Sisto Martello, CEO and President of Design 2147, answers commonly asked questions about the new 485x tax incentive.
Q. What is 485x?
A. 485x is the Affordable Neighborhoods for New Yorkers (ANNY) tax incentive. It was recently enacted as part of the New York State budget, and it replaces the previous 421a affordable housing tax credit that expired on June 15, 2022.
Q. How do affordable housing tax credits work?
A. Developers need to provide a certain percentage of affordable units in order to receive a tax credit for certain programs for 40 years.
Q. What does “success” in the affordable housing market look like? More buildings? More people housed? Higher profitability that attracts better developers?
A. Success to me is defined as how quickly we can construct the affordable units and market-rate units to assist the current housing crisis. Also, on the larger projects, there will be a minimum pay scale for the construction workers, thus fueling the New York City economy. The negative to that is the cost of construction: Is it going to get too high and scare developers away?
Q. By that measure of “success,” do you think 485x will be more successful than 421a in creating affordable housing?
A. I’m not sure it will be more successful, but it is different based on the current needs of the City. Being different is a good thing, as it will evolve. Developers will adapt as they always do.
Q. What is the biggest misconception developers have about programs like 485x?
A. I think this program has different options for all sizes of projects, from small to very large. It is not only for the very large projects, but it can fit the needs of everyone even on the smaller structures. There is an option for everyone.
Q. What does the new legislation mean for developers that had projects in development when 421a expired?
A. The current 421a program has been extended for completion until June 15, 2031, so all buildings that are in construction at this time have been given an extension. Personally, I think this is a home run for developers who were in the midst of building and no longer will be under pressure to complete the projects, as financing played a big role in getting the projects started.
