Image Credit: NYC HPD
On October 8, 2024, the New York City Department of Housing Preservation and Development (HPD) published the proposed rules for the Affordable Neighborhoods for New Yorkers (Real Property Tax Law Section 485-x) and Affordable Housing From Commercial Conversions (Real Property Tax Law Section 467-m) programs.
These programs aim to combat the City’s ongoing lack of affordable housing shortage, reduce homelessness, and encourage multi-generational homes. The 485-x program provides developers who construct new residential housing with affordable housing units or rent stabilized apartments property tax exemptions. The 467-m program offers property owners convert their commercial property a residential property and include affordable housing units a tax exemption.
The proposed rules address the critical link between legislation and the implementation of the 485-x and 467-m programs. New Yorkers may submit written comments both before and at a public hearing.
The New York City Department of Housing Preservation and Development will review the community feedback and make any necessary changes before finalizing the rules. Once finalized, the rules will take effect thirty days after they are published. The agency expects the rules will be in effect by January 2025 and will begin approving applications after the rules go into effect.
Affordable Neighborhoods for New Yorkers (Real Property Tax Law Section 485-x)
The proposed ways to qualify for the 485-x program include: rental projects with 150 units or more located in certain areas (including Manhattan south of 96th Street, western Queens, and parts of Brooklyn) and at least 25 percent of units are income restricted, rental projects citywide with 100 units or more with at least 25 percent of homes income restricted, citywide rental properties that include anywhere from six to 99 units and at least 20 percent of homes are income restricted, rental property with six to ten units, outside of Manhattan at least 50 percent of units are rent stabilized units. Lastly property outside of Manhattan with an assessed value of $89 or less per square foot and will be eligible if the owner agrees to reside in the home for no less than five years after acquisition.
The wages of construction workers working on these projects varies depending on the size of the property. Large projects of 100 units or more will earn $40 per hour. Properties with 150 units or more located in select areas of Manhattan south of 96th Street, western Queens, and parts of Brooklyn will receive between 60 and 65 percent will receive between $63.00 and $72.45 per hour, whichever is less, escalating at 2.5 percent per year. Building service workers in buildings with 30 units or more will receive prevailing wages unless they contain only affordable housing with not less than 50 percent of those affordable to households at or below 90 percent of AMI.
Affordable Housing From Commercial Conversions (Real Property Tax Law Section 467-m)
The proposed eligibility requirements for the 467-m program are conversion of a non-residential property into a rental multiple dwelling with six or more apartment units; applying within one year of construction completion; beginning construction between January 1, 2023 and December 31, 2031; and completing construction on or before December 31, 2039.
The proposed affordability rules will require at least 25 percent of units to be affordable to households with a weighted average of 80 percent AMI or lower; affordable units must remain permanently affordable and rent stabilized.
Given the urgency of the housing crisis, the program is designed to provide the deepest benefit to developers who start construction on or before June 30, 2026.
Deputy Mayor for Housing, Economic Development and Workforce Maria Torres-Springer said, “This State legislative session, we fought for and secured the passage of a transformative housing package to build the homes New Yorkers deserve thanks to our many partners in State government, labor, advocacy and industry who know that the key to addressing our housing crisis is to build more housing. Publishing the rules for the as-of-right State tax incentive programs is a critical milestone to enact this legislation and supports reaching New York City’s moonshot goal of creating 500,000 new units of housing in the next decade. Coupled with ‘City of Yes for Housing Opportunity,’ we have a generational opportunity to finally start moving the needle on the city’s housing supply and tackle this crisis together.”
New York City Executive Director for Housing Leila Bozorg said, “In an effort to creating more housing across all neighborhoods to meet the needs of New Yorkers, we’ve pushed forward an aggressive agenda that includes new tools like 485x and 467m. I’m excited to begin the rulemaking process for these important initiatives, both of which complement our City of Yes for Housing Opportunity proposal, which will ultimately make housing more accessible in every neighborhood in New York City.”
By: Chelsea Ramjeawan (Chelsea is the CityLaw intern and a New York Law School student, Class of 2025.)