Good News for Developers: New York Adopts the 421-a “Affordable Housing NY Program”
More than a year after New York State’s 421-a tax exemption program expired on January 16, 2016, the state legislature has adopted a 421-a replacement law, known as the “Affordable Housing NY Program.” The law, which passed following extensive back and forth in the legislature on issues such as an expansion of the maximum number of units for a condominium project, is almost unchanged from the version introduced by Governor Cuomo earlier this year.
The most notable change is that the New York City Comptroller, rather than HPD, will be the agency charged with overseeing newly added wage mandates that apply to certain projects with 300 or more units in qualifying areas. The new law resurrects the provisions of the Rent Act of 2015 that require every project receiving the 421-a tax exemption to meet certain on-site affordable housing requirements, which vary depending on the specifics of the project.
Now that the law is on the books, the next step will be structuring new deals. Existing tools, such as inclusionary housing requirements and the requirements for structuring condominiums, will be paramount for making deals work. Careful attention must be paid to meeting the affordability requirements, and how to layer additional subsidies and requirements into a deal.
Stroock stands ready to advise developers on these requirements and on how best to structure deals to take advantage of the Affordable Housing NY Program.