New York City is a step closer to implementing the desperately awaited, middlingly received tax break for affordable housing developments that was approved in this year’s state budget to replace the bygone 421-a program.
Mayor Eric Adams’ administration on Friday announced that developers can register online to receive benefits through the new 485-x tax break, and submit letters of intent to qualify for the five-year extension of the old 421-a benefit that was also part of the state budget. Both the 485-x and 421-a portals are now live on the city’s Housing Preservation and Development Department website.
All projects participating in 485-x must fill out the registration form within six months of starting construction if the start date was on or before April 20, 2024. Projects that started construction between June 15, 2022 and April 20, 2024 must register by mid-November. As for the 421-a extension, developers must submit letters of intent by Sept. 12.
Actual applications for the new 485-x tax break are not yet available, but the city will launch them by the end of the year and make the first approvals in 2025, City Hall said in a press release.
As construction lagged following the expiration of 421-a two years ago, the Adams administration pushed hard in Albany this year to secure the new tax breaks — along with another incentive for office-to-residential conversions that also started implementation this month.
Details about the tax breaks are on the HPD website, largely spelling out the rules already set by state lawmakers earlier this year. The 485-x program grants tax exemptions of up to 40 years for projects that include affordable units, with the exact benefit depending on the number of affordable units and the location of the building. The program also sets wage rates that were crucial in securing union support, including a $40 per-hour minimum for construction workers on large projects of 100 units or more.
The 421-a extension, meanwhile, allows projects to qualify for the old tax break if they are completed before June 15, 2031 — five years past the previous 2026 deadline. The state budget also tweaked 421-a to eliminate an affordability scheme unpopular among housing advocates that granted the benefits for projects that included units renting at 130% of the area median income — meaning that developers must choose more affordable rents to qualify for the extended tax break.
The new 485-x got a muted reception from the real estate industry, whose leaders predicted it will produce less rental housing than 421-a did. Some developers have announced they can no longer build planned projects due to the program’s higher wage and stricter affordability rules, although the full effect of the tax break remains to be seen.
The Adams administration appeared happier than anyone about the housing deal, which gave the city much of what it asked for. Maria Torres-Springer, the deputy mayor for housing, said in a statement Friday that the tax breaks are “powerful new tools to address the housing crisis, and the city is wasting no time in putting them into action.”
Nick Garber , 2024-06-14 19:14:33
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