Workaround to 421-a Abatement Program Tested in Gowanus by Gov. Hochul

Since expiring in June 2022, a replacement for the Affordable New York Housing Program (ANYHP) that provided a tax incentive to developers in exchange for affordable housing construction is being tested in the Brooklyn neighborhood of Gowanus by Governor Hochul. Previously known as the 421-a Tax Abatement program, it was replaced with revisions in 2017 by ANYHP. Under the arrangements of Hochul’s program, the “state would take over the Brooklyn sites and rent them back to developers through long-term ground leases. Property owners would then make payments in lieu of taxes, or PILOTS, at a discount to what they would normally pay in property taxes.” The only eligible developments are those that got their footings in the ground prior to the sunset of the 421-a program but might not meet the required 2026 completion deadline. The initiative, which may eventually be expanded to other areas of the city, is one of a series of initiatives recently announced by the governor to support more housing construction.