New York City Mayor Bill de Blasio Unveils ‘Housing New York: A Five-Borough, Ten-Year Plan’
New York City Mayor Bill de Blasio recently unveiled a new housing plan aimed at building 160,000 market-rate apartments, in addition to constructing and preserving 200,000 affordable housing units over the coming decade. The plan calls for new development projects throughout the five boroughs and pledges more than $200 million dollars to help foster this development. The city also plans to provide developers and property owners with incentives aimed at promoting affordable housing development. These incentives include making changes to the city’s zoning laws, as well as creating new tax programs and modifying existing programs.
The Plan’s Impact on Tax Programs
Under the plan, the city will seek to create new tax programs that provide developers and property owners with tax exemptions in exchange for ensuring affordability for the life of the exemptions. The city will also target and strengthen existing tax incentives by modifying the 421a, J-51, and 420-c tax programs.
The 421a tax program currently grants partial tax exemptions to developers who set aside at least 20% of their units as affordable. Under the plan, the city will increase the percentage of affordable units and the level of affordability required for developers, in strong housing markets, to obtain 421a eligibility. The city is also considering requiring condominium developers, who seek to benefit from the program, to construct off-site affordable rental units or make payments into a fund for that purpose. The plan does, however, eliminate the Preliminary Certificate of Eligibility and make construction period benefits retroactive, thus eliminating burdensome eligibility and oversight requirements.
The J-51 tax program provides property owners with incentives, in the form of real estate tax exemptions and abatements, to rehabilitate residential buildings. The new plan will expand incentives by increasing tax abatements that would allow property owners to recoup more of their investment. The city is also considering changes that would enable landlords to increase the legal rent for rent-stabilized units.
The 420-c tax program provides a tax exemption for low-income housing developments financed through tax credits and controlled by charitable organizations. The city will make a series of administrative reforms aimed at removing unnecessary eligibility requirements from the 420-c program and increasing predictability for owners regarding the value and timing of the exemption.
Overall, these changes appear to benefit developers and property owners, by making it easier and more economically appealing for them to participate in these programs. However, many of these programs will require developers and property owners to make bigger commitments to affordable housing than in the past. In the end, the plan will benefit those who are willing to invest in weaker housing markets and provide greater affordability.
Portions of this article were taken from ‘Housing New York: A Five-Borough, Ten-Year Plan.’ To read the Mayor’s entire proposal please click on the following link: http://www.nyc.gov/html/housing/assets/downloads/pdf/housing_plan.pdf