sometime between December 31, 2014 and December 31, 2017, the building owner will not be legally obligated to renew my lease, nor will the owner be in any other way regulated by the Rent Stabilization Code.

    A bit scary sounding right?

    So I looked more into J-51, and noticed this on the nycrgb.org site...

    "The expiration of J-51 benefits does not always affect the stabilization status of buildings. If the building was rent stabilized before the tax benefits were applied, then the expiration of those benefits would not affect the building's regulated status. But if the units received stabilization status as a result of its J-51 tax benefits, then whether or not the building loses rent stabilization protection would depend on whether the owner gave proper notices in the lease and each renewal."

    My building is a 6 story building, with about 50 units, built in 1910 on a residential street, so how could it possibly lose its rent stabilization "solely" by having their J-51 expire? Wasn't it most likely rent stabilized before, meaning I shouldn't worry about the J-51 ending?

    My building shows up on the Rent Stabilized building list online, but is there any way of finding out when it originally became rent stabilized? 
  • These people have those answers: http://www.nyshcr.org/

    For example, while your building was constructed prior to RS, it could have had so many capital improvements done on it, that "it was about to" be able to escape the regulations.

    The LL could have then had a conversation with HCR and the local politicians: "if you don't give my building a tax break, I am raising the rent of all these people to market rates, as per my rights."

    The tax break was awarded, and everyone was happy.

    However, such breaks are time limited, and the LL might not be willing to take such a deal this time. Likewise, the gov might not be able to award the tax break again....

    DHCR will actually have the answer as it relates to your building.
  • After seeing how much I typed I realized I should maybe just go to their office and speak to someone.
  • TMuchTread:  As a landlord I can add this, If you are a Stabilized tenant, with your name on a proper Stabilized lease, you will remain one. It is the landlord that took the bad bargain, his/her taxes are about to skyrocket and I believe have some retroactive issues. I chose not to go J-51 in the 80's due to ugliness when it runs out. The landlord will try anything now to cover the increases if they are dishonest. Most landlords will end up selling once they see the hurt they face, esp. if the tenants have low rents. Good luck, make sure your ducks are in order. 
  • I believe my building is stabilized under J-51 as well. In its 1980s tax photo, the windows were bricked in, which means it was probably essentially rebuilt at some point between then and now (though the front staircase has some original details).
  • The building most likely underwent a "substantial rehabilitation" which is the term used for when more than 75% of the building's systems are replaced with new.  When this happens the building is considered to be a "new" building (which it basically is) so if this happened after the date when new buildings were no longer subject to rent stabilization then it would not be stabilized. 

    The J-51 program offers a deal to owners to voluntarily keep units stabilized and thus more affordable.  A property tax break is offered in exchange for making the units rent stabilized.  Once the property tax break is done, the owner no longer has to keep the units stabilized, so long as notice was given to the tenants (the form you signed) letting you know that the status may change.

    This all makes sense and is a good deal for everyone.  The tax break encourages the renovation of units and in exchange the owner agrees to keep the rents stabilized while getting the tax break.  At the end of the period the owner pays full taxes and also has the right to collect market rents.The taxes will go up a lot so the city benefits, if forced to keep the rents low there is a good chance that the building would essentially go bankrupt because the low stabilized rents could not cover the much higher taxes that will need to be paid.

    It's possible that the owner will decide to make more improvements as needed to the building in order to get additional tax breaks and will thus agree to again keep the units stabilized.  There may be some extra incentives since Billy D wants to build or preserve affordable units.  Entering into agreements like this is one of the ways that they preserve affordable units.
  • I went over to the nyshcr office and got the rent history for my apartment, and it has been rent stabilized for as long as they had record of (since the early 1980s).

    They told me to get in touch with NYC Finance and Taxation to see when my building received the J-51 abatement, and this is what I found (attached image)...

    It looks like they have 2 J-51 abatements, one in 2004 and one in 2007, both 10 years (plus 4 years phase out). I find it strange that my landlord says that the buildings J-51 will expire sometime between December 31, 2014 and December 31, 2017, and when that happens I will lose all rent stabilization rights. Even if the first 10 year J-51 expires December 2014, the second one can't even expire UNTIL 2017.

    I understand that "substantial rehabilitation" would make the building be considered "new", but could 45,000 dollars turn a 6 story building with almost 50 units into a "new" building? That is less than 1,000 bucks an apartment.


    Screen Shot 2014-05-21 at 7.16.58 PM
  • Is the rent you are paying now presently close to $2500?

    I ask because as the J51 phases out, the LL may be able to pass on the taxes. The first increase alone may be enough to legally make your apt market rate, and that may be where his warning comes from.
  • My legal rent is $1,900, but I have a preferential rent of $1,725. I'm assuming after this year though he is going to bump my rent up to the legal amount, but that still is at least 500 dollars under the limit.

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