Chapter 6: Tax Exemption Pursuant to § 421-a(1) Through § 421-a(15) of the Real Property Tax Law and §§ 11-245, 11-245.1 and 11-245.1-b* of the Administrative Code of the City of New York

This chapter covers applications for tax exemption pursuant to § 421-a of the Real Property Tax Law by multiple dwellings that (1) commence construction on or before June 15, 2015, (2) commence construction after June 15, 2015 and on or before December 31, 2015 that receive their first temporary or permanent certificate of occupancy covering all residential areas on or before December 31, 2019, and (3) for either (1) or (2) above, do not make an election pursuant to Real Property Tax Law § 421-a(16)(R). For all other applications for tax exemption for new construction or eligible conversion pursuant to § 421-a of the Real Property Tax Law, see Chapter 51 of this title.

For applications for extended benefit tax exemption pursuant to § 421-a(17) of the Real Property Tax Law, see Chapter 49 of this title.

(Amended City Record 9/26/2017, eff. 10/26/2017)

* Editor's note: New York City Administrative Code § 11-245.1-b was effective from December 28, 2007, to December 28, 2010.

§ 6-01 Scope; Construction; Definitions.

   (a)   Scope of rules. This chapter governs the grant of tax exemption pursuant to § 421-a of the Real Property Tax Law of the State of New York, including the procedure for filing an application for tax exemption and the issuance of Preliminary and Final Certificates of Eligibility by the Office of Development of the Department of Housing Preservation and Development. Upon issuance of the Certificate of Eligibility, the calculation and implementation of the tax exemption are under the jurisdiction of the Department of Finance.

   (b)   Construction. This chapter is to be construed to secure the effectuation of the purposes of § 421-a of the Real Property Tax Law and § 11-245 of the Administrative Code and in accordance with the general principle of law that exemption statutes are to be strictly construed against the taxpayer applying for the exemption.

   (c)   Definitions. As used in this chapter, the following terms shall have the following meanings:

      Act. "Act" shall mean § 421-a of the Real Property Tax Law, as amended.

      Adjusted monthly rent. "Adjusted monthly rent" shall mean the rent payable per month as provided in the first effective lease upon initial occupancy of a rental dwelling unit of a multiple dwelling after completion of construction assisted by exemption under the Act, not inclusive of charges for parking or electricity, gas, cooking fuel and other utilities other than heat and hot water.

      Administrative Code. "Administrative Code" shall mean the Administrative Code of the City of New York.

      Affordable units. "Affordable units" shall mean units created and rented in accordance with 28 RCNY § 6-08.

      Aggregate floor area. "Aggregate floor area" shall mean the sum of the gross horizontal areas of all of the floors of a dwelling or dwellings and accessory structures on a lot measured from the exterior faces of exterior walls or from the center line of party walls.

      Annual schedule of reasonable costs. "Annual schedule of reasonable costs" shall mean the amounts determined by the Department to be reasonable for the maintenance and operation of a multiple dwelling in such categories and classifications attached to these rules as Appendix A.

      Certificate of Eviction. "Certificate of Eviction" shall mean a certificate of eviction granted by the city rent agency pursuant to § 26-408 of the Administrative Code.

      Commencement of construction. "Commencement of construction" shall mean the date upon which excavation and the construction of initial footings and foundations commences in good faith. An architect or professional engineer licensed in the State of New York shall certify that such construction commenced on such date and that such construction was thereafter completed without undue delay. Notwithstanding the foregoing, construction shall not commence prior to issuance by the Department of Buildings of either (i) a building or alteration permit for the construction of an entirely new multiple dwelling, the footprint of which consisted entirely of vacant and unimproved land upon such date, or (ii) an alteration permit for the construction of a new multiple dwelling above, and on an entirely separate tax lot from, one or more existing structures which are to be retained, provided that only the floor area attributable to the new multiple dwelling, and any eligible commercial, community facility or accessory use space within such new structure shall be eligible for benefits under the Act. Any such new multiple dwelling shall comply with all other applicable statutory and regulatory requirements.

      Commissioner. "Commissioner" shall mean the Commissioner of the Department of Housing Preservation and Development, or his or her designee, or the chief executive officer of any successor agency thereto authorized to administer these rules.

