New York Governor Releases 421-a Program Update – Real Estate and Construction
United States: New York Governor releases 421-a program update
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Earlier this month, New York Governor Hochul’s Executive Budget introduced a proposal to update the 421-a property tax exemption program. Called “Affordable Neighborhoods for New Yorkers” and proposed under a different section of the State Property Tax Act (485-w), the Governor’s proposal follows the 421-a/Affordable New Existing York, with some tweaks:
- Affordable housing needs remain, with limited options for rental projects. “Large rental developments”, containing 30 or more units, would be required to reserve at least 25% of their units at a mix of 40, 60 and 80% of the area median income (“AMI”). Rental projects of less than 30 units would be required to reserve 20% of the units at a maximum of 90% of the AMI. This would reduce the required income levels compared to the previous version of the program. In addition, affordable housing for major projects must remain affordable in perpetuity, and affordable housing for all rental projects must be concluded and remain in rent stabilization. Lease projects would be eligible for a 35-year tax holiday, structured much the same as the current program.
- The program would reintroduce a home ownership option, which is largely absent from the current program. Home ownership projects that are 100% affordable at 130% of the AMI would be eligible for a 40-year tax holiday.
- Wage requirements for construction labor remain, for buildings over 300 units in the “core” development areas of Manhattan, Queens and Brooklyn. The bill proposes to raise the required average minimum wage from $60 per hour to $63 per hour in Manhattan and from $45 per hour to $47.25 in Queens and Brooklyn, with increases every three years, giving way to changes in wages by the Ministry of Labour.
The above proposition is still just that; any new tax exemption program and/or changes to Section 421-a must be passed by state legislators, who may propose further changes. We will continue to monitor and share new details as they become available.
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