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Understanding New York's New Housing Deal

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In one large NY Housing budget bill, state lawmakers reinstated a property tax relief, encouraged office-to-residential conversions, and updated standards for good cause eviction.


485x (formerly 421a)

Two years after allowing the multifamily tax exemption 421a lapse, legislators are now replacing it with 485x, or Affordable Neighborhoods for New Yorkers. To qualify, projects must meet increased affordability requirements for tenants and wages for workers. The 485x program expires on June 15, 2034.

The new program provides an up to 40-year exemption on taxes and requires that new income-restricted units remain permanently affordable. 

Construction deadline: The budget extends construction deadlines for the expired 421a program by six years, which means developers who managed to get foundation footings in the ground before June 15, 2022, have until June 2031 to finish.

Affordability: 100 to 149 unit projects must allocate 25 percent of units for tenants earning a weighted average of up to 80 percent of the area median income. For larger projects, the AMI is 60 percent. 

Six to 99 unit projects must allocate 20 percent at 80 percent of AMI. Projects outside Manhattan that are 12,500 square feet or smaller and have six to 11 units are eligible for a 10-year benefit, and must make at least 50 percent of units rent-stabilized. 

Condo and co-op projects are also eligible if they’re located outside Manhattan and have an average assessed value of $89 per square foot or less.

Wage requirements: Wage requirements kick in for any project with more than 100 units. For those, the wage and benefit floor starts at $40 per hour.

At projects of more than 150 units in Manhattan south of 96th Street and on the Brooklyn and Queens waterfronts, including Williamsburg, Greenpoint and Long Island City, construction workers’ total compensation must be the lesser of $72.45 per hour or 65 percent of the prevailing wage.

Contractors on projects in other parts of Brooklyn (including Dumbo and Brooklyn Heights) and Queens (Astoria and Queensbridge) must pay at least $63 per hour or 60 percent of prevailing rate.

All rates also increase 2.5 percent each year in an effort to keep up with inflation.

Office Conversions

Last year, Mayor Eric Adams estimated that some 20,000 homes could be created within 10 years by converting office buildings to residences. That projection relied on changes by the city and state, including lifting the citywide cap on residential floor area ratio, or FAR, as well as a new tax incentive so more of these costly and complicated projects would pencil out.

The exemption, generally, starts at 90 percent off the tax bill in areas of Manhattan south of 96th Street, and at 65 percent outside Manhattan. For all projects, the tax break phases out in its final years.

Terms of the conversion measure: Twenty-five percent of the new apartments must be affordable at a weighted average of 80 percent of the AMI, including 5 percent at 40 percent of the AMI. The length of the benefit ranges from 25 to 35 years, depending on when the application is filed.  


Lift the FAR Cap

The new deal lifts the Floor Area Ratio cap, which had limited residential space to 12 times the lot size. Lifting the cap does not automatically allow larger apartment buildings, but allows the city to rezone for them. 

The mayor’s “City of Yes” initiative proposes two residential districts with a FAR of 15 and 18. Rezoning triggers the city’s Mandatory Inclusionary Housing law. The budget specifies that residential projects that exceed an FAR of 12 must have at least as many affordable housing units as is required under that law. 

The budget also bars larger residential projects in historical districts or those that share a lot with a building containing joint living-work quarters for artists.

If a developer wants to demolish a residential building to take advantage of the higher FAR, tenants must be offered buyouts worth up to six months of rent or a new lease in a comparable unit.


Good Cause Eviction

Tenants may challenge evictions resulting from rent increases of more than 10 percent, or 5 percent plus inflation, whichever is less.

Exemptions: Buildings constructed in 2009 or later are exempt from good cause for 30 years from the time of completion. Apartments affordable to households earning 245 percent of the area median income are also exempt, as are those whose owners have no more than 10 units in the state. Owner-occupied buildings with 10 or fewer apartments are also exempt.

Landlords can still evict tenants for failing to pay rent or for being a nuisance. 

The policy has the same sunset date as 485x, June 15, 2034.


Kathryn Brenzel, “Housing Deal Finally Passes,” in The Real Deal, ed. Amir Korangy (April 20, 2024)

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