By Bob Friedrich
In New York City, almost 1 million people live in co-op apartments, and many of the most affordable ones are in Queens. Efforts to maintain affordable housing in New York City are continually being challenged.
Two of the most important issues essential to co-op affordability are: (1) Protecting co‑ops from excessive single-year tax and valuation increases, and (2) Preserving the J51 tax exemption/abatement program. The Presidents Co-op & Condo Council, a think tank of board presidents representing nearly 100 co-ops and condos in the city, is a driving force to keep co‑ops and condos affordable and state Sen. Tony Avella, City Councilman Barry Grodenchik, and state Assemblyman Ed Braunstein have been legislative partners in this battle.
Co-ops and condos are taxed at significantly higher rates than one- to three-family homes. The property tax on Mayor de Blasio’s $1 million Brooklyn home is less than the property tax on many modest co-op apartments. This type of egregious tax inequity is driving out the middle-class. The PCCC worked with Avella to craft a bill and its Assembly companion that would protect co-ops from the sting of double and triple digit single-year tax and valuation increases experienced by many eastern Queens co-ops a few years back.
Avella’s legislation would cap annual tax increases at 6 percent, or a maximum of 25 percent over a five‑year period, by creating a new property-tax “Class 1A” for co-ops and condos and have the same tax and valuation protections enjoyed by one‑to three-family homes currently identified as “Class 1” properties. The legislation would create an objective methodology to assess these properties based on fair-market values using actual sales data rather than the arbitrary manner in which they are done today that has led to our inequitable system.
The legislation contains other protections to ensure this new methodology will not negatively affect middle‑class co-ops and condos. A typical Queens co-op apartment would likely see a 6 percent reduction in property taxes and would also be protected from future budget-busting increases under the legislation. Avella’s bill passed the Senate only to die in the Assembly, where many tax reduction bills meet their fate if they fail to garner mayoral support. As a result, an all-out battle can be expected in the next legislative session as co-op residents will be energized and engaged in the crucial battle for tax equity for their properties.
Equally important as property tax equity is protecting the decades-old J51 program that has helped facilitate improvements in the city’s housing stock, which has benefitted working-class families and residents on fixed incomes, among others. The J51 program, a successful partnership between the city and residential housing communities, provides a dollar-for-dollar reduction in taxes on a portion of the cost of essential capital improvements.
As an example, Glen Oaks Village, the largest garden apartment co-op in New York, recently installed more than 18,000 new energy‑efficient windows. This project was made feasible through the J51 program, which offset nearly 38 percent of the cost. Without it, monthly maintenance paid by co-op owners would have had to increase by 16 percent to cover the window upgrades. Such an increase would be unaffordable for seniors and many other families on fixed incomes.
Glen Oaks Village is one of hundreds of co-ops benefitting from vital capital improvement upgrades made feasible by the J51 program. The $16 million that Glen Oaks has spent on eligible capital improvements since 2002 was offset by $6 million in tax reductions. Without the J51, residents would have had to pay an additional $250 per month—simply unaffordable for many families, and seniors who have seen zero Social Security increases over the past few years. Until recently, the J51 program was available to all co-ops with tax valuations (not fair market value) below $40,000.
A few years back, the state Legislature reduced the eligibility threshold to $30,000, causing many co-ops to lose their eligibility in the J51 program. The PCCC asked the Legislature to restore the valuation threshold to $40,000, so that larger co-ops such as Beech Hills in eastern Queens could again qualify. The Legislature responded by slightly increasing the eligibility threshold, from $30,000 to $32,000 and indexing it to inflation. This change will have a marginal effect in slowing down the number of co-ops falling out of this valuable program, but more clearly needs to be done.
The J51 Tax Exemption Program is not glamorous, and it doesn’t inspire much conversation around the dinner table, but it is one of the most important programs to help keep our affordable co-ops affordable.
Bob Friedrich is a civic leader, former New York City Council candidate and president of Glen Oaks Village.