      Completion of construction. "Completion of construction" shall mean the date upon which either a Temporary Certificate of Occupancy is issued for all residential areas in the multiple dwelling or a Permanent Certificate of Occupancy is issued for the entire building.

      Construction. "Construction" shall mean the construction of a new building which is a Class A multiple dwelling.

      Covered Project. "Covered Project" shall mean a "covered project" as defined in subparagraph (i) of paragraph (a) of subdivision six of § 421-a of the Real Property Tax Law. For purposes of clause (B) of such subparagraph, two or more buildings shall be considered part of one contiguous development if such buildings are located on tax lots existing on or after June 21, 2005 that (1) are adjacent for at least ten linear feet, or (2) but for the intervention of streets, sidewalks or street intersections, would be adjacent for at least ten linear feet. All tax lots apportioned from such tax lots shall be deemed part of one contiguous development.

      Demolished. "Demolished" shall mean the total destruction of a building or structure by razing or otherwise.

      Department. "Department" shall mean the Department of Housing Preservation and Development of the City of New York or any successor agency or department thereto.

      Department of Buildings. "Department of Buildings" shall mean the Department of Buildings of the City of New York or any successor agency or department thereto.

      Eligible debt-financed project. "Eligible debt-financed project" shall mean a project that may be encumbered by a lien or mortgage, where (A) such project is not obtaining low income housing tax credits pursuant to § 42(b)(1)(A) of the Internal Revenue Code of 1986, as amended (nine percent (9%) reservation), (B) any lien or mortgage encumbering such project provides that it is expressly subject and subordinate to the Written Agreement entered into with the Department, and (C) the average household income of the units in such project does not exceed eighty percent (80%) of median income.

      Floor area of commercial, community facilities, and accessory use space. "Floor area of commercial, community facilities, and accessory use space" shall mean the gross horizontal areas of all the floors or any portion thereof of a multiple dwelling or dwellings and accessory structures or spaces on a lot measured from the exterior faces of exterior walls of commercial or community facilities or accessory uses as such uses are defined in the Zoning Resolution; (See Article 1, Chapter 2). Notwithstanding the foregoing, accessory use space shall not include (a) parking areas which are not part of the building such as uncovered outdoor parking areas and open space beneath a building (including access roads), (b) for properties for which a final certificate of eligibility is issued on or after November 3, 1995, accessory parking space located not more than twenty-three feet above the curb level, (c) for properties for which a final certificate of eligibility is issued on or after May 8, 2013, accessory off-street parking spaces located not more than twenty-three feet above the curb level which (i) are located in the Manhattan Core, as defined in Section 12-10 of the Zoning Resolution, and (ii) meet the requirements of Section 13-21 of the Zoning Resolution.

      Geographic exclusion area. "Geographic exclusion area" shall mean that area of Manhattan described in 28 RCNY § 6-02(c)(10).

      Hotel. "Hotel" shall mean (i) any Class B multiple dwelling, as such term is defined in the Multiple Dwelling Law, (ii) any structure or part thereof containing living or sleeping accommodations which is used or intended to be used for transient occupancy, (iii) any apartment hotel or transient hotel as defined in the Zoning Resolution, or (iv) any structure or part thereof which is used to provide short term rentals or owned or leased by an entity engaged in the business of providing short term rentals. For purposes of this definition, a lease, sublease, license or any other form of rental agreement for a period of less than six months shall be deemed to be a short term rental. Notwithstanding the foregoing, a structure or part thereof owned or leased by a not-for-profit corporation for the purpose of providing governmentally funded emergency housing shall not be considered a hotel for purposes of this chapter.

      Low and moderate income. "Low and moderate income" shall mean a household income not exceeding 100 percent of median income. For purposes of this chapter, low income households shall be deemed to be those at 60 percent or less of median income and moderate income households shall be those between 60 and 100 percent of median income, provided, however, that the average household income in any group of affordable units shall not exceed 80 percent of median income.

      Median income. "Median income" shall be calculated in accordance with the regulations of the United States Department of Housing and Urban Development governing eligibility for occupancy as a lower income family, by size of family, in the metropolitan statistical area, which includes the City of New York, for purposes of § 8 of the United States Housing Act of 1937, as amended.

