J-51 Benefits Denied

Landlord applied for J-51 tax benefits after converting a Class B multiple dwelling into a Class A dwelling. HPD ruled against landlord, finding that Real Property Tax Law Section 489, the law governing the J-51 program, didn't apply to the work done by landlord. Landlord appealed, claiming that HPD's decision was arbitrary and unreasonable. The court and appeals court ruled against landlord. The law states that J-51 doesn't apply to any conversion of a Class B building, or to any conversion of a Class A building used in whole or in part for SRO units, unless the work is substantially funded by a government agency. Since landlord's conversion of its building from Class B to Class A was entirely privately funded, it was ineligible. Landlord argued that the building never was used as an SRO, but that didn't matter. The law's exclusion applied to any conversion of a Class B building.

108 Realty, LLC v. HPD: NYLJ, 4/25/11, p. 18, col. 5 (App. Div. 1 Dept.; Friedman, JP, Sweeny, DeGrasse, Abdus-Salaam, JJ)