BBG News

Mayor Attempts to Address the 421-A Void With New Affordable Housing Initiative

Dec 26, 2023


On January 31, 2023, Governor Kathy Hochul attempted to address the affordable housing crisis in New York City.  Her  proposed extension to the Affordable Housing New York program (“421-a”) failed.  Her brand new tax incentive for commercial conversions in New York City was never entertained in the New York State Legislature.  A replacement to the J-51 affordable housing program succeeded, but was extremely limited in its scope.  In July, the Governor created a payment in lieu of taxes (“PILOT”) program that provided a geographically-limited 421-a equivalent to new developments in Gowanus, Brooklyn.

With roadblock after roadblock from the State, Mayor Adams launched a task force to save affordable housing projects that were put at risk after the June 15, 2022 expiration of the 421-a program. The first result from this program is the Mixed Income Market Initiative program (“MIMI”).

The Mixed Income Market Initiative Program

MIMI will provide new construction financing for projects that produce affordable units, as detailed in part herein, in “high-opportunity neighborhoods,” (i.e., wealthier neighborhoods where the market-rate units can subsidize the affordable units).   This marks the first major push from the City to fill the void left by 421-a.  The Mayor announced that the Department of Housing Preservation and Development (“HPD”), will support “innovative financing models” include Low Income Housing Tax Credits (“LIHTC”).

MIMI is expected to require 120% Area Median Income (“AMI”) for 70% of the apartments in a given project (“Affordable Units”).  At least 15% of the Affordable Units must be available for those who were formerly homeless.  Finally, 7.5% of the Affordable Units must be available to those with 30% AMI.  All Affordable Units must be available at least 20% below market.

According to HPD, the regulatory term will last 30 years or more.

Application Process

The City is currently requesting feedback, and has posted a Request for Expressions of Interest (“RFEI”) on their website.  These proposals must be submitted as a PDF online with HPD by February 15, 2024 at 4:00 PM.  As per the City, it will include (1) the proposed organizational structures, project narratives, and developer experience and description; (2) financing pro-forma and narrative and appraisal/market study; and (3) a zoning analysis and design.

The Benefit

According to the RFEI, tax benefits are conferred under the Article XI or other tax exemption programs.  The City’s summary states that MIMI projects meeting affordability distribution requirements will qualify for a “discretionary Article XI tax exemption” approved by the New York City Council, and restricted by the HPD Regulatory Agreement.  The benefit would run up to 40 years, and may not include commercial spaces, but may include parking and community facilities “if restricted in a manner acceptable to HPD.”

Contact Us
For more information or if you have any questions, please reach out to your BBG attorney of record or contact us here.

Written by: Zachary L. Nathanson, attorney in the Firm’s Administrative Law Department.

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