After a meager initial response, developers are now looking to build 71,000 apartments with the extension to the lapsed 421a property tax break.
Gov. Kathy Hochul on Wednesday announced that developers proposing nearly 650 buildings have sent letters of intent to qualify for the extension, which would give them until June 15, 2031, to complete them.
The letters by themselves do not guarantee that the units will get built or that they will receive the tax break. Under the program, developers apply for the tax break once the project is completed.
The unit count exceeds industry projections that 33,000 planned apartments would not be built unless the state legislature extended the 421a construction deadline beyond June 2026.
The difference could stem from a number of factors. The letters of intent are not binding, so some developers may have filed as a contingency measure, but may not ultimately build housing. Developers looking to offload their sites likely sent a letter to make their properties more marketable, but that doesn’t mean a buyer will emerge and build housing.
The industry projections were the result of a survey of Real Estate Board of New York members, so it did not include the full universe of projects in need of the extension.
The deadline for submitting these letters was in September. The Department of Housing Preservation and Development initially received a lackluster response, in part because of confusion and ignorance of the letter requirement.
Hochul made her announcement at Two Trees Management’s 300 Kent Avenue, an office building that is the centerpiece of the Domino Sugar megadevelopment. Two Trees is seeking the 421a extension for a 1,000-unit project planned on what is known as Site B.
The company, led by REBNY chair Jed Walentas, has been critical of 421a’s successor, 485x, saying its wage and affordability mandates made Two Trees’ River Ring project infeasible.
The governor took a victory lap during the press conference, touting the passage this year of a package of housing policies in the state budget — which included the 421a extension, 485x, incentives for office-to-residential conversions, good cause eviction and a removal of the city’s cap on residential density.
“I’m willing to take on the entrenched interests and the NIMBYs,” she said. “The play-it-safers and the keyboard warriors don’t tell us what to do.”
Hochul did, however, back down from her New York Housing Compact of 2023, which would have required localities to meet certain housing targets. In its place, she launched an incentive-based approach called the “Pro-Housing Communities Program,” making $650 million in state funding available to localities that allow for housing growth.
On Wednesday she announced that New York City has joined the more than 200 communities certified as pro-housing.
Read more
Politics
New York
The Daily Dirt: City kickstarts 485x
Politics
New York
Housing deal finally passes; here are the details
Commercial
New York
Confusion, ignorance costing developers crucial tax break
Hochul was joined by Maria Torres-Springer, who recently took on the role of first deputy mayor after Sheena Wright resigned. Though Mayor Eric Adams was quoted in press releases put out by City Hall and the governor’s office, he did not speak at the event.
Next week, the City Council will hold hearings on Adams’ signature housing policy, the City of Yes for Housing Opportunity.