421a Tax Abatement

In order to receive 421a benefits, multiple applications must be filed with various New York City agencies. Our firm provides consulting and advisory services to analyze, prepare and submit your application, as well as register affordable units with DHCR (Homes and Community Renewal) in accordance with RGB guidelines to ensure compliance with 421a regulations.

Unit Mix Analysis

Unit Mix Calculation
Twenty-five to thirty percent of all units in a building must be dedicated to affordable housing to receive 421a benefits. To obtain maximization of free market units and remain compliant with this HPD regulation, it is necessary to consider multiple unit mix analyses.

Affordable Unit Allocation
Proper allocation and calculation of allowable rent for each affordable unit must meet certain requirements of the 421a program that include but are not limited to:

  • Affordable and market-rate units sharing the same entrance; and
  • Affordable units not occupying more than 70% of the units on a floor.

Affordable Unit Rent Calculation
Rent amounts for affordable units are based on which utilities tenants pay and the Area Median Income % (AMI %) of the project. The program considers housing affordable when a household spends no more than 30% of its income on rent. The City calculates Area Median Income (AMI) each year.

421a Application

421a Workbook
The 421a workbook outlines information about market rate and affordable units in a building, which includes but is not limited to: rent amounts, AMI %, utilities and size of each unit. HPD uses these factors to calculate rent amounts for affordable units. If all items in the workbook meet 421a requirements, then HPD approves the workbook and assigns a TEO number.

Housing Preservation and Development (HPD) 421a Certificate of Eligibility Application
HPD accepts a 421a Certificate of Eligibility Application after marketing of affordable units commences and a temporary or permanent certificate of occupancy is issued for the property. The full 421a tax abatement application package includes DHCR rent registration, the restrictive declaration and other documents.

Department of Finance (DOF) 421a application
After HPD issues a 421a certificate of eligibility, a separate 421a application must be filed with NYC Department of Finance (DOF). HPD determines if a property is eligible for the 421a tax abatement and DOF administers the program’s tax benefits.

Opinion Letter

Many mortgage and banking professionals request opinion letters that outline potential benefits a property receives as part of the 421a program, such as: affordability options most suitable for the project, rent amounts for affordable units and the amount of assessable taxes.