2023-24 New York State Budget: Proposed Housing InitiativesFebruary 9, 2023
On February 1, 2023, New York Governor Kathy Hochul released the State’s Executive Budget for Fiscal Year 2024. Over the next several weeks, Governor Hochul and the State Legislature will negotiate the Budget’s proposals and other Legislative measures. A budget will need to be adopted by April 1, the beginning of New York’s fiscal year.
With 95 years of experience helping owners, developers and New Yorkers solve the region’s challenges (and capitalize on the opportunities these challenges present), Herrick is well-equipped to advise on the Budget’s long-term impact to your business and bottom-line.
Herrick’s Affordable Housing and Community Development team will continue to monitor these initiatives and will provide updates as more details arise.
Land Use Proposals
New York Housing Compact: Establishes local housing supply growth targets. If a jurisdiction does not meet its growth target or qualify for a Safe Harbor, developers may apply to build mixed-income or entirely affordable projects notwithstanding zoning.
Transit-Oriented Development: Requires zoning of a minimum average density within half a mile of every Metropolitan Transit Authority station, including New York City’s subway. Within and up to 15 miles from New York City, the minimum average density required would be 50 dwelling units per acre.
Accessory Dwelling Unit Legalization: Community Districts in New York City may legalize preexisting unlawfully occupied accessory dwelling units.
Office-to-Residential Conversion: Amends the State’s Multiple Dwelling Law to authorize conversion from office to residential use of New York City buildings constructed up to 1990. Such conversions would be exempt from the Multiple Dwelling Law’s 12 FAR cap for residential buildings.
Real Estate Tax Incentive Proposals
421-a (16) Affordable New York Program: Extends the completion deadline for vested 421-a projects from June 15, 2026 to June 15, 2030.
Office-to-Residential Conversion: Establishes the Affordable Housing from Commercial Conversions Tax Incentive Benefits Program under which, if a building meets certain affordability requirements, property tax is fully exempt during construction. Post-construction, for properties located south of 96th Street in Manhattan (the Manhattan prime development area), property tax is 50% exempt for the following 15 years, and each year thereafter for four years at a rate of 10% less than the prior year. For properties located outside the Manhattan prime development area, property tax is 35% exempt for the following 15 years, and each year thereafter for four years at a rate of 7% less than the prior year.
Reformed J-51: Replaces the expired J-51 tax incentive program with a tax abatement for capital improvements made to buildings with affordable housing. The maximum abatement under the reformed program would be 81/3% of the total certified reasonable cost of eligible construction, capped at 70% of the total improvement costs for a duration of no longer than 20 years.
Accessory Dwelling Units Tax Exemption: Jurisdictions may offer a property tax exemption on the increase in value of a property (capped at $200,000) resulting from the addition of an accessory dwelling unit.
Upstate Property Tax Exemption: Jurisdictions outside of New York City may offer a property tax exemption for new multifamily construction where at least 20% of the units are rented at 80% of Area Median Income. The construction must occur on vacant or predominantly vacant land or replace an existing non-conforming use or substandard dwelling. The Program would provide a 100% exemption of real estate tax during construction then phase out by 4% per year for 25 years.
For more information on this issue or other affordable housing and community development or land use & zoning matters, please contact:
Brett J. Gottlieb at +1 212 592 1455 or [email protected]
Mitchell A. Korbey at +1 212 592 1483 or [email protected]
© 2023 Herrick, Feinstein LLP. This alert is provided by Herrick, Feinstein LLP to keep its clients and other interested parties informed of current legal developments that may affect or otherwise be of interest to them. The information is not intended as legal advice or legal opinion and should not be construed as such.