The recently adopted state budget bill included the long-awaited revisions to the 421-a program. These amendments to the Real Property Law, dubbed the “Affordable New York Housing Program,” provide partial exemptions from real estate taxes for up to 35 years for qualifying projects in New York City that provide affordable housing. Rental projects are eligible to receive an exemption from real estate taxes above the amount payable on the land and improvements prior to start of construction of the project:

  • 100% of the tax increase above the exemption base is exempt during the construction period.
  • 100% of the tax increase above the exemption base is exempt for the next 25 years.
  • A proportion of taxes equal to the proportion of affordable units is exempt for the next 10 years.

Rental projects with 300 units or more in the “enhanced affordability area” — generally, Manhattan south of 96th Street and the Brooklyn and Queens waterfronts — are required to pay a minimum average hourly wage to construction workers of at least $60/hour (including all benefits) for projects in Manhattan, and at least $45/hour for projects in Brooklyn and Queens. However, these projects receive enhanced benefits:

  • 100% of the tax increase above the exemption base is exempt for the entire 35-year period following construction.

Rental projects with 300 or more units outside the enhanced affordability area may elect to comply with the construction wage requirements and receive the same enhanced benefits. Homeownership projects outside of Manhattan and not exceeding 35 units are eligible to receive an exemption from taxes above the exemption base for 20 years:

  • 100% of the tax increase above the exemption base is exempt during the construction period.
  • 100% of the tax increase above the exemption base is exempt for the next 14 years (provided that no exemption shall be given for any portion of a unit’s assessed value that exceeds $65,000).
  • 25% of the increase is exempt for the next six years (provided that no exemption shall be given for any portion of a unit’s assessed value that exceeds $65,000).

The law provides several different options for the number of dwelling units provided as affordable housing, the affordability levels and the availability of other subsidies: Affordability option A

  • Not less than 10% of units at 40% of AMI.
  • Not less than an additional 10% of units at 60% of AMI.
  • Not less than an additional 5% of units at 130% AMI.
  • The site must be developed without substantial government assistance, except for tax-exempt bond proceeds and 4% tax credits.

Affordability option B

  • Not less than 10% of units at 70% of AMI.
  • Not less than an additional 20% of units at 130% of AMI.

Affordability option C

  • Not less than 30% of units at 130% of AMI.
  • The site must be developed without substantial government assistance.
  • Not available in Manhattan south of 96th Street.

Affordability option D

  • Applicable only to homeownership projects outside of Manhattan and not exceeding 35 units.
  • 100% of the units shall have an average assessed value not to exceed $65,000 upon the first assessment following the completion date.

Affordability option E

  • Not less than 10% of units at 40% of AMI.
  • Not less than an additional 10% of units at 60% of AMI.
  • Not less than an additional 5% of units at 120% AMI.
  • The site must be developed without substantial government assistance, except for tax-exempt bond proceeds and 4% tax credits.

Affordability option F

  • Not less than 10% of units at 70% of AMI.
  • Not less than an additional 20% of units at 130% of AMI.

Affordability option G

  • Applicable to sites within the Brooklyn and Queens enhanced affordability areas, with no less than 300 rental units.
  • Not less than 30% of units at 130% of AMI.
  • The site must be developed without the substantial assistance of grants, loans or subsidies provided by a federal, state or local government agency.

Projects that receive enhanced benefits must comply with affordability option E, F or G. To be eligible for the new program, a multiple dwelling must have:

  • Commenced construction after Dec. 31, 2015, and before June 15, 2022.
  • Completed construction before June 15, 2026.