Owners, lenders and potential purchasers of NYC multifamily properties subject to regulatory agreements with public agencies should be aware of a positive development from the recently concluded NYS legislative session which was passed by the legislature and, once signed into law by Gov. Hochul (expected shortly), will amend the NYS Private Housing Finance Law (PHFL) (the “PHFL Amendment”).
Public agencies that subsidize affordable housing projects, including but not limited to NYC’s Department of Housing Preservation & Development, are now authorized to modify regulatory agreements to allow affordable housing providers to collect the full value of rental vouchers, even if such rent amount might exceed rents permitted under rent regulation, though this does not alter the legal rent beyond the period of subsidy receipt. This PHFL Amendment is directed at properties with negotiated regulatory agreements which simultaneously impose PHFL affordability rules and Rent Stabilization Law (“RSL”) jurisdiction in exchange for real estate tax benefits and rent subsidies. The simultaneous imposition of PHFL and RSL rules has led to unanticipated consequences for such projects, such as the inability to collect the full rent subsidy if it is a rent higher than the maximum RSL legal rent. We expect that, in the case of regulated properties receiving Section 8 subsidies, owners may be able to receive the full Section 8 maximum voucher payment or contract rent, even if such amount exceeds the legal rent under the RSL provided the public agency agrees to modify a property’s regulatory agreement.
This law change is a significant new consideration for properties with existing regulatory agreements. If you have questions about the PHFL Amendment and what it might mean to a particular property, including how to obtain a full maximum payment standard or contract rent amount in excess of RSL legal rent amounts, please contact Daniel M. Bernstein or Nicholas Kamillatos.
Daniel M. Bernstein
Head of Tax Incentives
& Affordable Housing Dept.