Last week New York’s $237 billion FY 2025 budget was released. It takes significant steps to
increase housing supply and addresses other policy issues such as affordable housing insurance
discrimination, deed theft and tenant protections and funding was maintained for vital housing
programs. However, the budget once again excluded the Housing Access Voucher Program,
which would have provided rental assistance to low-income New Yorkers experiencing
homelessness and at risk of eviction. NYHC will continue to advocate for this and other
desperately needed resources for the most vulnerable renters.

“We applaud Governor Hochul and the NY State Legislature for reaching an agreement on a
wide range of policy solutions to address NY’s housing shortage. Tax incentives, zoning changes
and new funding will help build more housing and most importantly it will make NY a more
affordable place to live in for renters and homeowners. It won’t happen overnight, but this
agreement will help increase our housing supply across the state by increasing
affordable housing development with tax incentives; allowing Accessory Dwelling Units;
facilitating conversions to residential housing; and by fighting insurance discrimination which is
making housing more expensive. Albany lawmakers have come together on solutions that will
benefit New Yorkers for future generations and we hope they will continue discussing
comprehensive solutions to address the housing crisis. While new protections will help limit rent
increases for some renters, more resources are needed to help low-income families and people
experiencing homeless endure the crushing realities of the tight housing market.”
Statement from Rachel Fee, Executive Director of New York Housing Conference on the
FY2025 New York State Budget

New York City Housing Policy Changes

Establishes Affordable Neighborhoods for New Yorkers Tax Incentive (ELFA Part U)
The budget replaces the expired 421-a program with Affordable Neighborhoods for New Yorkers
(485-x), a new tax incentive for rental and homeownership construction in NYC for projects
vested between June 2022 and June 2034 with six or more units of rental or homeownership.
Terms of the benefit and wage requirements are determined by the size and location of projects.
All projects receive a 100% exemption during construction up to three years. For rental projects
with income restricted units, only the affordable units will be subject to rent stabilization,
affordability is required in perpetuity and at least half of affordable units must be two bedrooms or
larger and no more than 25% can be smaller than one bedroom. For homeownership projects,
affordability is required for 20 years.

Minority and Women Owned Business Enterprises (MWBE) Requirement
The bill requires that eligible sites make all reasonable efforts to spend 25% of total design and
construction costs on MWBEs.
The bill creates new notification requirements and enforcement terms. It includes language to
allow HPD to determine appropriate fines for violations of affordability and rent stabilization terms.
It requires owners to register with HPD within 6 months or pay a penalty equal to the application
fee. They must also notify both HPD and the NYC Comptroller of the anticipated start and end
date of construction and the existence of a labor agreement within 3 months prior to construction.
Failure to provide such notice will result in fines up to $5,000 and forfeiture of the benefit. Further,
the Comptroller will have the authority revoke benefits for violating wage agreements for
construction or building service employees.

NYHC strongly supports an as of right tax abatement to encourage mixed income rental housing that
better reflects the needs of low-income New Yorkers. While we were advocating for lower income levels
given the huge increase in AMI in recent years, we are pleased the Governor and the Legislature were
able to come to an agreement on a program that eliminates the highest incomes, maintains affordability
in perpetuity and better addresses cross subsidy challenges.

Extends 421-a Project Completion Deadline for Vested Projects (ELFA Part T)
The deadline to complete 421-a projects already in the pipeline is extended from June 15, 2026
to June 15, 2031 and excludes the highest income affordability options, which produced 30% of
units at 130% AMI. The bill requires HPD to develop an application form within 60 days and for
developers to submit such form within 90 days of it becoming available.

NYHC supports extending the deadline to allow projects already in the pipeline to be completed
and the exclusion of the highest income units.

Requires Annual Audits of 421-a Projects (ELFA Part JJ)
HPD must develop a program to conduct annual random audits of 421-a projects receiving
benefits since 2014 for compliance with rent registration, affordability, and rent stabilization
requirements under the affordable New York housing program. The first audit will be due by
December 31, 2025 and the results will be made public. No more than 25% of eligible properties
can be subject to an audit each year and no project can be audited in two consecutive years.

Affordable Housing from Commercial Conversion (AHCC) Tax Incentive (ELFA Part R)
Establishes the AHCC program in NYC to provide a tax exemption for commercial to residential
conversions that produce at least six rental units. It would require at least 25% of units be
affordable in perpetuity, averaging at or below 80% AMI. At least 5% must be affordable at or
below 40% AMI with none exceeding 100% AMI. The program applies to projects vested from
January 2023 to June 2031 and completed by 2039.

