New York Governor Kathy Hochul's $227 billion budget includes proposals that would make it easier to convert older office buildings into residential use.
Property-tax exemptions would be offered to landlords who agree to include affordable housing in their office conversion projects, according to the state
"The time has come for this. Buildings should take on a second life," said Mitch Korbey, chair of Herrick Feinstein LLP's land use and zoning group. "But if we don't move on the tax relief front, we're not going to be able to produce the housing."
New York City's office market is struggling to recover as workers slowly return to the office. In response, some landlords are exploring opportunities to transform empty offices to apartments. But conversions in the city are expensive and highly regulated.
Developers converting offices into apartments with at least 20% affordable units would qualify for a property tax break for 19 years. At least 5% of the units must be affordable to households whose income doesn't exceed 40% of the area median income, or
Projects would receive a full property-tax exemption during the construction period. After construction is complete, properties south of 96th Street in Manhattan would get a 50% exemption for 15 years, while properties outside that area would get a 35% exemption for that period. The tax breaks decline over the next four years.
For instance, the former AIG headquarters building on 70 Pine St., completed in 1932, in Manhattan's Financial District was
Conversions would also be exempt from a state law that caps density for residential properties, under the governor's proposal.
Hochul, who called for building 800,000 units of new housing over the next 10 years, also proposed legislation requiring municipalities in the metropolitan New York City region to rezone areas around rail and subway stations. The budget also sets housing growth targets of 3% over three years in New York City and its surrounding suburbs.
— With assistance from Natalie Wong
