NYC Mayor Eric Adams and NY Governor Kathy Hochul today celebrated new numbers for the 421-a extension tax incentive program to help build tens of thousands of critically needed affordable housing units.
The New York City Department of Housing Preservation and Development (HPD) received Letters of Intent for approximately 650 buildings, representing about 71,000 new homes, including 21,000 affordable units. These new numbers come as the city faces a 1.4 percent rental vacancy rate, with half of all New York renters paying more than 30 percent of their income in rent. The 421-A extension was part of the Adams administration’s successful Albany housing agenda to secure new tools to address the city’s housing crisis and build a moonshot goal of 500,000 new homes by 2032. Today’s announcement comes as HPD is engaging small developers, including minority- and women-owned business enterprises (M/WBE) to utilize the 421-a program.
“… promises made, promises kept …”
“At the beginning of this year, Governor Hochul and myself stood together and promised New Yorkers real solutions to deliver on affordable housing. Today, I’m proud to say: promises made, promises kept,” said Mayor Adams. “The 421-a tax incentive extension, which our administration successfully advocated for last session, has proven to be a success. We have received Letters of Intent from approximately 650 buildings, representing 71,000 new homes, including 21,000 affordable units. Our administration and the state came together to meet this generational crisis head-on, and now, the City Council has their moment in front of them. The City Council has an opportunity to join New Yorkers in saying ‘yes’ to our ‘City of Yes for Housing Opportunity’ proposal — the most pro-housing change in the history of the city’s zoning code. To deliver the affordable housing New Yorkers need and deserve, every level of government has a role to play, and we look forward to working with our partners in the City Council to build our way out of this housing crisis.”
“By extending the 421-a construction completion deadline, we are able to put more than 70,000 new homes back on track and create affordable options to live in New York City,” said Governor Hochul. “My administration is committed to combating the affordability crisis in every region of the state, and I want to thank Mayor Adams and his team for their partnership and advocacy as we tackle the housing crisis by ensuring that there are more and more opportunities to live and thrive in New York State.”
“… we’re rising to the moment …”
“This administration is making profound inroads on our housing crisis, wasting no time to use the tools we won in Albany to create affordable housing,” said First Deputy Mayor Maria Torres-Springer. “Between these numbers, our record housing production in Fiscal Year 2024 and our relentless work to pass ‘City of Yes for Housing Opportunity,’ we’re rising to the moment to meet New Yorkers’ need for affordable housing.”
“With a 1.4 percent rental vacancy rate, we must do all we can at every level of government to create more housing. The extension of 421-a will allow for the construction of thousands of homes that will make a real difference in the lives of New Yorkers,” said New York City Department of City Planning Commissioner and City Planning Commission Chair Dan Garodnick. “Now, with ‘City of Yes for Housing Opportunity,’ we can keep up the momentum and take a big bite out of housing crisis by adding a little more housing in every neighborhood.”
“The overwhelming response to the 421-a extension speaks volumes about our deep commitment to creating affordable housing,” said HPD Commissioner Adolfo Carrion Jr. “New housing is not just about bricks and mortar — it’s about transforming lives and strengthening our communities. Every project and every single apartment we produce through HPD makes a tangible difference for New Yorkers, providing them with the stability and security they need. The extension of the 421-a(16) program is a powerful tool that not only supports our developers but also fuels our mission to create affordable housing options that countless families rely on for a better future.”
Earlier this year, Mayor Adams and members of his administration successfully advocated for new tools in the 2024 New York state budget to spur the creation of urgently needed housing. These tools included the new 421-a tax incentive program, a tax incentive program to encourage office conversions to create more affordable units, the lifting of the arbitrary “floor-to-area ratio” cap that held back affordable housing production in certain high-demand areas of the city, and the ability to create a pilot program to legalize and make safe basement apartments.
Under the 421-a extension program, new construction projects that commenced construction prior to June 15, 2022, have an extended completion deadline for qualifying projects seeking 421-a(16) tax benefits from June 15, 2022 to June 15, 2031. The extension enables projects that require extended construction periods to move forward without interruption as long as projects filed this Letter of Intent with HPD. By facilitating a longer timeline, the 421-a(16) extension allows for the thoughtful, sustainable development of housing that meets the diverse needs of the city’s population. The extension removed the controversial Options C and G, which allowed all affordable units in a project to be restricted at up to 130 percent area median income (AMI). Projects participating in the extension will instead need to provide deeper affordability compliant with the remaining 421-a(16) options, such as Option A with 10 percent of total units affordable to households making no more than 40 percent AMI, 10 percent of units affordable to households below 60 percent AMI, and an additional 5 percent of units at 130 percent AMI.
HPD conducted extensive outreach to affordable housing developers, including smaller sized and M/WBEs firms, to brief them on the new the tax incentive, inform them on critical deadlines, and direct them to submit a Letter to Intent to utilize the program. HPD will be publishing the Letter of Intent filings through Open Data this fall.
The previous 421-a program was a vital tool in creating critically-needed affordable housing. In Fiscal Year (FY) 2024, the 421-a program drove construction of 5,400 affordable homes nearly 40% of the agency’s new construction production for the fiscal year. HPD and HDC financed a total 27,911 units through new construction and preservation deals, an increase of 80 percent from 2022.