The tax exemption would be subject to prevailing wages for building service workers during the
benefit period except in buildings with fewer than 30 units or that receive substantial government
assistance or subsidy to develop affordable housing. The exemption also establishes terms for
revoking the benefit for violating wage or affordability requirements.

    The terms of the benefit are determined by when buildings are vested and whether they are in the Manhattan prime development area (south of 96th street):

    By June 30, 2026: 35-year benefit
    100% exemption during construction
    First 30 years: 90% exemption in Manhattan prime and 65% outside
    Year 31: 80% exemption in Manhattan prime and 50% outside
    Years 32-35: 10% annual decrease in exemption in all areas

    By June 30, 2028: 30-year benefit
    100% exemption during construction
    First 25 years: 90% exemption in Manhattan prime and 65% outside
    Year 26: 80% exemption in Manhattan prime and 50% outside
    Years 27-30: 10% annual decrease in exemption in all areas

    By June 30, 2031 – 25-year benefit
    100% exemption during construction
    First 20 years: 90% exemption in Manhattan prime and 65% outside
    Year 21: 80% exemption in Manhattan prime and 50% outside
    Years 22-25: 10% annual decrease in exemption in all areas

    NYHC strongly supports commercial conversion tax incentive benefits requiring affordable
    housing and we are happy to see the affordability requirement increase from 20% proposed in
    the Executive Budget to 25% as proposed in the Senate one-house.

    Reforming Floor Area Ratio Cap (ELFA Part Q)
    The budget allows NYC to exceed the 12-FAR cap of certain buildings, in accordance with local
    zoning laws, ordinances or resolutions. It clarifies that FAR can only be exceeded for projects that
    have gone through the public review process and are subject to Mandatory Inclusionary Housing
    (MIH) or equivalent affordability requirements.

    The bill excludes historic districts and lots with joint live work quarters for artists or lofts. It also
    includes language requiring the offer of compensation and relocation assistance for existing
    tenants in buildings that are demolished to rebuild beyond 12 FAR.

    NYHC has been championing this policy change for nearly a decade.

    Basement Apartment Legalization Pilot in NYC (ELFA Part S)
    A pilot program is created to convert occupied some illegal basement apartments in NYC to legal
    dwelling units that meet health and safety standards. It requires standard to be established in
    consultation with the NYC fire department, the NYC department of buildings, and the NYC office
    of emergency management. Units located in flood hazard areas will need to meet additional

    The program exempts any necessary zoning changes from environmental review but does
    require a public hearing and approval by the City Planning Commission and approval by the City
    Council. It provides amnesty to property owners who convert these units and a right of first refusal
    to return for tenants who need to be removed while their units are brought into compliance. It also
    includes language for court action and compensation for tenants who are denied their right of first

    The Community Districts covered include:
    Bronx CDs 9, 10, 11, 12
    Brooklyn CDs 4, 10, 11, 17
    Manhattan CDs 2, 3, 9, 10, 11, 12
    Queens CD 2

    NYHC strongly supports the creation of a basement apartment legalization program to improve housing
    quality and safety for current residents of illegal basement and cellar apartments. However, we regret that
    many Queens & Brooklyn neighborhoods that would benefit most were excluded from the pilot.

    Increases the Amount Recoverable by an Owner for Certain Individual Apartment
    Improvements (IAI) (ELFA Part FF)

    The budget increases the amount that can be recouped for improvements to individual rent
    stabilized apartments from $15,000 to $30,000 and to $50,000 for vacant apartments that were
    continuously occupied for at least 25 years prior to vacancy. It also makes these increases

    NYHC recognizes that changes to IAIs were inadequate to recoup the cost of improvements
    through rent increases. We strongly opposed proposed language to reset the rents of long tenancy vacant apartments which could have led to rent increases of over 100%. We believe this
    IAI reform is a reasonable compromise balancing owners need to recoup investment with

    Enacts Good Cause Eviction (ELFA Part HH)
    The budget includes good cause eviction protections for certain unregulated renters in NYC and
    allows localities outside of the city to opt-in, with the flexibility to make some changes in local law.
    The bill requires a “good cause” to evict or refuse to renew a lease. Reasons considered good cause include:

