REBNY survey: June 2026 construction deadline jeopardizes projects (B5?) that already qualified for 421-a tax break. Banks said to want 1-year buffer.

First it was the 6/15/22 deadline to get foundations in the ground to qualify for the expiring 421-a tax break. Now it's the 6/15/26 deadline to get the buildings finished.

Expired 421a deadline jeopardizes 33K housing units, the Real Deal reported yesterday, based on a survey by the Real Estate Board of New York (REBNY). The survey states that, among the total, 16,000 units are in Brooklyn and over 8,200 of the total are affordable units.

REBNY states that many of the projects at risk are in recently rezoned areas, such as Gowanus, which has a pipeline of about 7,000 apartments, including more than 2,000 "affordable" ones.

The implication is that any renewal of the lapsed 421-a tax break should include an extension of time for those projects that have already qualified. The contours of such an extension are, of course, highly contested, so keep watch on what REBNY might be willing to cede during future negotiations.

It's unclear how comprehensive the survey is; not every developer is a member of REBNY. 

For example, some of the smaller developers who got spot rezonings in the area just east of Atlantic Yards/Pacific Park--which Community Board 8 called "M-CROWN" before the recent proposed Atlantic Avenue Mixed-Use Plan--may not be REBNY members, and some of their projects have not started to rise.

Multiple challenges

REBNY cited three challenges. One is rising interest rates, coupled with banks that seek a 12-month buffer before the deadline, "meaning a June 2025 completion or less than three-year construction timeframe. This is nearly impossible to meet for large projects."

A large project like B5 (aka 700 Atlantic Ave.), the first Atlantic Yards/Pacific Park tower slated to be built over the Vanderbilt Yard, was not even supposed to start until a year after construction of the platform started. 

As stated last May, the platform was supposed to start in the spring of 2022, and B5 in 2023, with completion in 2025. That's been put off at least a year. So, while under that logic the building still might be finished by the June 2026 deadline--if, in fact, the project proceeds, which is question--the banks' buffer could make things dicey.

REBNY also cited the difficulties in getting certifications from the Department of City Planning (DCP) and the Department of Housing Preservation and Development (HPD). Both have suffered attrition and slow hiring for open positions.

The final issue is a shortage of construction contractors, given that "projects are competing for the same contractors at the same time," which means time pressures "can lead to damaging shortcuts." Unmentioned is whether that applies to both union and non-union contractors.