Real Estate Praises Hochul’s New Plan For Affordable New York Tax Break
Gov. Kathy Hochul’s plan for the future of Affordable New York would change the income requirements for units and potentially make them permanently rent-stabilized.
Affordable New York is set to expire in June. The current program allows developers a tax exemption for 35 years if they set aside 25% to 30% of the units for low- and moderate-income tenants when they build a market-rate rental building with more than 300 units. It was last reformed in 2017, when its name was changed from 421-a, to which it is still commonly referred.
Hochul this week laid out a new proposal called Affordable Neighborhoods for New Yorkers, providing some welcome detail for the real estate industry, Crain’s New York Business reports.
"The governor’s proposal provides the private sector with an important tool for producing rental housing at deeper levels of affordability permanently,” Real Estate Board of New York President James Whelan said in a statement to Crain's.
Uncertainty around the program has put a freeze on the land market in the city, industry players say, with most of the industry accepting in recent months that the tax break is set to be significantly adapted.
Hochul’s plan mandates that any building with more than 30 units have 25% of the apartments set aside for people earning between 40% and 80% of area median income, per Crain's. In buildings with fewer than 30 units, 20% of the rental units would need to go to those earning up to 90% of AMI. Affordability requirements would be permanent for housing in the buildings with more than 30 units but would still stop at 35 years for buildings with fewer than 30.
Some housing advocates have slammed the plan, however, with the Legal Aid Society saying that the program should be discontinued altogether. While developers have long argued that it is impossible to build rental housing without it, critics of the program have said it is a tax giveaway that doesn't create enough cheap housing to be justified.