    • Non-payment of rent, unless it was due to an “unreasonable” rent increase. (Rent increases of 5% plus the annual change in the consumer price index or 10% whichever is lower, are presumed unreasonable.)
    • Lease violations
    • Nuisance or damage
    • Breaking the law and the remedy involves vacating the unit
    • Illegal use of a unit
    • Unreasonable refusal of access to unit
    • Refusal to agree to reasonable changes at lease renewal
    • Good faith recovery for the landlord or family member to occupy as their primary
      residence, unless the tenant is 65 years or older or disabled.
    • Good faith effort to demolish the building
    • Good faith withdrawal of the unit from the rental market

    The bill exempts:

    • Affordable housing because renters in regulated and public housing already have a right to lease renewal and rent increases are limited by other state and federal laws.
    • Owner-occupied buildings with 10 units or less.
    • Owners with portfolios of 10 units or less, however must provide proof if they claim this exemption in court.
    • Cooperatives and condominiums
    • Units with rent that exceed 245% FMR, or currently $6,742 for a two-bedroom
    • New construction for 30 years, beginning with buildings built on January 1, 2009.
    • Other forms of housing such as retirement communities, hospitals and adult care facilities, manufactured homes, hotel rooms, dormitories and religious housing

    Landlords of units subject to good cause will have to give tenants notice a rent increase above
    the rent reasonableness threshold and provide justification for the increase. They will also have to
    give notice and the reason for nonrenewal. Landlords who are exempt from good cause
    provisions will have to give the reason for the exemption.

    While NYHC did not take a position on the original good cause bill, our analysis suggests that the
    exemptions in this budget will result in protections for a relatively narrow universe of unregulated
    tenants. For example, while we cannot cross reference with portfolio size or owner occupancy,
    we know that about 140,000 condo and co-op units are exempt and 75% of non co-op/condo
    unregulated rental units are in buildings with fewer than 10 units.

    Public Housing
    The budget includes $140 million for the New York City Housing Authority, significantly less than
    the $500 million proposed in both the Senate and Assembly one-houses and $75 million for
    public housing outside of NYC.

    NYHC strongly supports state funding for NYCHA capital improvements.

    Statewide Housing Policy Changes

    Housing on State Land (Capital S8304-D)
    The budget includes $250 million as part of a larger $500 million commitment to develop up to 15,000
    units of housing on state-owned sites across New York as part of the Governor’s Redevelopment of
    Underutilized Sites for Housing (RUSH) initiative. Sites will become available on an individual basis as the
    state issues requests for proposals to develop them.

    Strengthen Pro-Housing Communities Designation (Capital)
    The budget enables the State to make the Pro-Housing Communities certification a requirement
    to receive up to $650 million in state discretionary funding programs for housing, economic
    development and transportation.

    NYHC supports strong incentives to build housing, but we continue to call for a statewide
    framework to increase housing supply and eliminate exclusionary zoning.

    Address Discrimination in Affordable Housing Insurance (ELFA Part BB)
    The budget includes language that property and liability insurers cannot “cancel, refuse to issue,
    refuse to renew or increase the premium of a policy, or exclude, limit, restrict, or reduce coverage
    under a policy” based on the existence of income restricted units, the source of income of the
    tenants or shareholders, the receipt of government subsidy, or the owner being a public housing
    agency or a limited equity co-op. It also prohibits them from asking about these factors in an

    NYHC strongly supports this language to ban discrimination against affordable housing in
    both property and liability insurance. Recent NYHC analysis found blatant discrimination in
    correspondence between our partners and brokers/insurance companies.

    Opt-In Multifamily Tax Incentive (ELFA Part EE)
    The budget creates an optional multifamily rental tax exemption for localities outside of NYC for
    new construction and conversions on vacant and underutilized land with at least 10 units of rental
    housing and income restricted units that serve an average of 60% – 80% AMI, with a max of
    100% AMI. Income restrictions last for the benefit period, however rent restricted tenants have a
    right to lease renewals for their entire tenancy. In mixed use buildings, at least 50% of the square
    footage must be rental housing.

    Buildings that are 25% affordable will receive a 100% exemption during construction for up to 3
    years followed by an exemption for 25 years that starts at 96% and decreases by 4% each year.
    Prevailing wage applies for building service employees except in buildings with less than 30 units
    or that have substantial government subsidy.

    Buildings that are 100% affordable will receive a 100% exemption during construction up to 3
    years followed by a 30-year exemption. Up to 2 units may not be income restricted to be occupied
    by property employees such as superintendents as part of their compensation.

    NYHC supports standardizing tax incentives for rental housing with affordable housing
    requirements across the state.

