Affordable New York and 421-a Housing Programs
Herrick is a recognized leader in the affordable housing space. Commercial real estate owners, developers, and lenders rely on our guidance on the Affordable New York Housing Program, 421-a(16) and its predecessor program, 421-a(1-15).
Our team is regularly called on to educate financial institutions, brokerage firms, title insurance companies, architecture firms and major industry groups on the nuances of both programs.
Attorneys in our government relations group are a valuable resource to clients facing non-compliance investigations by the New York State Attorney General’s Office and the Office of the New York City Comptroller.
The Affordable New York Program, which is administered by the Department of Housing Preservation and Development (HPD), provides low- and middle-income tenants with access to affordable housing options in new construction residential buildings across the New York City. In exchange for offering at least 25% of the units as affordable housing, real estate owners receive a tax benefit which is equal to a 100% savings over a base year for a term of 25 years. Real estate owners can receive ten additional benefit years at reduced savings.
Partnering Throughout the Development Process
- We counsel our clients in the pre-construction phase by leveraging Herrick’s combined experience in New York City zoning and land use, Mandatory and Voluntary Inclusionary Housing, the affordable housing marketplace and New York City real property taxes to project the efficacy of the proposed development and to ensure a conforming design process.
- During construction we work with our clients to determine the maximum affordable rents, unit stacking and proportionality of the affordable unit types/sizes relative to the market rate units.
- When construction has concluded, we guide our clients, along with their architect, through the application process to receive a Certificate of Eligibility.
- Additionally, we offer formal legal opinions including tax projections detailing the project’s eligibility for the Affordable New York program. These may be presented to perspective purchasers or lenders.
The Affordable New York program requires construction to commence lawfully and in good faith by installing a footing or foundation on or before June 15, 2022. Construction must be complete by June 15, 2026.
Before the Current Affordable New York
The Herrick team continues to assist developers with the predecessor program to the current Affordable New York. The "old" 421-a law remains available for projects which commenced construction on or before June 15, 2015 or for projects which commenced construction between June 16, 2015 and December 31, 2015 and completed construction prior to December 31, 2019.
Under the "old" program, developers are eligible to receive benefits either by being located outside a geographic exclusion area, providing at least 20% of the units as affordable housing or surrendering 421-a negotiable certificates (depending upon property location) to receive 421-a benefits without offering affordable housing.
Industrial Commercial Abatement Program (ICAP)
Herrick counsels clients who are owners or tenants of commercial properties applying for benefits through the Industrial Commercial Abatement Program (ICAP). ICAP is a New York City property tax abatement offered for new construction and renovations of properties located within the five boroughs of New York City.
Much like with 421-a program, our team regularly educates financial institutions, brokerage firms, title insurance companies, architecture firms and major industry groups on the nuances and benefits of the ICAP program.
Herrick attorneys counsel clients on the laws and rules which govern ICAP and the construction compliance requirements. We leverage the experience of the Land Use & Zoning Planning and Development Specialists to work with our clients and ensure the active participation of Minority and Women Business Entrepreneur’s (M/WBE) in the bidding process, while actively monitoring the progress before the Department of Small Business Services.
Brief ICAP Overview
The ICAP program offers property tax savings on the building portion of tax above 115% in the base year for a term of eight to twenty-five years. The benefit term is determined by the property’s location and building’s use. An obligated taxpayer for the property may file a preliminary application with the Department of Finance prior to the issuance. Among program requirements, applicants must solicit at least three bids for each construction contract from NYC certified M/WBE’s where construction costs exceed $750,000 and make a good faith effort to procure contracts. ICAP benefits are available on July 1 in the tax year immediately following the completion of construction after satisfying the program’s requirements.
ICAP benefits are not available for residential or self-storage uses.
Partnering Throughout the Development Process
- We counsel our clients in the pre-construction phase by leveraging Herrick’s combined experience in New York City zoning and land use and New York City real property taxes to project the efficacy of the proposed development and to ensure a conforming design process.
- During construction we work with our clients to ensure compliance with ICAP M/WBE contractor bid procurement procedures and construction reporting requirements for contractors, vendors and suppliers.
- We provide monthly status reports to clients detailing M/WBE participation and construction employment submissions.
- When construction has concluded, we guide our clients, along with their architect and accountant, through the application process to receive a Certificate of Eligibility.
- Additionally, we offer formal legal opinions including tax projections which may be presented to perspective purchasers or lenders detailing the project’s eligibility for the ICAP program.
ICAP requires the filing of a preliminary application prior to March 1, 2025 and construction to commence prior to April 1, 2025.