The clock is ticking for developers with 421a-qualified sites to complete their projects before the tax break’s 2026 construction deadline — especially after state lawmakers opted to not extend it in this year’s budget. And now one big project is moving forward in Brooklyn.
Jeff Levine’s Douglaston Development acquired a shovel-ready site at 1057 Atlantic Avenue in Bedford-Stuyvesant, where the firm plans to build a 456-unit rental building that will qualify for 421a if it’s finished in time.
Douglaston bought the site for $66 million and landed a $185 million construction loan from Wells Fargo and M&T Bank, the company said.
The sellers, a partnership between Lee Brodsky’s BEB Capital and Tucker Reed’s Totem, started foundation work in May of last year after spending two years assembling the site and getting it rezoned for residential use. BEB Capital and Totem are staying on as co-developers.
In a statement, Levine noted the uphill battle in securing the construction loan in an “exceptionally challenging financing market” and highlighted the significance of the project “at a time when New York City is in vital need of more affordable housing options and expanded market-rate supply.”
TerraCRG’s Ofer Cohen and Daniel Lebor brokered the sale.
The 17-story building will set aside 137 units for income-restricted renters. Ares Real Estate has a preferred equity stake in the project, which is expected to cost $320 million and be completed in 2025.
Douglaston said it’s one of the last projects that will be eligible for 421a, also known as the Affordable New York Housing Program. The tax break expired last summer and the real estate industry has warned that little new rental housing will be built without a replacement.
Even projects that did qualify for the tax break by getting foundations laid before it expired last June still have to be completed by June 15, 2026, to actually receive it. That means if developers can’t get started on eligible projects soon, they likely won’t be finished in time. Gov. Kathy Hocuhl proposed an extension to the construction deadline in her budget this year, but it failed to gain traction in Albany.
The looming deadline and waning hopes for an extension has some 421a site owners struggling to sell their properties.
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State may create 421a stopgap