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Overview

In the annual Budget Bill of April 20, 2024, New York State has established the Affordable Housing Conversion Tax Incentive (AHCCI) program. This initiative provides property tax exemptions for 25, 30, or 35 years for buildings previously used for non-residential purposes, now converted into qualifying residential dwellings, adhering to specified construction and affordability benchmarks.

Benefits

• The program significantly reduces real estate taxes for a period of 25 to 35 years of 100% Tax Exemption depending on the Affordability Option. 
• 100% construction exemption. Up to 12% of ineligible non-residential floor area is covered by the benefit
• No mini tax

Eligibility

• Construction commencement & completion
• • Conversions eligible for the AHCCI program benefits must commence construction by June 30, 2031, and achieve completion by December 31, 2039
• Must be a non-residential building prior to conversion
• •  A non-residential building under this program is defined as a structure (excluding hotels and Class B multiple dwellings) that includes at least one floor, a roof, and a minimum of three walls enclosing the majority of the space. Such buildings must predominantly (at least 90%) be used for commercial, manufacturing, or other non-residential purposes, as evidenced by a certificate of occupancy or other proof acceptable to the Department of Housing Preservation and Development (HPD).
• 6+ residential units
• Rental projects only

Requirements

• Affordability requirements
• •  Different affordability options are provided for different projects depending on the number of the units and location of the property.
• •  Affordable rental units permanently subject to rent stabilization, unlike the 421a restriction listed only for the duration of the benefit
• •  25% Affordability requirement
• •  Weighted average AMI cannot exceed 80% AMI. At least 5% of the units must be @ 40% AMI
• •  No more than 3 income bands, no income band over 100% AMI
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• Prevailing wage for Building Service Employees
• • Prevailing wage requirements apply for projects with 30+ units and are subject to Labor Law 224-a, which governs construction prevailing wage requirements.
• Affordable units must all be on-site and share the entrance with market rate units

Options