    Opt-In Accessory Dwelling Unit (ADU) Tax Exemption (ELFA Part GG)
    The budget includes language to define ADUs as a housing accommodation in the human rights
    law and creates the terms of an optional ADU tax exemption on the increase in value of property
    that results from the addition of an ADU.

    Localities may adopt the exemption after a public hearing exemption. It is limited to ADUs added
    to single and two-family homes and cannot exceed $200,000 in increased market value. For the
    first five years, it will provide a 100% exemption on the increase in assessed value. Over the
    following five years, it will phase out based on a percentage of the increase in assessed value.

    NYHC strongly supports ADU legalization and tax incentives that support homeowners who want
    to create them. We will continue to explore the additional policy implications if any, of adding
    ADUs to the definition of housing accommodation statewide.

    Safety Standard for Single Exit, Single Stairway Buildings (ELFA Part V)
    The budget includes language to require the State Fire Prevention and Building Code Council
    conduct a study relating to standards for egress including existing building codes for single-exit,
    single stairway multifamily buildings that are above three stories and up to at least six stories. The
    bill requires the study be completed by July 1, 2026 and allows the council to amend the uniform
    code based on its findings.

    NYHC strongly supports allowing single-stair construction to reduce the cost of
    building housing and to make more efficient use of sites. This is a “no cost” way for the
    Legislature to help bring down housing costs.

    Heirs Property Protection and Deed Theft Prevention Act of 2024 (ELFA Part O)
    The budget includes language that establishes deed theft as a specific form of larceny, creates a
    clear definition of the crime of deed theft and authorizes the Attorney General to prosecute such
    crimes. It further prohibits outside parties that did not inherit shares of a property from initiating
    partition actions and establishes a right of first refusal for heirs when an outside party makes an
    offer to purchase one owner’s shares. These changes limit the ability of predatory investors to
    acquire interests in inherited property and pressure homeowners into selling their family homes.
    The bill also establishes a Transfer on Death Deed, which would allow homeowners to determine
    the beneficiary of their property, without the necessity of drafting a formal will.

    New York Housing for the Future Homeownership Program and the New York Housing for
    the Future Rental Housing Program (ELFA Part KK)

    Two new housing programs are established and provided $150 million to provide assistance in
    the form of payments, grants and loans to support affordable rental housing and limited equity
    cooperative homeownership opportunities serving households up to 130% AMI and projects
    would be subject to prevailing wage. Much of the details of the programs are to be determined by

    USDA 515 Rental Property Preservation (Capital)
    The budget includes $10 million to preserve USDA 515 rental properties whose mortgages and
    affordability protections are set to expire. These projects are affordable rentals built with USDA
    funding in the 1990’s and early 2000’s in rural areas of the state. There are about 400 of these
    properties encompassing 22,000 affordable rental apartments in New York. This is less than the
    $25 million proposed in the Senate one-house.

    NYHC strongly supports this funding which is a top priority for our partners at the Rural Housing
    Coalition of NY.

    Infill Housing Pilot Program (Capital)
    The budget includes a Senate proposal for $40 million for an infill housing program to construct
    one to two family homes for purchase affordable to low-moderate income buyers in Buffalo,
    Binghamton, Albany, Syracuse, and Rochester. The program would prioritize vacant, abandoned,
    or under-utilized land owned by the municipality.

    Vacant Apartment Repair and Rehabilitation Program (Capital)
    The budget includes $40 million to provide grants of up to $75,000/unit to repair vacant
    apartments outside of NYC, a modified Senate proposal.

    Clarifies When a Landlord-tenant Relationship Exists (ELFA Part II)
    The budget clarifies that squatters are not tenants and defines squatters as those that intrude
    upon real property without the permission of the person entitled to possession and continue to
    occupy the property without title, right or permission of the owner or owner’s agent or a person
    entitled to possession.

    Other Budget Highlights
    As seen in the table below, funding was restored for programs that were cut in the executive
    budget, such as the Rural and Neighborhood Preservation Programs, the Small Rental
    Development Initiative and Access to Home.

    $40 million was included for the Homeowner Protection Program (HOPP) to prevent foreclosure
    and $15 million for eviction prevention. NYHC supports funding for both of these programs,
    however we echo concerns from other advocates that this was not additional funding, but
    diverted from the Interest on Lawyer Account Fund (“IOLA”) which already supports civil legal
    services for low-income New Yorkers. We urge the Governor and Legislature to adequately fund
    all of these programs.