NYC Boosts Affordable Housing Development with Innovative Financing Program

A New Dawn for Affordable Housing in New York City

There's a new initiative in town aimed at revitalizing the residential development market in New York City. The city's Department of Housing Preservation and Development (HPD) has recently introduced a mixed-income financing program. This program is designed to assist projects where the majority of the units, at least 70%, are affordable. Developers can now submit their proposals to the city to qualify for an Article XI tax abatement and city subsidy.

Understanding the New Financing Program

Previously, Article XI tax abatements, which can exempt some or all of a property's taxes for up to 40 years, were only applicable to city-subsidized projects carried out by a nonprofit Housing Development Fund Company (HDFC). This new initiative, however, allows projects to participate without HDFC ownership. This move will simplify the process for subsidized rental buildings to access private financing and Article XI abatements, which often require lengthy negotiations with city officials.

Addressing the Housing and Affordability Crisis

Mayor Eric Adams has expressed his commitment to addressing the city's housing and affordability crisis. He believes that exploring creative solutions like this new financing program is crucial to providing the relief that New Yorkers need. The city has faced challenges in financing new rental construction due to the federal cap on tax-exempt bonds, rising interest rates, and the expiration of the 421a tax abatement in mid-2022.

The Mixed-Income Market Initiative

The new program, known as the Mixed-Income Market Initiative, does not replace the 421a tax abatement, which required that only 30% of the apartments in a project be affordable. This program demands that builders reserve at least a quarter of their units for extremely low-income New Yorkers and set aside 15% of the building for people exiting the shelter system. The affordable units will be rent-stabilized for a minimum of 30 years, or for as long as the Article XI tax abatement is in place.

Looking Forward

Deputy Mayor Maria Torres-Springer has expressed optimism about the new program, stating that it will introduce new models for combining public resources and private financing to produce new homes for working families, seniors, children, and all New Yorkers who are struggling. The focus will be particularly on neighborhoods with little affordable housing. This initiative is a step forward in addressing the housing crisis in New York City and providing affordable homes for its residents.