T
he Department of Housing Preservation and Development has released proposed rules for two key property tax breaks: 485x, which incentivizes multifamily housing development, and 467m, which encourages office-to-residential conversions. These rules are crucial for developers as they determine how to apply for the tax exemptions. State legislation passed in April created these programs with little room for city modification.

    HPD Commissioner Adolfo Carrión emphasized the need for swift action, stating that "people need homes now." The proposed 485x rules clarify what constitutes a "reasonable effort" by developers to spend at least 25% of contract costs on minority- and women-owned businesses. However, real estate experts note that it's still unclear how projects initiated before 485x passed but after 421a expired will meet this requirement.

    The city's proposed rules also decrease the rents for affordable apartments allocated through a lottery, marketing them at rates affordable to households earning 77% of area median income (AMI) instead of 80%. This change aims to increase lower-income family access. While HPD believes it won't disrupt financing, it may affect underwriting.

    Developers are still awaiting clarification on penalties for non-compliance with affordability and wage requirements. The state legislation indicates that penalties will be calculated as a percentage of program benefits, but cannot exceed 1,000%. HPD plans to release a separate penalty schedule.