NYC Real Estate Update: Affordable Housing & Other Opportunities in Current Market
In addition to its terrible human cost, the COVID-19 pandemic and state of emergency in NY have profoundly affected real estate and forced reconsideration of the highest and best use of properties and development sites. Owners, lenders, purchasers and other NY real estate stakeholders may want to consider some of the following potential opportunities which we’ve seen evolving over the past year.
- Condo to Rental Conversions: Under construction or newly completed (unsold & never occupied) residential condominium developments can be converted to rentals. If combined with making 25% or 30% of units affordable under the “Affordable New York Housing Program” (“ANYHP” aka “421-a”) such rental properties may be able to qualify for a thirty-five (35) year partial property tax exemption which can substantially improve underwriting. There are key deadlines under 421-a and eligibility requirements which must be met. We can assist in analyzing whether a residential conversion may generate 421-a benefits, project the potential value of such 421-a benefits, prepare and file 421-a applications, amend or terminate declarations of condominium, and advise regarding rent stabilization requirements, leasing and other issues.
- Non-Residential Construction: Many non-residential uses which require new construction or renovation may qualify for partial property tax abatement under the ICAP property tax abatement program for benefits of up to twenty-five (25) years. ICAP requires planning, making certain time sensitive filings and compliance obligations before awarding contracts/commencing construction. We can assist with all aspects of ICAP eligibility including property tax projections showing potential ICAP benefits.
- Supportive Housing: Under-utilized multifamily or hotel properties suitable for use or conversion to use as affordable housing, possibly including supporting housing, may be of interest to NYC. NYC’s Department of Housing Preservation has expressed interest in certain types of under-utilized properties being used as supporting housing for homeless or other individuals and families. We can assist with all aspects of these transactions.
- Conversion of Non-Residential to Residential Space: Possible conversions of office and other non-residential space to residential use. To incentivize such conversions we are looking at the J-51 property tax incentive program, the former 421-g property tax incentive program and potential legislative solutions to provide property tax incentives and other incentives that would likely require providing a substantial amount of affordable housing.