HPD Advances City of Yes for Housing Opportunity Initiative with New Program Applications

The New York City Department of Housing Preservation and Development (HPD) has officially released application materials for two critical housing programs under the City of Yes for Housing Opportunity (COYHO) amendment: the Universal Affordability Preference (UAP) program and updated materials for the Mandatory Inclusionary Housing (MIH) program. Additionally, HPD has confirmed that application materials for the new Qualifying Residential Sites (QRS) program are forthcoming. These developments mark a significant step in implementing the COYHO zoning amendments adopted on December 5, 2024, which aim to transform the city’s residential development landscape. This is an ideal opportunity for developers to contact us to evaluate their portfolios and explore how these programs might enhance project feasibility.

I. Universal Affordability Preference (UAP)

The UAP program, established under the COYHO amendment to the Zoning Resolution, creates an as-of-right pathway for developers in R6 through R12 zoning districts to increase their Floor Area Ratio (FAR) in exchange for providing permanently affordable housing. This program effectively replaces the previous Voluntary Inclusionary Housing (VIH) framework.

A. Key Requirements

The UAP program includes the following essential requirements:

1. Affordability Requirements

• Housing must serve households at or below a weighted average of 60% of Area Median Income (AMI)
• No more than three income bands are permitted, and no band may exceed 100% AMI
• For projects with 10,000+ square feet of Affordable Floor Area (AFA), at least 20% must serve households at or below 40% AMI

2. Distribution Requirements:

• Affordable units must be distributed vertically throughout at least 65% of the building’s residential stories
• Horizontally, no more than two-thirds of units on any floor can be affordable units, unless every floor contains more than two-thirds affordable units This represents a shift from the prior VIH rule, which limited affordable units to one-third per floor, aligning more closely with 485-x requirements

3. Bedroom Mix:

• The bedroom mix between affordable and market-rate units must be proportional, or
• At least 50% of affordable units must be two-bedrooms or larger, and 75% must be one-bedrooms or larger

4. Size Requirements:

• The average size of affordable units by bedroom type must not be less than either:
  • The average size of comparable market-rate units, or
  • The prescribed minimums (Studio: 400 sq. ft.; One-bedroom: 575 sq. ft.; Two-bedroom: 775 sq. ft.; Three-bedroom: 950 sq. ft.), whichever is less
• This represents a departure from VIH, which required strict compliance with statutory minimums regardless of market-rate unit sizes

B. Application Process Improvements

The UAP program introduces several key procedural improvements that significantly streamline the application process compared to the former VIH program:

1. Elimination of Administering Agent Requirement:

• Developers no longer need to retain a pre-approved not-for-profit Administering Agent
• This removes a significant administrative burden that previously required coordination of marketing, leasing, tenant selection, and annual certifications

2. Earlier Community Board Notification:

• Community Board notification now occurs at the time of submission to HPD
• This replaces the previous timeline that allowed up to 45 days before closing

3. Removal of “Tax Memo” Requirement:

• The cumbersome requirement for full disclosure of owned, managed, or controlled properties across all five boroughs has been eliminated
• This removes one of the most time-consuming bottlenecks in the approval process

C. Remaining Process Challenges

Despite meaningful improvements, several procedural hurdles from the VIH process remain:

• Construction Financing Requirement: HPD still requires a construction loan to be in place before issuing final UAP approval, despite no subsidy being provided under UAP
• Building and Land Development Services (BLDS) Review: Selected projects continue to undergo review by HPD’s internal architectural team, which can introduce significant delays

D. Technical Implementation Notes

Several technical aspects of the UAP application process are worth highlighting:

• The “stacking charts” have been replaced by the UAP Workbook, which serves the same compliance modeling function
• The Architect Certification is now embedded within the UAP Workbook rather than existing as a standalone affidavit
• While the UAP zoning text permits conversion projects, the current application includes only checkboxes for new construction and preservation
• The application checklist does not include the Pre-Construction Accessibility Statement, though this omission likely does not indicate a policy change

E. Progress Assessment

While HPD’s transition from VIH to UAP represents significant progress in streamlining housing incentives—especially for market-rate developers seeking to build as-of-right without unnecessary administrative burdens—developers should still anticipate navigating some familiar procedural challenges.

II. Mandatory Inclusionary Housing (MIH) Updates

The MIH program, originally enacted in 2016 and updated in December 2024 under COYHO, applies to projects exceeding 10 units or 12,500 square feet within designated MIH Areas. These areas are mapped through public or private rezonings that increase allowable residential density.

A. MIH Options

Each mapped MIH Area specifies which compliance options are available to developers. Where multiple options are permitted, developers may choose among them:

1. Option 1:

• 25% of Residential Floor Area (RFA) set aside,
• Weighted average income ≤60% AMI,
• No more than three income bands,
• At least 10% of RFA at 40% AMI,
• No income band greater than 130% AMI.

2. Option 2:

• 30% of RFA set aside,
• Weighted average ≤80% AMI,
• No more than three income bands,
• No income band greater than 130% AMI.

