NYC Rules on Housing Tax Breaks Face Developers’ Skepticism

Herrick Real Estate partner, Brett Gottlieb, was quoted in an article from Bloomberg Law discussing how New York City's proposed rules for new tax breaks to spur office conversions and multifamily housing are receiving pushback from the real estate industry, who say development may suffer from the provisions. The biggest point of contention of the amended 421-a or 485x guidelines is a lowered income threshold for affordable units created under the two benefits-77% of the area medium income, down from the 80% AMI standard set by the state law that created the programs.

Brett said the adjustment may "not seem like a big difference" for developers but is another hit to "their net income they have to take into account."

"The real problem here is many lenders have already started underwriting projects and loaned money based on certain income assumptions for the properties," Gottlieb said, adding it could "cause some reflection if this gets passed with regards to whether these projects still make sense at further reduced rent levels."

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