City Suspends 421-a Benefits to More Than 1,700 Non-Compliant Owners

HPD Commissioner Maria Torres-Springer and Department of Finance Commissioner Jacques Jiha recently announced the suspension of 421-a benefits to more than 1,700 owners who haven’t complied with the requirements of the program. The suspensions are the latest phase of a multi-stage, multi-agency enforcement effort to ensure that properties that receive 421-a tax benefits comply with the rules.

New York State enacted Section 421-a of the Real Property Tax Law, known as 421-a, in 1971 to incentivize the construction of housing in New York City. The law provides a partial exemption from New York City property taxes for the owners of newly constructed, residential multifamily buildings for at least 10 years. For many years, benefits were administered through a two-stage application process because the 421-a statute allowed a developer to apply to HPD for a Preliminary Certificate of Eligibility (PCE) once construction started, and again for a Final Certificate of Eligibility (FCE) when construction was complete. Even so, many owners, especially in smaller buildings with less than 100 units, failed to complete the FCE process.

This first part of the compliance project targeted projects that had received 421-a benefits for at least five years but haven’t yet filed a required FCE with DOF. DOF sent letters notifying owners of 5,268 multifamily tax lots that their 421-a tax benefits will be suspended if they don’t comply with the requirements of the 421-a program. The letters gave owners notice that the tax exemption will be suspended unless they submit their FCE within a 13-month deadline.

On Jan. 31, 2018, DOF notified the 1,788 properties that didn’t meet the deadline that their 421-a tax exemption had been suspended. These buildings range from small, three-family homes to large multifamily properties. City officials also informed city councilmembers which properties in their districts have been suspended and how they can help bring them back into compliance. The city will reinstate owners’ benefits, representing $66 million in tax revenue for 2018, if they come back into compliance by May 1, 2018.