3-Year Construction Period:
The property will be 100% exempt above base amount. (Base amount calculation: Taxes based on the value of a year prior to start of construction). This credit will be received retroactively after implementation of exemption.
25 Years of 421a Tax Exemption:
100% exempt above the base amount for 25 years. Years 26-35 of Exemption Period: Property will be exempt of 25% – 30% of the taxes (depending on which affordability option the owner chooses.)
Affordability Options
Option A
25% of the units must be affordable: at least 10% at up to 40% of AMI, 10% at up to 60% of AMI, and 5% at up to 130% of AMI; and the project cannot receive any government subsidies other than tax-exempt bond proceeds and 4% tax credits.
Option B
30% of the units must be affordable: at least 10% at up to 70% of AMI and 20% at up to 130% of AMI.
Option C
At least 30% of the units must be affordable at up to 130% of AMI; the project cannot receive any government subsidies; and the project cannot be located south of 96th Street in Manhattan or in any other area established by local law.
Eligible rental projects with 300 or more dwelling units that either are located in one of the enhanced affordability areas (portions of Manhattan, Queens and Brooklyn) or elect to comply with the minimum average hourly wage requirements for construction workers, would receive: a 100% exemption for a construction period of up to three years; and a 35-year post-construction 100% exemption.
These rental projects would be required to choose one of three affordability options and comply with it through the extended restriction period (40 years from completion)
Option E
25% of the units must be affordable: at least 10% at up to 40% of AMI, 10% at up to 60% of AMI, and 5% at up to 120% of AMI; and the project cannot receive any government subsidies other than tax-exempt bond proceeds and 4% tax credits.
Option F
30% of the units must be affordable: at least 10% at up to 70% of AMI and 20% at up to 130% of AMI.
Option G
At least 30% of the units must be affordable at up to 130% of AMI; the project cannot receive any government subsidies; and the project cannot be located in the Manhattan Enhanced Affordability Area.
421A Requirements
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A project that commenced construction after January 1, 2016 and on or before June 15, 2022 to be completed on or before June 15, 2026 can be eligible for the exemption.
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25%-30% for affordable housing should be allocated according to the HPD Requirements which will include as follows: 5% for mobility, and 2% preference for vision and hearing impaired. All designated affordable units are to remain vacant up until lease up by HPD.
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The market rate units are to be stabilized for the full exemption period, except if the rent amount exceeds the decontrol limit upon vacancy.
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Affordable units are to remain affordable and stabilized for the total exemption period.
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Developments above 300 units that are in an enhanced affordability area have to comply with the Average Minimum Wage as set forth on the 421a rules. 300+ unit developments located outside of the enhanced affordability areas have the option to comply and receive the 40 year exemption.
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HPD Filing Fees should be submitted accurately and promptly.
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Affordable units are to be marketed through the HPD Housing Connect Website.
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Marketing Monitor – The owner is required to hire a Marketing Monitor to insure compliance with the HPD requirements for the duration of the Exemption. (The owner can either hire “RE Tax Service’s” Sales and Marketing Division or hire a third party company.)
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The building manager of a 30+ unit property should be compensated with at least the average minimum wage per hour.