New 421-a Legislation Now Required to Extend Exemption
News reports indicate that there will be no agreement on construction wages between the Real Estate Board of New York and the Building and Construction Trades Council by today's deadline. As a result, projects commencing construction after December 31, 2015 (including certain conversions to residential use and certain expansions of existing properties) cannot qualify for 421-a property tax exemption benefits unless the 421-a program is extended or amended by new legislation. The time frame for such an extension or amendment is unknown.
For the time being, we recommend that residential developers with future projects whose underwriting assumes property tax exemption benefits under the 421-a Statute hold off on land and development rights acquisitions, closing on financing, and other pre-development activities and expenditures until there is clarification on an extension of the 421-a Statute and the details of such legislation.
This past June, because of legislative disagreements in Albany concerning 421-a and Rent Regulation, the 421-a Statute lapsed for less than two weeks, so the short-term unavailability of the 421-a Statute is not completely without precedent. We will be monitoring legislative developments relating to 421-a going forward.
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