NYC Land Use Bulletin: Governor Cuomo Announces New 421-a “Affordable Housing NY Program” Legislation

 

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Governor Andrew Cuomo announced that he will advance new legislation to create the “Affordable New York” housing program after the Real Estate Board of New York and the Building and Construction Trades Council of Greater New York reached a deal to replace the program previously known as 421-a. He discussed the new legislation on The Cats Roundtable with John Catsimatidis– a transcript of the interview can be found here.

We encourage you to read the summary below published by the The New York Housing Conference (NYHC) here.

New 421-a “Affordable Housing NY Program” Legislation

The 421-a real estate tax abatement which has been suspended since January 2016 has been rebranded as the “Affordable Housing NY Program” in legislation announced on Sunday by Governor Cuomo.  The 421-a tax abatement had been previously restructured in June 2015 to provide 3 options for affordable rental housing developed which were to work in tandem with New York City’s Mandatory Inclusionary Zoning Program. An outer borough homeownership option and extended affordability were also features. However, the program is suspended until representatives of residential real estate developers and construction labor unions sign a memorandum of understanding regarding wages of construction workers performing work on 421-a projects.

The agreement reached by the two industry groups changes the terms of the program, requiring new legislation rather than a Memorandum of Understanding.  Governor Cuomo’s new proposal essentially maintains the 421a framework previously passed but also includes the changes sought by the trade groups by introducing 3 new tax abatement options (Options E, F & G) for residential construction for eligible projects with at least 300 rental units with average wage requirements below 96th Street in Manhattan and the waterfront “Gold Coast” in Brooklyn and Queen. Projects of at least 300 rental units outside of these “enhanced affordability areas” may also opt in.

PROGRAM PASSED IN JUNE 2015 BUT CURRENTLY SUSPENDED (Options A, B, C & D)

Eligible rental projects would receive:

Rental projects would be required to choose one of three affordability options and comply with it for the entire benefit period:

Option A

Option B

Option C

Option D Homeownership Projects

Homeownership projects would have to meet the following eligibility requirements:

Extended Benefit Program

The Extended Benefit Program would only be available to rental projects that began construction prior to July 1, 2008 and qualified for a 20-year or 25-year 421-a tax exemption.

Owners who elect to participate would receive either:

During this extended benefit period, the owner would be required to:

The first requirement is identical to the existing affordability requirement applicable to such projects (it simply extends that requirement for an additional 10 or 15 years). The second requirement is an increase over and above the existing affordability requirement.

NEWLY PROPOSED PROGRAM (Options E, F & G)

Option E

Option F

Option G

The NY State Legislature must pass this bill to reinstate the 421-a program and adopt these new changes.  The bill allows for a retroactive effective to January 1, 2016.

NYHC is supportive of the 421a Program to incentivize rental housing with affordability requirements.  At this time, we do not have cost estimates for the proposed changes which would be incurred by the City of New York. The enhanced benefit period for all units, not just the affordable ones, may considerably add to program costs.


Capalino Can Help

Capalino has been working with clients in understanding how these changes apply to their sites, and identifying affordable housing and other development opportunities created by these new regulations.

Get in touch today to discuss the implications and opportunities for your sites and developments.


Claire Haaga Altman

Claire-Altman

Executive Vice President of Affordable Housing + Community Development

Work: 212-616-5839
Cell: 917-721-8103
Claire@nullcapalino.com 

About Claire


Richard BarthRichard Barth

Executive Vice President of Housing + Real Estate Strategies

Work: 212-616-5845
Cell: 917-860-2711
Richard@nullcapalino.com

About Richard


Christopher CollinsChris Collins

Executive Vice President of Land Use + Real Estate Strategies

Christopher@nullcapalino.com
212-616-5848

About Chris


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