New York's Cooperative and Condominium Community
Gov. Kathy Hochul has proposed replacing the soon-to-expire Affordable New York (421-a) property tax incentive program with a new program to be known as Affordable Neighborhoods for New Yorkers, or ANNY. If passed by the Legislature, the new plan could inspire a spurt of new developments of affordable co-ops and condominiums.
In a bulletin, the law firm Nixon Peabody writes: "ANNY provides another much-needed tax incentive to support the development of affordable homeownership, especially at a time when lenders have tightened lending requirements for co-op purchases. Therefore, ANNY may serve as the missing tool to increase the development of affordable condominiums, by providing for an as-of-right exemption."
Adds the website 6SqFt: "The governor’s plan would provide more benefits for condo and co-op projects than the existing 421-a program. The current program provides a full tax exemption for 14 years and a 25% exemption for six years for condos and co-ops. Hochul’s plan gives co-ops and condos a full tax exemption for up to three years during construction and for 40 years after work is complete."
For co-op shareholders and condo unit-owners to qualify for the tax exemption, they would have to use the apartment as their primary residence for at least five years. All units must be sold to families with incomes not exceeding 130% of the area median income, adjusted for family size. Buildings that receive the tax exemptions will operate under a Regulatory Agreement with oversight from the state's Department of Housing Preservation and Development to ensure compliance with resales, primary residency requirements and other program restrictions. The staffs in such buildings must be paid prevailing wages.
Since this is New York City, there has, predictably, been pushback. Affordable housing advocates have derided Hochul's proposal as a "handout" to developers. The Legal Aid Society said in a statement: “We urge the Legislature to reject this proposal outright so that the city can reallocate these tens of millions of dollars to expand already proven housing programs — including a highly successful voucher program that has already connected thousands of New Yorkers to safe and affordable housing.”
But the Real Estate Board of New York greeted the proposal warmly, calling Hochul's proposal "an important tool" for producing rental, co-op and condo housing "at deeper levels of affordability permanently.”
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