According to the Commercial Observer, New York’s real estate industry took a dive when the 421a tax abatement stopped for 16 months. New building permits slowed and some construction came to a stop. However, a year since Affordable New York became effective, development seems to be resuming. Currently, there are many projects with open affordable housing lotteries listed by HPD.
Affordable New York, the new 421a program, has more rules and regulations than its predecessor. Unlike the old program, developers must pay property taxes during construction. Moreover, the exemption only applies once a project is complete. However, the tax benefit is retroactive to include taxes paid during construction.
Banks and lending institutions are still adapting to the new program.
Affordable New York limits options for condominium developers because a building does not qualify unless each unit has an average assessed value no greater than $65,000. Therefore, only inexpensive apartments meet the new program’s requirements. This means buyers and developers of mid-priced condominiums probably will miss out on the tax benefits.