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Office-to-residential conversions have been a popular idea for how to simultaneously deal with the city’s housing shortage and its office surplus since the pandemic hit, and a tax incentive included in this year’s state budget aims to turn them into a reality.
The Adams administration officially kicked off its implementation of the program Friday, launching a portal on the Department of Housing Preservation and Development’s website with detailed information about how the incentive will work. The agency expects to start accepting applications for it later this year.
Here are the key things to know about the incentive.
Timeline
Work on all eligible conversions must have started no earlier than 2023 and no later than July 2031. The projects must be finished by Dec. 31, 2039. The tax benefit will last 35 years for projects where work starts before July 2026, 30 years for projects where work starts before July 2028 and 25 years for projects where work starts before July 2031.
Affordability
Eligible projects must make 25% of their residential units permanently affordable to households earning no more than 100% of the area median income, or about $140,000 for a family of three. At least 5% of the affordable units must be for households earning no more than 40% of the area median income, or about $56,000 for a family of three, and the overall average for the project must be no higher than 80%, or about $112,000 for a family of three.
Size
Buildings must include a minimum of six residential units to be eligible for the program. At least half of the affordable apartments must be two-bedroom units or larger, and no more than 25% of them can be studios. Alternately, the sizes of the affordable units must be proportional to the sizes of the market-rate units.
Geography
Conversions can happen anywhere in the city, although the tax benefits will be greater for those in the Manhattan prime development area, which is any tax lot in the borough below 96th Street. Projects within that area will receive a 90% tax exemption for the first 20 to 30 years of the program, depending on when the project starts. This will decline by 10% per year for the final five years, ending at a 40% exemption. At projects outside of the Manhattan prime development area, the tax break will start at 65% and then go down to 10% by the final year.
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Eddie Small , 2024-06-07 18:32:55
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