BBG News

HPD Proposes New Rules for 485-x Affordable Housing Program: Public Hearing on November 6, 2024

Oct 24, 2024

The New York City Department of Housing Preservation and Development (HPD) has published proposed rules for the New York State Real Property Tax Law (RPTL) §485-x, the successor program to the now expired RPTL § 421-a Affordable New York program. HPD will hold a public hearing online Wednesday, November 6, 2024. The proposed rules and instructions on how to comment and attend the hearing are available here. The 485-x program, also known as Affordable Neighborhoods for New Yorkers Tax incentive program (“ANNY Program”), has an anticipated effective date of January 2025 subject to HPD publishing final rules. Some of the most important provisions of the rules are discussed below.

The 485-x program is similar to the 421-a program, providing tax credits to developers of certain new constructions and conversions of existing buildings that meet certain affordability thresholds. The affordable units in eligible 485-x projects are subject to permanent affordability restrictions and rent-stabilization. Units built under 421a (16) become exempt from Rent Stabilization when they exceed the luxury deregulation threshold. Market units built under 485x are not subject to rent stabilization regardless of the rents charged and paid.

Eligible projects must have commenced construction after June 15, 2022, and on or before June 15, 2034, and complete construction on or before June 15, 2038. Affordability options fall into different categories based upon building-size and location as follows:

  • Large Rental Projects with 100 or more residential dwelling units receive a 35-year benefit and up to three years of Construction Period benefits
    • 25% of the units must be Affordable Housing Units at an average of 80% Area Median Income (AMI) with no more than 3 AMI income bands allowed with the highest band capped at 100% AMI.
  • Very Large Rental Projects with 150 or more residential dwelling units located in Zones A[1] and B[2] that meet the eligibility requirements receive a 40-year benefit, up to five years of Construction Period benefits in Zone A and up to three years of Construction Period benefits in Zone B.
    • 25% of the units must be Affordable Housing Units at an average of 60% of AMI with no more than three AMI income bands allowed with the highest band capped at 100% of AMI
  • Modest Rental Projects with at least 6 and no more than 99 residential dwelling units that meet the eligibility requirements receive a 35-year benefit and up to three years of Construction Period benefits.
    • 20% of the units must be Affordable Housing Units at an average of 80% AMI with no more than three AMI income bands are allowed with the highest band capped at of 100% AMI.
  • Small Rental Projects with at least 6 and no more than 10 residential dwelling units that meet the eligibility requirements receive a 10-year benefit and up to three years of Construction Period benefits
    • At least half of the units must be rent stabilized.
    • The project cannot be located in Manhattan.
    • The project cannot be located on a zoning lot that permits residential floor area exceeding 12,500 sq. ft.
  • Homeownership Projects located outside of Manhattan with at least 6 units and an assessed valuation that does not exceed $89 per square foot that meet eligibility requirements receiver a 20-year benefit and a Construction Period benefit for up to three years.
    • Each owner of a unit in a Homeownership Project must agree in writing to maintain the unit as their primary residence for at least the first five years of ownership

The proposed rules require the maximum initial rents for the affordable units to be reduced by three percentage points less than the stated AMI. For example, initial rents would be set at 77% AMI for an 80% AMI unit.

One of the biggest deviations from the 421-a program is the requirement that all eligible sites make “all reasonable effort to spend on contracts with minority and woman owned business enterprises at least 25 percent of the total applicable costs.” RPLT § 485-x(4). The proposed rules require that at the time of application for 485-x benefits, the applicant submit an affidavit that they have either 1) met the minority and woman owned business participation or 2) have made “reasonable efforts” to do so. Reasonable efforts include demonstrating the applicant has made timely requests for assistance to the New York City department of Small Business Services (“DSBS”), and providing a description of how recommendations made by DSBS were acted upon and/or providing an explanation why the applicant could not meet the minority and woman owned business enterprises goals. Additional factors will also be considered including advertisements of opportunities in media or publications for minority and woman owned business enterprises. The rules do not include any exceptions for contracts entered into before this rule was introduced.

Large or Very Large Rental projects require construction wages of at least $40.00/hr with yearly increases of 2.5%. Very large projects with at least 150 units in Zones A and B are subject to wages between 60 and 65 percent of the greatest prevailing wage rate within a classification or between $63.00 and $72.45 per hour, whichever is less. Additionally, buildings containing 30 or more units require all building service employees to receive the prevailing wage unless the building contains only affordable housing with not less than 50% at 90% AMI.

HPD has begun to publish application forms for 485-x. Currently, applications for Small Rental Projects and the workbook and workbook affidavits are available on their webpage. Any comments to the proposed rules must be submitted to HPD on or before the November 6, 2024 hearing date.

Contact Us
For more information or questions about the proposed 485-x Affordable Housing Program rules, please contact us.

Written by:  Ryan Matthews, Associate, Administrative Law Department
Edited by: Martin J. Heistein, Partner and Co-Chair of Administrative Department


[1] Zone A is defined as any tax lot located entirely south of 96th street in the borough of Manhattan or in any of the following neighborhood tabulation areas as most recently defined by the Department of New York City Planning: Brooklyn 0101, Brooklyn 0102, Brooklyn 0103, Brooklyn 0104, and Queens 0201.

[2] Zone B is defined as any tax lot which is located entirely in any of the following neighborhood tabulation areas as most recently defined by the Department of New York City Planning: Brooklyn 0201, Brooklyn 0202, Brooklyn 0203, Brooklyn 0204, Brooklyn 0601, Brooklyn 0602, Brooklyn 0801, Queens 0105, and Queens 0102.
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