Penn South Co-op Solidifies Tax Break With Bottcher-Led Bill

The New York City Council has passed legislation that gives Penn South, a ten-building limited-equity co-op housing complex on Manhattan’s West Side, a significant tax reduction.

This means that residents of the housing complex—which is located between W. 23rd and W. 29th St., and between Eighth and Ninth Ave.—will be guaranteed lower living costs.

The bill, which essentially serves as the city’s parallel codification of state legislation that was passed last fall, was sponsored by now-State Senator Erik Bottcher.

The Albany iteration of the bill was sponsored by Bottcher’s predecessor in the State Senate’s 47th District, Brad Hoylman-Sigal—who is now the Manhattan Borough President—and District 75 State Assembly Member Tony Simone, both West Side reps.

The bills cement the closure of a “technical loophole” that left Penn South out of a measure included in Governor Kathy Hochul’s Fiscal Year 2026 (FY2026) budget, which cut the taxes owed by New York City’s Mitchell-Llama project developments in half.

Specifically, Penn South’s “shelter rent tax” is now five percent, rather than ten percent. This levy, which serves as the equivalent to a traditional property tax, is basically indirectly paid for by Penn South residents; the tax burden placed on the housing development factors into the monthly maintenance fees that they owe.

The “technical loophole” that Bottcher’s bill gets around is Penn South’s status as an “Article V” co-op, which is different from a Mitchell-Llama development. Therefore, it was ineligible for the tax reduction that was included in Hochul’s fiscal budget last year, spurring the separate legislation.

Bottcher, who was finishing out his last days as a local City Council Member before a Feb. 3 special election sent him to Albany, hailed the loophole’s closure in a newsletter on January 29.

“By extending this tax relief to Penn South, we are strengthening the financial stability of the cooperative, helping keep carrying charges affordable, and protecting a proven model of permanently affordable housing for the long term,” he said.

Bottcher also situated Penn South in a broader history of backyard affordability, writing: “This 2,820-unit limited-equity cooperative in the heart of Chelsea has provided stable, affordable homes for working families, seniors, and retirees for more than six decades.”

When the state version of the bill became law last October, Bottcher attended a signing ceremony alongside Hoylman-Sigal and Simone. In a speech at that event, Governor Hochul referred to Penn South residents as “the best of New York...hardworking New Yorkers.”

Penn South’s President, Amber Nicosia, also appeared at that Oct. press conference. “This is an example of government at its best, working together to champion solutions that make a meaningful impact in the lives of New Yorkers,” she said.

Penn South, which is otherwise known as the Mutual Redevelopment Houses, opened in 1962. Named due to its immediate proximity to Penn Station, with its ten buildings soaring to 22 stories each, the co-op complex came into being in a rather contentious way—by being pursued as a “slum clearance” project, which led to the displacement of a number of local residents during its construction.

According to the book Affordable Housing in New York: The People, Places and Policies That Transformed New York City, by Nicholas Dagen Bloom and Matthew Gorden Lasner, Penn South’s creation involved an array of famed mid-century development trends and figures: “Clearance coordinated by Robert Moses, cooperative enterprise spearheaded by Abraham Kazan, city tax abatements, and federal subsidies through the Title I urban renewal program.”

Famous residents of Penn South have included the civil rights icon Bayard Rustin and the anthropologist David Graeber, while President John F. Kennedy and then-Governor Nelson Rockefeller attended its dedication upon opening.