Hokul wants to change the affordable housing program in New York: what does it offer

In her State of the Union address, New York Gov. Kathy Hokul vowed to end a controversial tax credit to encourage developers to build affordable housing in New York City. The 421-a program expires this year, so lawmakers don't have to do anything to make it go away. But Hokul promised to replace it with something else. The new program will make much more efficient use of public funds to spur more affordable housing, the governor said. City and State New York.

Hokul outlined her idea for such a replacement in her executive budget. She included details of the new program that were not listed in her newsletter., in the Budget bill on spending to support education, employment and families - an unusual place for housing legislation, which is indicated at the very end of the document.

Called a tax credit, the New Yorkers Accessible Neighborhoods Proposal (or ANNY Program) will create a new section 485-w of the state's tax on property. It will provide tenants with a new combination of numbers and letters to confuse non-professionals.

On the subject: If you do not have enough money to rent housing in New York, the government can pay some of it: program conditions

Despite her promise to replace the existing tax break with something new, Hokul's proposal serves more as an adjustment to what's already in the laws. The essence of the program has not changed significantly, but preferential lodging will become more accessible. Despite housing support, the plan does not see the significant changes that housing advocates would like to see. The plan is considered more of a status quo as an incentive for large property developers.

Two options for affordable housing developers

Hokul's new 485-w tax credits offer developers two options to qualify for a ten-year tax credit if they build apartments for rent. Under option A, at least 15% facilities under construction should be affordable, while: 10% of them - have 40% of the average income in the area, 10% - 60% of the average income in the area and 5% - 80% of the average income in the area.

That is, this is housing for families of three with an income of about: $42, $690 and $64. This applies to houses with 440 or more apartments. Option B would require 85% of apartments to be affordable at 920% of the median income in the area. That is, for those whose income is about $30 for a family of three. This applies to houses with less than 20 apartments.

This is a slight improvement over the existing 421-a program, which allows developers to build affordable properties with up to 130% of the median income in the area, which is $139 for a family of three across all three options it provides. developers.

However, this does not provide an incentive to build more affordable housing within the lowest affordability range of 40% of median income in the area and only a small percentage of apartments at that level.

“The 90% area median income (AMI) requirement is definitely better than 130%. But we would like to see more affordable housing for people whose income is about 50% of the AMI or less, they really need help, said Debipriya Chatterjee, senior economist at the Community Service Society. But it's definitely an improvement on the accessibility goals for this program."

What else will change

Other changes include the time frame for which housing will remain available. Option A would keep them permanent, while Option B would provide availability for 35 years, followed by permanent rent stabilization. This compares favorably with the current program, which only maintains affordability as long as the tax credits are in place. That's 25 years with a 10-year phase-out for all options available to developers.

However, the 485-w program did not satisfy housing activists. Despite the improvements, Hokul's proposal still treats affordable housing construction in the same way as 421-a, with big tax breaks for developers on all of their buildings.

"It's the same thing," said Sia Weaver, campaign coordinator for the Justice for All Housing Coalition. “It just doesn’t seem that big.” She wondered how the state would ensure the continued availability that Hokul promised. Weaver called the inclusion the usual "window dressing" until the defenders know more.

Sam Stein, a housing policy analyst with the Public Works Society, said the state could limit subsidies to affordable apartments, or eliminate tax credits entirely and use the lost profits to directly fund affordable housing. “But the new version doesn't have either,” Stein said. It simply adjusts the parameters of an existing program.

The opinion of developers and deputies

Representatives of the real estate industry do not seem unhappy with Hokul's proposed replacement for the 421-a, despite the changes made to it. "The Governor's proposal provides the private sector with an important tool to produce more affordable rental housing on an ongoing basis," New York Real Estate Board President James Whelan said in a statement. "We look forward to continuing to work with the state and city on long-term solutions to address New York's housing supply crisis."

It's still early, and opinions may change as people delve into the details. But the powerful developer lobby has given Hokul its seal of approval.

And the Hokul plan made a good first impression on at least one MP whose opinion is key. "I think she should be commended for coming up with something different," Assemblyman told City & State Steve Simbrovich, chairman of the housing committee of his chamber. He noted that he was still waiting for more information from the governor's office to make sure all the math was working. Simbrowic said he likes the plan's commitment to higher levels of availability.

This is not the first time that the 421-a tax credit has undergone some changes. Most recently, former Governor Andrew Cuomo changed the program in 2017 and attempted to rename it Accessible New York. The Hokul proposal may have new branding and a new section of the law. But it contradicts the fact that it's pretty much an old subsidy with a different name. “The general principles of what she said she was going to replace sounded like we could potentially support them,” Stein said. "However, the proposed changes do not address some of the underlying problems with the 421-a."