of New York City Department of Housing Preservation and Development (HPD) The city announced Tuesday a new mixed-income financing program aimed at helping mostly affordable projects secure city tax exemptions in an effort to revitalize the city. Dying housing development market.
Developers of projects where at least 70% of the units are affordable; Submit a proposal According to HPD’s term sheet, it will apply to the city to qualify for Chapter 11 tax breaks and city grants.Projects independent of the federal government Low-income housing tax credit The Common Financing Mechanism for Affordable Housing (LIHTC) is applicable and tax breaks are subject to approval by the U.S. government. new york city council.
under Current city regulationsTitle XI, which allows some or all real estate taxes to be waived for up to 40 years, applies only to city-subsidized projects carried out by nonprofit organizations. housing development fund company, or HDFC. However, projects can participate in the new program without HDFC ownership, an HPD spokesperson told Commercial Observer.First of all, take action report by new york timesmakes it easier for subsidized rental buildings to access private financing and Section 11 relief, although the latter often requires years of negotiations with city officials.
“New York City is in the midst of a housing and affordability crisis, and we must explore every creative idea to provide the relief New Yorkers need,” said the Mayor. Eric Adams said in a statement. “As someone who grew up on the brink of homelessness, it is completely unacceptable to make New Yorkers feel insecure about their housing situation.”
City is struggling to hit. federal cap upon tax exempt bonds, used to secure LIHTC. The cap, combined with rising interest rates and expiry of terms, 421a Mid-2022 Tax Reductionhas made it difficult for developers and cities to finance new rental construction in the five boroughs.
Since the expiration of 421a, new development has slowed significantly, especially in the city’s more affordable areas, as developers rely on tax breaks to take on new buildings at lower market rents. The state legislature and governor Kathy Hochul Unable to come up with an alternative to tax cuts, New York State Real Estate Board and construction unions fought over wage regulations and affordability requirements. Naturally, the delay in housing production Mayor may not achieve ‘moonshot goal’ construction and preservation 500,000 units Over the next 10 years.
The new program is Mixed Income Market Initiativedoes not replace 421a, which requires only 30 percent of the apartments in a project to be affordable. The program also requires builders to set aside at least a quarter of their units for very low-income New Yorkers and 15 percent of their buildings for people exiting the shelter system. There is.
The income-restricted portion of the project could make rents affordable for New Yorkers earning up to 120 percent of the city’s income. beaverage income, or $165,230 for a family of three. The affordable units will be rent stabilized for a minimum of 30 years, or as long as the Section 11 tax abatement is in place, according to the city’s term sheet.
Ultimately, only 30 percent of the qualifying building’s units will be available for rent at market rate. In addition to city grants, HPD documents say developers can rely on “public and private funding sources, including but not limited to private financial institutions and private equity.” .
deputy mayor Maria Torres Springer The new program “unveils a new model for combining public resources and private funding to build new housing for working families, seniors, children, and all struggling New Yorkers. “We are focusing specifically on areas where there is little affordable housing.”
Rebecca Baird Lemba can be contacted at: rbairdremba@commercialobserver.com.
