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CLIENT ACCESS
April 24, 2024
By Shimon Shkury, Ariel Property Advisors
Below is a summary of the new housing policies and regulations included in New York State's FY 2025 Budget:
| REGULATION | Before NY State Budget | 2025 NY State Budget Changes |
|---|---|---|
| Vested 421-a Development Sites (Any development site with a “Commencement Date“ on or before June 15, 2022) | Must complete construction by June 15, 2026 to qualify for tax benefits. | Extends completion date for 421-a vested development sites (excluding 421-a Options C & G) to June 15, 2031. Options C and G must be completed by June 15, 2026. |
| 485-x Tax Exemption | No as-of-right tax exemption for developers following expiration of 421-a program in June 2022. |
The new program has 5 different options with all developments over 100 units including new wage requirements.
|
| Office-to-Residential Conversion Tax Exemption | No citywide tax exemption for conversion of office space to residential. Previously, 421-g tax exemption between 1995 and 2006 (construction completed by 2013) helped facilitate conversions in designated areas of Lower Manhattan that fit within residential zoning requirements; did not require levels of affordability. |
Conversions using new 467-m tax exemption will require 25% of units to be rented at a weighted average
of 80% of AMI (includes 5% of units at 40% of AMI). In Manhattan (below 96th Street) tax savings would
be 90% of tax bill, whereas outside of area tax savings would be 65% of tax bill. Length of tax
exemption determined by commencement date:
|
| Density Changes (Lifting the FAR Cap) | FAR cap limited residential space to at most 12 times lot size. | Lifting cap does not automatically allow larger apartment buildings, but allows city to rezone for them. Adams administration aims to create 2 residential districts with a FAR of 15 and 18. A rezoning would trigger the Mandatory Inclusionary Housing law. |
| Individual Apartment Improvements (IAIs) | Caps IAI spending at $15,000 over 15-year period limited to 3 IAIs. Increases shall be 1/168 for buildings with 35 units or less or 1/180 for buildings with more than 35 units, for a period of 30 years. | Makes IAI increases permanent and caps improvement costs at $30,000. Increases for buildings with 35 units or less 1/144 of repair costs; 1/156 if building larger. If unit was either occupied continuously for 25 years or registered as vacant in 2022, 2023, and 2024, allowed improvement costs rise to $50,000. Then the IAI rent increases would be 1/168 if 35 units or under and 1/180 if over 35 units. |
| Good Cause Eviction |
Free market apartments that are not exempt, can have a tenant challenge rent increases if it exceeds
whichever is less between 10% and 5% plus the CPI (Currently 3.4% in New York-Newark-Jersey City).
Exemptions Include:
|
To download the table above please click here.
More information is available from Shimon Shkury at 212.544.9500 ext.11 or e-mail sshkury@arielpa.com.
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