8
FEATURE STORY
NYC Affordable Housing; The End of 421-a and the future of housing incentives Daniel M. Bernstein Member
R&E EXCLUSIVE FEATURE STORY by Daniel M. Bernstein January 31, 2022
New York City needs more housing and more affordable housing. The 421-a property tax exemption program, currently the single most important program for NYC housing production, will expire on June 15, 2022, and is not expected to be renewed. Now is the time to establish a new and improved program to incentivize construction of rental, coop and condominium apartments, on terms that deliver real public benefits (affordable housing, construction jobs, building service jobs) and which offset the considerable expenses of developing housing in NYC (a reasonable property tax exemption), all without requiring any cash outlay by government. 421-a Is Ending Developers of new residential properties in New York should act now to lock in tax incentives provided under the city’s current 421-a program a/k/a The Affordable New York Housing Program or “ANYHP” before they expire on June 15, 2022. NYC needs the uninterrupted residential developments, including critically important affordable housing units, that are incentivized under this program. 421-a of the Real Property Tax Law was first enacted in New York on July 1, 1971, to provide tax exemptions for any new construction on under-utilized or vacant land. The successful program has promoted the construction
of nearly half of all new residential units built in New York since 2010, and some 200,000 apartments remain affordable today because of the program. The program has been renewed in various forms several times since it was first established, the last time in 2017 following a 16-month gap which made it nearly impossible for developers to underwrite or build mixedincome housing. The creation of affordable homes by private developers virtually ground to a halt before 421-a was re-enacted as ANYHP with the addition of a benchmark construction labor agreement (for very large projects) for the first time in the program’s history and with a requirement that every project include a significant percentage of affordable units. Now, ANYHP is about to sunset, and without a renewed version, history could repeat itself at a time of critical need for affordable housing. Gov. Hochul’s Proposal: Affordable Neighborhoods for New Yorkers (“ANNY”) This Month, Gov. Kathy Hochul proposed legislation to replace the sunsetting program. However, legislators have a history of allowing the 50-year-old incentive for affordable units in new ground-up developments to expire without replacement.
