For now, the 421-a tax break is dead. But another revision might get on the legislative agenda in January.

The June 15 deadline to get residential buildings to qualify for the 421-a tax break has passed, and many now have the beginnings of foundations--and a three-year deadline, by 6/15/26, to complete construction.

And that means, likely, a temporary stall on new construction, at least that which is not fully market-rate or significantly subsidized by the city.

Dead and buried: 421a is gone. Will it ever return?, the Real Deal reported 6/15/22, noting that Gov. Kathy Hochul's proposed replacement program, 485-w, failed in the Legislature.

That proposal, I'd note, would've required deeper affordability than the previous iteration (aka "Affordable New York"), passed in 2017, which allowed for 30% of units for households at 130% of Area Median Income (AMI)--people essentially earning six figures and potentially paying more than $3,000 per unit.

What next?

The Real Deal noted, "In a joint statement, the Real Estate Board of New York, 32BJ SEIU and the New York Building and Construction Trades Council, said in a statement that it is “hopeful that lawmakers will work productively with our growing coalition to address the city’s housing crisis.”

And, of course, create jobs for their members and profits for their builders.

So it wouldn't be surprising to see some version return for discussion in January, after the election season where "capitulation" in one direction might be seen as politically disadvantageous.

Passage of a replacement would allow the Atlantic Yards/Pacific Park developers to plot a path to building the B6 and B7 towers, at least.

Meanwhile, if 421-a opponents have their way, there could be tax reform--which would then remove some of the rationale for the tax break. But getting tax reform done would be complicated.

Lowering the AMI levels?

In a 6/17/22 article headlined New York’s 421a Tax Abatement Is Dead. Now What?, the Commercial Observer noted the bad blood from Gov. Andrew Cuomo's 2017 unilateral negotiation:

State lawmakers resented swallowing the new law, which included a 35-year property tax abatement that was 10 years longer than what then-Mayor Bill de Blasio wanted. The new units weren’t particularly affordable, either. A majority of new units advertised between 2019 and 2021 were affordable to households earning 130 percent of AMI, the Furman Center found.

The Commercial Observer quoted Brooklyn Assemblymember Steven Cymbrowitz, who leads the Assembly’s Housing Committee, as saying that Hochul's team didn't want to lower the required income/rent levels beyond her proposal.

Now, as the article notes, the Legislature created a new Affordable Housing Commission, expected to submit a report by December, just in time for the next session.

From the article:

Some developers would like to see a buffet of options that include different AMI bands tied to the length of the tax abatement or a property’s location. Other new projects could include a zoning bonus to build higher or denser with greater levels of affordability. There could even be room to include existing buildings to opt into an incentive program to reduce property taxes, perhaps following a unit’s renovation.