Image Credit: NYC HPD
On October 16, 2024, New York City Mayor Eric Adams and New York Governor Kathy Hochul celebrated the milestone of the New York City Department of Housing Preservation and Development (HPD) receiving Letters of Intent for approximately 650 buildings through the 421-a extension tax incentive program. The proposed 650 buildings represent roughly 71,000 new homes (including 21,000 affordable units) for New Yorkers. Currently, New Yorkers face a 1.4 percent rental vacancy rate, with half of all New Yorkers using more than 30 percent of their income to pay their rent.
Under the 421-a extension program, new construction projects that commenced construction prior to June 15, 2022, have an extended completion deadline for qualifying projects seeking 421-a (16) tax benefits from June 15, 2022 to June 15, 2031. The extension removed the Options C and G, which allowed all affordable units in a project to be restricted at up to 130 percent area median income (AMI). Participating projects will instead be required to provide deeper affordability compliant with the remaining 421-a(16) options, such as Option A with 10 percent of total units affordable to households making no more than 40 percent AMI, 10 percent of units affordable to households below 60 percent AMI, and an additional 5 percent of units at 130 percent AMI.
The New York City Department of Housing Preservation and Development informed affordable housing developers and smaller sized Minority and Women-Owned Business Enterprises (M/WBEs) of the critical deadlines for the tax incentive, and instructed them how to submit a Letter to Intent to utilize the 421-a extension tax incentive program. The New York City Department of Housing Preservation and Development will publish the Letter of Intent filings through Open Data by this fall.
The 421-a extension tax incentive program was inspired by the success of the previous 421-a program which resulted in the construction of 5,400 affordable homes. The New York City Department of Housing Preservation and Development and The New York City Housing Development Corporation financed a total 27,911 units through new construction and preservation deals.
New York City Mayor Eric Adams said, “At the beginning of this year, Governor Hochul and myself stood together and promised New Yorkers real solutions to deliver on affordable housing. Today, I’m proud to say: promises made, promises kept. The 421-a tax incentive extension, which our administration successfully advocated for last session, has proven to be a success. We have received Letters of Intent from approximately 650 buildings, representing 71,000 new homes, including 21,000 affordable units. Our administration and the state came together to meet this generational crisis head-on, and now, the City Council has their moment in front of them. The City Council has an opportunity to join New Yorkers in saying ‘yes’ to our ‘City of Yes for Housing Opportunity’ proposal — the most pro-housing change in the history of the city’s zoning code. To deliver the affordable housing New Yorkers need and deserve, every level of government has a role to play, and we look forward to working with our partners in the City Council to build our way out of this housing crisis.”
New York State Governor Kathy Hochul said, “By extending the 421-a construction completion deadline, we are able to put more than 70,000 new homes back on track and create affordable options to live in New York City. My administration is committed to combating the affordability crisis in every region of the state, and I want to thank Mayor Adams and his team for their partnership and advocacy as we tackle the housing crisis by ensuring that there are more and more opportunities to live and thrive in New York State.”
By: Chelsea Ramjeawan (Chelsea is the CityLaw intern and a New York Law School student, Class of 2025.)