Navigating the NYS 2024/2025 Executive Budget and Its Impact on NYC Multifamily Housing (Part 4 of 4)

New York recently adopted the Affordable Neighborhoods for New Yorkers (ANNY) Tax Incentive and the Affordable Housing from Commercial Conversions (AHCC) Tax Incentive programs, as well as a host of other new and modified laws pertaining to multifamily housing density, rent regulations and tenant protections. In this series, the attorneys in Cole Schotz’s Real Estate Practice explore some of the initiatives and changes included as part of the Fiscal Year 2024/2025 Executive Budget that will impact developers and owner/operators of properties located in New York City.

Limited Extension of 421-a

Section 421-a of the New York Real Property Tax Law has also been amended to extend the completion date requirement for a limited scope of eligible projects for an additional five years. To be eligible, construction of the project must have commenced on or prior to June 15, 2022, and must have a completion date on or prior to June 15, 2031 (which had originally been June 15, 2026). Additionally, the project must not be subject to Affordability Option “C” or “G” (which provide for 30% of units being set aside for rental to tenants with AMI up to 130%). Further, to be eligible, a “letter of intent” must be filed with New York City’s Department of Housing Preservation and Development (HPD) within 90 days of HPD’s promulgation of the applicable form.

Housing Density

The floor area ratio (FAR) cap of 12.0x applicable to multiple dwellings has been eliminated in order to permit municipalities to increase the maximum allowable FAR for multifamily development projects, provided that the development is not located (i) in a historic district or (ii) on a zoning lot with a building occupied for joint living-work quarters for artists or residential lofts.  Additional conditions will apply if a multifamily development project is located on the same zoning lot as an existing multiple dwelling having a FAR less than 12.0x.

Cap on Rent Increases for Individual Apartment Improvement

Amendments to the Emergency Tenant Protection Act and Rent Stabilization Laws partially reverse provisions of the 2019 Housing Security and Tenant Protection Act relating to rent increases for individual apartment improvements (“IAIs”) to rent stabilized apartments. These amendments will become effective in six month and will: (i) increase the limit on aggregate costs for IAIs performed in a 15-year period to $30,000, beginning with the first IAI on or after June 14, 2019, and makes the increase permanent; and (ii) increase the limit on aggregate costs for IAIs performed in a 15-year period to $50,000, beginning with the first IAI on or after June 14, 2019, and makes the increase permanent, but is only be available if the unit is vacant and (A) has been registered as “vacant” by December 31^st in each of 2022, 2023 and 2024, or (B) becomes vacant after a period of at least 25 years of continuous occupancy). For IAIs at the $50,000 threshold, the amortization schedule is adjusted to be 1/156^th of the IAI cost for buildings with more than 35 apartments (instead of 1/180^th) and 1/144^th of the IAI cost for buildings with 35 or fewer apartments (instead of 1/168^th).