USA – NEW YORK Trends and Developments Contributed by: Lindsey E. Haubenreich, Joseph P. Heins, Timothy P. Moriarty and Kimberly R. Nason, Phillips Lytle LLP
of new housing units over the past few years. Similarly well documented is the downturn in the office rental market due to, among other factors, the rise of remote and hybrid work schedules and the accompanying downsizing of leased office space. Both of these issues are espe - cially acute in New York City, and in an effort to address both, the New York State Legislature adopted the Affordable Housing from Commer - cial Conversions Tax Incentive Benefits Program (AHCC Program) in 2024 under Real Property Tax Law (RPTL) Section 467-m. The AHCC Program provides real property tax exemptions for conversions of existing non-res - idential buildings (except hotels) to residential uses. The general guidelines of the AHCC Pro - gram are as follows. • At least 25% of the units created must be affordable, with specific allocations therein for populations at certain percentages of Area Median Income. (a) Unlike the expired Section 421-a pro - gram, there is no sunset on the afford - ability restriction on these units, and they will remain permanently affordable and rent-stabilized. (b) The market rate units cannot be isolated from the affordable units, and all rental units must share the same common areas and entrances. (c) No affordable units may be rented to a corporation or other entity, nor may they be converted to cooperative or condo - minium ownership. • In order to qualify, work on a project must begin no later than 30 June 2031 and must be completed by 31 December 2039.
The length of the property tax benefits is tied to the commencement date of the project and the location of the building. • More lucrative incentives are available for projects that commence quickly, and projects located in the Manhattan Prime Development Area (defined as areas south of 96th Street) receive enhanced exemptions as well. (a) For example, a project commenced within the Manhattan Prime Development Area before 30 June 2026 will receive 35 years of benefits with a 90% exemption for the first 30 years and decreasing percentages each year for the remainder of the term. (b) A project outside of the Manhattan Prime Development Area commenced before 30 June 2026 will also receive 35 years of benefits, but the initial exemption starts at 65%. • Projects commenced between 1 July 2026 and 30 June 2028 will receive 30 years of property tax benefits. • Projects commenced between 1 July 2028 and 30 June 2031 will receive 25 years of property tax benefits. • All buildings receive a 100% exemption dur - ing the construction period. Notably, there are no construction wage require - ments under the AHCC Program, which will low - er initial costs for developers. Finally, in addition to the property tax incentives passed at the state level, New York City has established the Office Conversion Accelerator Program, which provides building owners with a single point of contact within City government to assist with office conversion projects. The program offers to assist owners with everything from analyzing zoning to securing permits and seeks to coordinate with various agencies within
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