Battle Lines Drawn As NY Gov. Urges Tax Abatement Revamp

January 26, 2022 – Media Mention

Herrick Real Estate partner Brett J. Gottlieb spoke to Law360 about New York Governor Kathy Hochul's proposed replacement to the expiring 421-a tax abatement program, called the Affordable Neighborhoods for New Yorkers (ANNY). 

The article explained that "Under ANNY, certain rental projects would have to offer more affordability options, ranging from 40% to 130% of area-median income, or AMI, to qualify for the abatements than under 421-a. Condos and co-ops would also need to be affordable at 130% of AMI, which equates to $108,680 for a one-person household and $155,090 for a family of four."

Brett reflected, "By and large, it's a major win for those who fit into the categories of income that are being targeted[.]" The article stated that ANNY would also eliminate a requirement for condos and co-ops to have an average assessment of $65,000 to qualify for the tax abatement; and that Brett concluded that removing the assessment threshold could encourage more condo and co-op development because developers can't control what a property's assessment will be and therefore wouldn't need to risk building a unit that may not qualify for an abatement.

Brett noted that The Real Estate Board of New York has come out in support of ANNY. The article stated that, in regards to developers fearing the expiration of 421-a, Brett said "the news that there would be a conversation about continuing to offer tax abatements for affordable housing was a welcome development and allayed fears that lawmakers were willing to let the program roll off the books."

He affirmed, "It's not the doomsday scenario that many were preparing for," adding, "Most developers rely upon these tax incentives in order for their projects to remain economically viable. The absence of such a program would really devastate the real estate community."

The article stated that Brett also observed that "one area where ANNY could be altered to become more friendly to property owners would be an inclusion of a tax benefit for existing properties that want to convert their buildings into affordable housing developments rather than gearing the abatement toward new construction."

Brett concluded, "There are limited options for those who have existing products," adding, "And existing products could work just as well for those who require affordable housing."

Read the full article in Law360. Access may require a subscription.