Last month, the City Planning Commission voted to approve “City of Yes for Housing Opportunity,” a historic zoning proposal to enable the creation of a “little more housing in every neighborhood.” The proposal would allow for the creation of up to 108,850 new homes over the next 15 years. City of Yes for Housing Opportunity will head to the New York City Council for a hearing and final vote before the end of the year.
Since the start of his administration, Mayor Adams has made record investments towards creating and preserving affordable housing. In July, Mayor Adams announced back-to-back record breaking years in both creating and connecting New Yorkers to affordable housing. In June, the Adams administration delivered an on-time, balanced, and fiscally-responsible $112.4 billion FY25 Adopted Budget that invests $2 billion in capital funds across FY25 and FY26 to HPD and the New York City Housing Authority’s capital budgets.
“… build and maintain affordable housing.”
In total, the Adams administration has committed a record $26 billion in housing capital in the current 10-year plan as the city faces a general housing crisis. In July, Mayor Adams and others also announced a landmark $500 million investment from the Battery Park City Authority’s Joint Purpose Fund to build and maintain affordable housing. And this past spring, thanks to Mayor Adams’ vision and leadership, the city celebrated the largest 100 percent affordable housing project in 40 years with the Willets Point transformation.
Further, the Adams administration is using every tool available to address the city’s housing crisis. Mayor Adams announced multiple new tools, including a $4 million state grant, to help New York City homeowners create accessory dwelling units that will not only help them to afford to remain in the communities they call home, but also to build generational wealth for families.
Additionally, under Mayor Adams’ leadership, the city is fulfilling its 2024 State of the City commitment to build more affordable housing, including by being ahead of schedule on advancing two dozen affordable housing projects on city-owned land this year through the “24 in ‘24” initiative, reopening the Section 8 Housing Choice Voucher program waitlist after being closed to general applications for nearly 15 years, and creating the Tenant Protection Cabinet to coordinate across agencies to better serve tenants. The city has also taken several steps to cut red tape and speed up the delivery of much-needed housing, including through the “Green Fast Track for Housing,” a streamlined environmental review process for qualifying small- and medium-sized housing projects; the “Office Conversion Accelerator,” an interagency effort to guide buildings that wish to convert through city bureaucracy; and other initiatives of the Building and Land Use Approval Streamlining Taskforce.
“I applaud Governor Hochul and Mayor Adams for working together to take this important step forward in kickstarting rental housing production. At a time when our housing crisis is deepening, this extension will immediately put tens of thousands of housing units in play and demonstrates how valuable a tax incentive program is to spurring production,” said Rafael E. Cestero, CEO, The Community Preservation Corporation. “Before it was allowed to expire, 421-a was critical to the creation of low- and moderate-income rental housing in working class communities and helped create opportunities for mixed-income housing in more expensive markets. The zoning changes in City of Yes, combined with implementing the new 485-x tax incentive would give us hope that the city could address this severe supply and demand imbalance that makes housing so expensive for too many.”
“As expected, the 421-a deadline extension has proven to be a commonsense policy action necessary to ensure the delivery of new, desperately needed rental housing,” said Basha Gerhards, senior vice president, planning, Real Estate Board of New York. “We are grateful to see the progress of hundreds of projects and thank Mayor Adams, Governor Hochul, and State Legislature for advancing a solution that helps address New York City’s housing supply crisis.”
“You can’t fight every fight, nor can you win every fight. But, I am grateful that Governor Hochul and Mayor Adams had the courage to fight for more housing in a time of unprecedented crisis and need. That is what leadership is all about,” said Kirk Goodrich, president, Monadnock Development.
“At L+M, we believe that the robust interest in the 42-1a extension underscores how urgently we need ALL of the tools available to address the housing crisis,” said Lisa Gomez, chief executive officer, L+M Development. “Tax abatements like 421-a are vital to the creation of affordable housing — and are certainly one of the ways we can blunt the effects of rising operating costs like insurance.”
“Governor Hochul, Mayor Adams and their teams deserve credit for keeping this vital new housing on track,” said David Schwartz, co-founder and principal, Slate Property Group. “We’re in a crisis that demands an ‘all of the above’ response. Thanks to swift action by the state and city, New Yorkers will soon be moving into thousands of new apartments that might never have been built.”
“Extending 421-a was an essential move to strengthen the pipeline of new housing in New York,” said Rachel Fee, executive director, New York Housing Conference. “It’s no surprise that there’s so much interest in taking advantage of the extension — tax incentives are critical to get new housing financed and built. We need every tool available to us, including the City of Yes for Housing Opportunity, to add new units and combat our housing shortage head-on.”
“Too many New Yorkers have to navigate a shortage of affordable housing that is essential to keep our neighborhoods thriving,” said Karim Hutson, president and CEO, Genesis Companies. “Programs like the 421-a extension are crucial to building the homes families urgently need, and we’re committed to partnering with the state and city to address the housing and affordability crisis for the communities we serve.”
Photo credit: HWM.
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