      Multiple dwelling or building. "Multiple dwelling" or "building" shall mean a dwelling which is, or is to be, lawfully occupied as the residence or home of three or more families living independently of one another, whether individual dwelling units herein are rented or owned as a cooperative or condominium.

      Negotiable Certificate. "Negotiable Certificate" shall mean a document issued by the Department which certifies that the bearer is entitled to the benefits of the Act for a specified number of units within the geographic exclusion area, provided that all program requirements have been met.

      Office. "Office" shall mean the Office of Tax Incentive Programs of the New York City Department of Housing Preservation and Development or any successor thereto.

      Prior assessed valuation. "Prior assessed valuation" shall mean the taxable assessed valuation in effect pursuant to § 1805-(3) of the Real Property Tax Law, exclusive of any exemption, of a tax lot (land and improvements) during the tax year preceding the tax year of Commencement of Construction.

      Program for the development of affordable housing. "Program for the development of affordable housing" shall mean housing which complies with the requirements of a grant, loan or subsidy from any federal, state or local agency or instrumentality to provide no less than twenty percent of its units as units affordable to and occupied by or affordable to and available for occupancy by individuals or families whose incomes do not exceed a specified limit and which has been approved by the commissioner pursuant to this chapter.

      Public project. "Public project" shall mean a building developed with substantial governmental assistance or a building developed pursuant to a regulatory agreement with a Federal, state or local agency or instrumentality requiring the development of affordable housing.

      Residential building. "Residential building" shall mean a structure or part thereof lawfully occupied in whole or part as the home, residence or sleeping place of one or more persons.

      Room Count. "Room Count" shall be calculated in the following manner: Each dwelling unit with at least one room which either (i) contains no cooking facilities and measures at least one hundred and fifty (150) square feet, or (ii) contains cooking facilities and measures at least two hundred and thirty (230) square feet, shall count as two and one-half rooms. Every other room in the dwelling unit separated by either walls or doors, including bedrooms, shall count as an additional room, plus one-half room for a balcony, provided, however, that kitchens, cooking facilities, bathrooms or corridors shall not count as an additional room. To be included in the calculation of "room count," a room must meet the requirements of habitability as provided in Administrative Code §§ 27-746 and 27-751.

      Single room occupancy. "Single room occupancy" shall mean occupancy in a multiple dwelling by one or more persons of a room or rooms either without a lawful kitchen or kitchenette or without a lawful bathroom or without separate means of egress for occupants thereof to the public areas of the multiple dwelling.

      Substantial governmental assistance. "Substantial governmental assistance" shall mean grants, loans or subsidies provided to any building or buildings on the same zoning lot or, if only a portion of such zoning lot is being granted benefits pursuant to the Act, to any building or buildings on such portion of such zoning lot, by any federal, state or local agency or instrumentality pursuant to a program for the development of affordable housing, provided that (1) as determined by the commissioner, each of the buildings on such zoning lot or portion thereof is part of the same project, (2) each of the buildings on such zoning lot or portion thereof is part of the same application for benefits pursuant to the Act, (3) the periods of construction and final real property tax exemption benefits granted pursuant to the Act for all of the buildings on such zoning lot or portion thereof being granted benefits pursuant to the Act shall commence simultaneously, and (4) no final real property tax exemption benefits shall be granted pursuant to the Act for any buildings on such zoning lot or any portion thereof being granted benefits pursuant to the Act until receipt of a certificate of occupancy or a temporary certificate of occupancy for the residential portions of the building or buildings on such zoning lot containing the units affordable to and occupied by or affordable to and available for occupancy by individuals or families whose incomes do not exceed a specified amount. Such subsidies may include allocations of low income housing tax credits and, in the discretion of the Department, below market sales or sales subject to evaporating purchase money mortgages by a federal, state or local agency or instrumentality, but shall not include permanent financing provided through the State of New York Mortgage Agency, purchase money mortgages, or mortgage insurance.

      Written Agreement. "Written Agreement" shall mean a document issued by the Department pursuant to 28 RCNY § 6-08(l).

      Zoning lot. "Zoning lot" shall mean a "zoning lot" as defined in § 12-10 of the Zoning Resolution.

      Zoning Resolution. "Zoning Resolution" shall mean the Zoning Resolution of the City of New York, as amended.