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421-a Update: NYS Legislature Does Not Renew/Replace 421-a; June 15, 2022 Vesting Deadline Approaching

On Behalf of | Jun 10, 2022 | Industry Updates

Dear Clients:

The NYS Legislature has adjourned without renewing or replacing the expiring 421-a property tax exemption program. Residential projects looking to vest for 421-a benefits must achieve a “Commencement Date” on or before June 15, 2022 to potentially qualify for this valuable property tax exemption benefit. Given the uncertain legislative prospects for a renewal or replacement of 421-a, it is critical that projects achieve a Commencement Date and gather documentation of the same, on or before the June 15, 2022 deadline. Developers will want to compile such Commencement Date documentation, and purchasers and lenders will want to carefully review such documentation, to be confident their project is vested for 421-a. All other 421-a eligibility requirements must also be met, including achieving a “Completion Date” on or before June 15, 2026, in order for a project to qualify for and be approved by NYC’s Department of Housing Preservation & Development (“HPD”) to receive 421-a benefits.

HPD has issued the following FAQ guidance (as of April 28, 2022, the “FAQ”) regarding achieving a Commencement Date and indicated to us that this FAQ only addresses what DOB permit(s) HPD will recognize as the basis for a Commencement Date in addition to performing the construction work required under 421-a. HPD will not deem issuance of DOB permit(s) alone as constituting a Commencement Date.

The expiration of the 421-a program does not impact the eligibility of vested projects with a Commencement Date on or before June 15, 2022 to eventually be approved for 421-a benefits, nor does it impact the continued eligibility of properties already approved to receive 421-a benefits.

Please contact me or my colleague Nicholas DiLorenzo with any questions you have regarding the expiring 421-a program.

Sincerely,

Daniel M. Bernstein

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