“P” as in pfft: Hochul’s upstate plan 421p losing air
Measure likely to be excluded from state budget
Gov. Kathy Hochul’s trial balloon for encouraging multifamily development outside of New York City has all but popped.
With the state budget due in a week, Hochul’s 421p proposal appears unlikely to be included, City and State reported. The affordable housing tax break wasn’t part of the one-house budget resolutions that the Senate and Assembly released earlier this month and it has gained little support since.
The program would allow municipalities outside of the five boroughs to designate areas where multifamily projects could qualify for 30-year tax exemptions. The projects would have to set aside 20 percent of units as affordable for households earning up to 80 percent of the area median income, or 25 percent of units at up to 100 percent of the AMI.
But the program, aimed at boosting housing supply and affordability, has been unpopular with legislators. In fact, nearly all of the real estate industry’s priorities are at high risk of not making it into the budget, or even passing this session at all.
The proposed 421p tax break is very similar to 421a, which for decades helped spur affordable housing development in New York City. The program expired last year, however, and lawmakers have shown little appetite to renew it, deeming it a giveaway to developers and an inefficient means to boost affordability.
Even projects that broke ground in time to qualify for the tax break might not get it because the law requires they be completed by mid 2026. The governor has pitched an extension of the construction deadline to June 2030, without which the industry says 32,000 planned apartments will not be built.
The deadline was added to the program to avoid a repeat of the last time 421a expired, when some developers rushed to pour footings ahead of the tax break’s expiration, then left the foundations untouched for years.
The construction deadline was also excluded from the one-house resolutions, which are statements of the legislature’s priorities.
While both chambers have taken a dislike to providing incentives for developers, they have proposed offering them to localities as an alternative to mandating housing growth.
Their budget resolutions also excluded a replacement for the J-51 tax break and a measure authorizing New York City to legalize basement apartments. The state budget is due April 1, but could be late this year as the three sides appear far from an agreement.
— Holden Walter-Warner
Here are the real estate policies to watch in Hochul’s budget