The 421-a Tax Incentive program is a partial real estate tax exemption for new construction of housing. The program was established in 1971 and has been closed, re-opened, and reorganized several times. After the tax exemption was suspended in 2016, the New York State Legislature extended the 421-a program in April of 2017 (with retroactive coverage to 2016), so that the program now includes three sub-programs which are scheduled to sunset in June of 2022. The first, 421-a (1-15), extends the program for projects that began construction before December of 2015 and the second, 421-a (17), extends the exemption period for properties that began construction before 2008 and already qualified for earlier versions of the program. The third sub-program, the 421-a (16) “Affordable New York” program, is available to developers of new housing projects who have not yet participated in the program or who began construction between January of 2016 and June of 2022. Affordable New York (ANY) includes seven options for rental and homeowner housing, which include varying term lengths and affordability levels.
Compared to earlier versions of 421-a, the options within ANY increase both the shares and AMI levels of affordable units on average, and extend the exemption schedule for rental buildings to 35 years. Within the six options for rental housing, between 25 and 30 percent of units must include income restrictions, although the depth of affordability varies by option. ANY establishes “enhanced affordability” areas to determine size and geographical restrictions for eligible properties. These conditions include a prevailing wage for building service employees in projects with 30 or more units and a minimum average wage for construction workers on projects of 300 or more units within “enhanced affordability” areas. ANY also restricted the use of the exemption for homeownership properties, which includes condos and coops, increased minimum building size requirements from four to six units, and changed some terms of the program’s rent stabilization requirements.