Long Island City Co-op Uses J-51 R Windfall to Offset Big-Ticket Repairs
By Emily Myers
When the board at The Concord, a 120-unit Long Island City co-op, set out to replace the building's aging boiler system in 2020, they weren't thinking about tax breaks they were focused on keeping residents warm and reducing maintenance costs. The same mindset drove their decision to complete nearly $570,000 in façade work during the pandemic.
What they couldn't have anticipated was finding themselves in a rare and enviable position when the city reinstated the J-51 program late last year. Both major projects fell within the eligibility window for the new J-51 R tax abatement program, setting the stage for substantial cost recovery on $1.1 million in essential upgrades.
The co-op's $529,000 boiler and hot water replacement as well as the façade project will be offset at 70% of total costs through the J-51 R program, spread over a minimum of 12 years with a maximum of 8.3% applied annually. "It is not a dollar for dollar abatement," says board president John Vetere, "but it will provide some financial cushioning for other much-needed capital projects."
The board had financed both projects with a $1.5 million wraparound mortgage, increasing maintenance charges but avoiding special assessments. The unexpected property tax relief will now free up funds for other challenges, including Local Law 97 compliance work and mortgage refinancing when their low-interest loans mature in 2028. (cont. below)
The six-story building at 25-40 31st Avenue, constructed in the 1930s, is similar to the maintenance challenges facing older co-ops throughout the city. The original boiler system running on No. 4 fuel oil - one of the dirtiest fossil fuels being phased out by the city - was costing "upwards of $40,000 a year" in repairs, according to Vetere.
The building’s solution involved replacing the system with a cleaner dual-fuel setup using No. 2 fuel oil and natural gas. The project required removing an above-ground oil tank caked with decades-old sludge, updating the chimney liner to code for gas use, and installing a separate gas-fired hot water system that allows the boiler to be switched off during summer months.
The Concord qualified for J-51 R because co-ops and condos with an average assessed apartment valuation under $45,001 can participate in the program. But eligibility was just the beginning.
"Some buildings assume they aren't eligible, when in fact they are," says Benjamin Williams, head of the property tax certiorari department at Rosenberg & Estis, who helped the board with their application. Qualifying improvements must receive necessary approvals before work begins, and extensive documentation is required throughout.
The biggest challenge proved to be inspections. "Inspections were the biggest hold up waiting to get the inspectors out to certify and confirm the work was completed," says Naro Dzidzovic, senior account executive at Orsid, which manages the building. The Concord's application, filed in April, remains under review by New York City Housing Preservation and Development, though Dzidzovic expects approval imminently.
Williams emphasizes the importance of maintaining relationships with project teams throughout the process: "Don't burn bridges with the architect, engineer, and contractor. Even after the work is complete they need to sign affidavits." He also advises ensuring that all infrastructure project records transfer properly if management companies change. (cont. below)
The tax abatement comes at a crucial time for The Concord. While the building currently operates below Local Law 97 carbon emission limits, projections show a different picture for 2030. To avoid penalties, the board will likely need window replacements and possibly a roof project both expensive undertakings that will coincide with mortgage refinancing. "Those are high-ticket items," Vetere notes. "The whammies are all going to hit at the same time."
The building's plumbing system presents another ongoing challenge. Though structurally sound, many risers and drain lines remain original 1930s installations that are increasingly unpredictable. "Our building has good bones, but clogged arteries," Vetere says.
Rather than undertaking a disruptive building-wide replacement, the board coordinates with shareholders doing kitchen and bathroom renovations, inspecting risers for corrosion or loose joints and funding replacements when necessary. This approach creates budgeting challenges since renovation activity varies unpredictably some years bring three or four projects, others none at all.
"The J-51 abatement helps with this because there will be a budget line that has wiggle room," Vetere explains.
The current J-51 R program expires June 30, 2026, unless extended in Albany. For The Concord, the timing worked out - their major improvements fell within the eligibility window despite being completed when no tax incentive program existed.
Other buildings considering similar work face a more compressed timeline. The application process requires inspections, extensive documentation, and city review all time-consuming steps that can stretch for months.
"We are so close to the finish line," Dzidzovic says of their pending approval, a sentiment that captures both the promise and the persistence required to benefit from the city's reinstated tax incentive program.