On September 16, 2024, the New York City Mayor’s Management Report (MMR) provided an update on various city initiatives, including the Childcare Center Tax Abatement program. This program, launched in February 2023 by the Department of Finance (DOF), aims to incentivize property owners to develop new child care spaces or expand existing centers. The goal is to increase the number of child care seats available to meet the growing demand in the city.
What is the Childcare Center Tax Abatement?
The Childcare Center Tax Abatement offers property tax relief to property owners who construct, convert, alter, or improve their properties to create new child care centers or increase the capacity of existing ones. Eligible property owners can receive an abatement covering up to $225,000 of construction costs for projects completed after April 1, 2022, as specified in the permit issued by the NYC Department of Health and Mental Hygiene (DOHMH). The application deadline for the abatement is March 15, 2025, allowing property owners ample time to plan and apply for this benefit.
Impact of the Program So Far:
According to the latest MMR, the program has already contributed significantly to increasing child care availability in New York City. Here are the key figures from the report:
- Fiscal Year 2023:
- Properties Approved: 22
- Seats Created: 1,791
- Fiscal Year 2024:
- Properties Approved: 19
- Seats Created: 1,348
- Total Seats Created So Far: 3,145 seats across 41 properties, averaging about 77 seats per property.
Looking Ahead to Fiscal 2025:
The city has set an ambitious target of creating 11,000 total seats by the end of Fiscal Year 2025. With 3,145 seats already created, this means an additional 7,861 seats are needed in the next fiscal year. Using the program’s overall average of 77 seats per property, the city would need to approve about 100 to 110 new properties in Fiscal Year 2025 to reach this goal.
This target represents a significant increase compared to the 22 properties approved in Fiscal Year 2023 and the 19 properties approved in Fiscal Year 2024. Achieving this goal will require a substantial effort, but it highlights the city’s commitment to expanding child care access through strategic property tax incentives.
Insight:
The Childcare Center Tax Abatement program has garnered attention in the real estate community for its potential to address the dual challenges of child care access and underutilized property spaces in the city. I recently shared my insights on this topic in an article published by Crain’s New York Business, discussing how this tax break could play a pivotal role in solving these two major issues. You can read more about it here.
Conclusion:
The Childcare Center Tax Abatement program, as detailed in the recent MMR, demonstrates New York City’s proactive approach to addressing the growing need for child care services. By encouraging property owners to create new child care centers or expand existing ones, the city aims to provide more options for families and support the development of a robust child care infrastructure. Property owners interested in applying for this abatement should take note of the application deadline on March 15, 2025, to take advantage of this beneficial program.