3. Option 3 (previously known as the Deep Affordability Option):

• 20% of RFA set aside,
• Weighted average ≤40% AMI,
• No more than three income bands,
• No income band greater than 130% AMI.

4. Option 4 (previously known as the Workforce Option) – Supplemental Only:

• Must be paired with Option 1, 2, or 3,
• 30% of RFA set aside,
• Weighted average ≤115% AMI,
• Up to four income bands,
• No income band >135% AMI,
• At least 5% of RFA at 70% AMI and another 5% at 90% AMI.

B. Off-Site Compliance

MIH requirements may be satisfied on a separate zoning lot if:

• The zoning lot is located within the same Community District or within one-half mile into an adjacent district
• An additional 5% of affordable RFA beyond the applicable minimum is provided

C. Updated MIH Approval Process

The revised MIH application materials reflect significant changes that align with the COYHO amendments:

• The materials now accommodate the increased FAR introduced under COYHO
• Like UAP, MIH eliminates the requirement for an Administering Agent
• Applicants must now notify the local Community Board upon application submission rather than 45 days prior to closing
• Construction loan requirements and BLDS review processes remain in place
• Unit size, bedroom mix, and distribution requirements are now identical to those under UAP
• The horizontal distribution limit now prohibits more than two-thirds of units on any floor from being affordable (unless the entire building exceeds that ratio), bringing MIH into closer alignment with the 485-x tax exemption’s 70% cap

III. Qualifying Residential Sites (QRS)

The QRS program introduces a powerful new as-of-right development mechanism for low-density zoning districts (R1 through R5). Through QRS, developers can access enhanced FAR without a rezoning, unlocking multifamily potential in areas that have historically permitted only one- and two-family homes.

While HPD has not yet released formal QRS application materials, the regulatory framework is already in place, allowing for early planning.

A. Site Eligibility Criteria

To utilize the QRS enhanced FAR provisions under ZR § 23-21, sites must meet specific criteria:

1. Inside Greater Transit Zone (GTZ):

• A site located within an R1–R5 district and within the GTZ qualifies if it:
  • Has a minimum lot area of 5,000 square feet, has frontage along a wide street or is located along the short dimension of a block, and is not within an R1 or R2 district; OR
  • Contains a building with existing community facility floor space as of December 5, 2024

2. Outside Greater Transit Zone:

• A site located in an R1–R5 district but outside the GTZ qualifies if it:
  • Has a minimum lot area of 5,000 square feet, AND
  • Contains a building with community facility space that existed on or before December 5, 2024

3. Senior Housing Exception:

• Sites in the following districts qualify if they contain Qualifying Senior Housing:
  • R3-2, R4 (no suffix), R5, R5B

4. Commercial Overlays Mapped Within R1–R5 Districts:

• Sites located in C1, C2, or C4 commercial overlay districts mapped within, or with a residential equivalent of, an R1 through R5 district may qualify if:
  • The commercial district extends continuously along the street frontage on the block and at least one adjacent block, AND
  • Along the long dimension of the overlay district, no more than 50% of zoning lots are developed solely with one- or two-family homes that existed in that form as of December 5, 2024

5. Paired Manufacturing Districts:

• Sites located in an M1 district paired with an R1 through R5 district may qualify, provided they meet all other applicable criteria and use restrictions

B. Affordability Requirement for Large QRS Sites

For QRS-eligible sites utilizing the increased FAR under ZR § 23-21, affordability requirements are triggered where total residential floor area exceeds 50,000 square feet:

• Developers may build up to the increased FAR, but only a portion may be market-rate
• The “market-rate allowance” is calculated as: [Maximum FAR under § 23-21] ÷ 1.2
• Any floor area above that threshold must be permanently affordable
• For example, with a maximum FAR of 2.0:
  • 2.0 ÷ 1.2 = 1.666 FAR may be market-rate
  • Any FAR above 1.666 must be affordable

C. Affordability Standards for Restricted Floor Area

Where triggered, the affordable housing portion of a QRS project must comply with:

• A weighted average income cap of no more than 80% of AMI
• No more than three income bands
• No single income band may exceed 100% of AMI
• Additional requirements as issued by HPD

Developers must memorialize these affordability obligations through either an Affordable Housing Regulatory Agreement or a Restrictive Declaration recorded against the property, with HPD review and approval required prior to building permit issuance.

IV. Legal Guidance for Your Development Strategy

HPD’s release of UAP and MIH application materials, along with the forthcoming QRS program application, transforms the theoretical zoning advantages introduced under the COYHO into actionable development tools. Now is the time for developers to evaluate their portfolios and determine how these programs might enhance project feasibility.

At Belkin Burden Goldman LLP, our Tax Exemptions and Zoning Incentives Department is fully prepared to file UAP and MIH applications and help clients assess eligibility for QRS projects. Our team can guide you through the nuances of these programs, identify optimization strategies, and navigate the application process with efficiency.

Please contact your BBG attorney of record to address any questions you may have.

This news blast was written by David Shamshovich, a Partner in the Tax Exemptions and Zoning Incentives Department.  David is available by email at dshamshovich@bbgllp.com or by phone at (212) 485-5237 x 394.