Developers who met initial requirements to qualify for a now-expired property tax break are calling it quits on at least 32,000 units of housing, saying they cannot hope to meet the next key deadline.
That’s according to a survey by the Real Estate Board of New York. In December, the trade group asked 200 members if they have a project that qualified for 421a before it expired in June.
Most who responded said they would not move forward with the project, as they would not be able to meet a critical deadline to ultimately receive the tax break. Under the old program, developers need to complete construction by June 2026 to qualify for the incentive.
REBNY concluded the construction deadline jeopardizes 32,000 apartments across 72 projects. Of those units, 8,200 would be affordable. Seven survey respondents, who are building 3,500 housing units, said they still planned to move forward with their projects.
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Developers have been pushing lawmakers to extend the construction deadline, citing anxious lenders and rising construction costs. Jim Hedden, a representative for the developers of a planned 1,440-unit project in Queens called Halletts North, previously told TRD that banks are asking projects to wrap up a year before the 2026 deadline.
REBNY also pointed to fierce competition for construction contractors as developers race to meet the deadline, as well as delays in getting necessary approvals from City Planning.
A number of factors, including high interest rates and staffing shortages at city agencies, also threaten projects, and it is not clear to what extent these and other project-specific issues are influencing the decisions of developers who answered REBNY’s survey.
Gov. Kathy Hochul announced a plan to create 800,000 new housing units over the next decade. She has said she plans to work with the state legislature to replace 421a, though lawmakers have shown little appetite for doing so. The Hochul administration believes the incentive would be needed for fewer than a quarter of the additional units that would be created as part of her housing plan.