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421-a’s revival, Affordable New York, is one vote away from enactment

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Lawmakers have reached a deal with Governor Cuomo and real estate industry bigwigs

UPDATE 4/7/17—State legislators have decided not to tie Affordable New York’s future to rent regulation, Politico has learned [h/t The Real Deal]. At a press conference on Thursday, Governor Andrew Cuomo said it made little sense to tie the two together, and now state legislators seem to have come to the same agreement. Democrats had been pressing for the two laws to be tied together, but those opposed to that argued that the 421-a replacement could be hobbled as early as 2019. In its current form, it is set to expire in 2022.

Plans to revive the 421-a tax break program have finally solidified after lawmakers reached an agreement on Governor Andrew Cuomo’s version of the program this week. Politico reports (h/t The Real Deal) that Cuomo, lawmakers and real estate industry folk came to an agreement on Tuesday, and the state legislature will now vote on the proposal in the coming days.

The agreement strongly resembles the “Affordable New York” proposal put forth by Governor Cuomo early this year. With this latest agreement, developers will have to pay workers an average wage of $60 per hour for apartment buildings with 300 apartments or more south of 96th Street in Manhattan.

In parts of Brooklyn and Queens that are closer to the waterfront, that average wage will reduce to $45 per hour with the same apartment number requirement.

Last month, some state senators had also proposed expanding this benefit program in the outer boroughs, but ultimately lawmakers decided not to include that in the final proposal.

Now developers will get a 35-year tax break on buildings that utilize this program and agree to maintain a group of rent-regulated apartments for 40 years. That’s up from previous 25-year limit.

The future of this revised program however is very much contingent upon rent regulation. The latter is up for renewal in 2019, but if for some reason it falls through, this 421-a proposal will collapse with it. As of now, Affordable New York is set to be in place until 2022, but if it’s not revived again that year, it will adversely affect rent regulation as well.