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.

§ 6-02 Eligibility.

   (a)   Eligibility. Partial tax exemption will only be granted to multiple dwellings which are eligible projects and which meet all the eligibility requirements of this section.

   (b)   Eligible projects. The tax benefits of the Act are available to:

      (1)   new multiple dwellings located outside the geographic exclusion area containing not less than three (3) dwelling units provided construction is commenced before December 31, 2007;

      (2)   new multiple dwellings located in the geographic exclusion area if the commencement of construction occurred on or before November 29, 1985 and if such building is completed no later than December 31, 2000 and only to the extent the building receives a permanent Certificate of Occupancy indicating that it was built pursuant to architectural, structural, and mechanical plans approved by the Department of Buildings on or before November 29, 1985; and

      (3)   new multiple dwellings located in the geographic exclusion area if the commencement of construction occurred after November 29, 1985 and before December 28, 2010, only if construction is carried out with substantial governmental assistance or if affordable units are created in accordance with the requirements of 28 RCNY § 6-08.

   (c)   Ineligible projects. The tax benefits of the Act are not available to:

      (1)   Any building or structure which is receiving tax exemption and/or tax abatement under any other provision of state or local law for new construction, conversion or rehabilitation, including but not limited to, §§ 488-a and 489 of the Real Property Tax Law and §§ 11-243 and 11-244 of the Administrative Code, and Article 16 of the General Municipal Law; provided however, that if a building or structure is divided into condominium units, and a condominium unit within the building is entitled to receive permanent tax exemption under any statute under which exemption is granted based on the exempt status of the owner, the granting of such an exemption shall not prevent the remaining condominium unit or units from receiving § 421-a exemption.

      (2)   Any multiple dwelling which results from the conversion or rehabilitation of any building or structure;

      (3)   Any building or portion thereof which after the completion of construction is used as a hotel, as that term is defined herein;

      (4)   Any building or portion thereof which after the completion of construction is used for single room occupancy, as that term is defined herein;

      (5)   Any multiple dwelling situated on land which is mapped as a public park provided, however, that this exclusion from eligibility for exemption shall not apply to any land which has been mapped as a public park but which, for a period of ten years or more after the date of such mapping, has not been acquired by the state or the city in which such land is located and with respect to which land the Department of Parks and Recreation has determined that such land is not required for public park purposes, and that such department has no intention of acquiring such land and that no funds have been allocated for such purpose;

      (6)   Any multiple dwelling situated on land which was utilized for ten or more consecutive years immediately prior to October first, nineteen hundred seventy-one as a "private park" as hereinafter defined. A private park is a privately owned zoning lot in a densely developed area having a minimum size of four thousand square feet, free of all developments and containing only trees, grass, benches, walkways and passive recreational facilities including structures incidental thereto which has been used and maintained during said period for such passive recreational activity by the general public without charge with the consent and participation of the owner thereof;

      (7)   Any multiple dwelling, or portion thereof, the construction of which commenced on or after November twenty-ninth, nineteen hundred eighty-five and which is located within any district in the county of New York where a maximum base floor area ratio, as that term is defined in the Zoning Resolution, of fifteen or greater was permitted as of right by provisions of such resolution in effect on April fourteenth, nineteen hundred eighty-two; provided, however, that this rule shall not be applicable to the extent to which such restriction is modified or repealed by State or local law.

      (8)   Any multiple dwelling the footprint of which is located in whole or in part within any area in the county of New York designated by the Zoning Resolution in effect on the date of commencement of construction as either a manufacturing district or a mixed-use district except to the extent that such multiple dwellings in a mixed-use district could be constructed for residential purposes, as of right, pursuant to the Zoning Resolution, unless construction actually commenced prior to January first, nineteen hundred eighty-two; this restriction is in accordance with City policy of preservation of these districts for mainly non-residential purposes: provided, however, that this restriction shall not apply to multiple dwellings for which construction commenced after the effective date of these rules.

      (9)   For purposes of paragraphs (7) and (8) above, the obtaining of a variance or special permit to allow residential construction in a manufacturing or mixed-used district shall not render the newly constructed Class A multiple dwelling eligible for tax benefits under the Act. In addition, to the extent the zoning lot of a project includes any building or structure located in such non-eligible district that is not to be demolished, the partial tax exemption shall be reduced by an amount equal to the area of the portion of the zoning lot which is located in such ineligible area.

      (10)   Except for multiple dwellings qualifying for the benefits of the Act pursuant to 28 RCNY § 6-08:

         (i)   any project commenced, as that term is defined herein, after November 29, 1985 and before March 7, 2006 within the geographic exclusion area, bounded and described as follows: Beginning at the intersection of the bulkhead line in the Hudson River and 96th Street extended; thence easterly to 96th Street and continuing along 96th Street to its easterly terminus; thence easterly to the intersection of 96th Street extended and the bulkhead line in the East River; thence southerly along said bulkhead line to the intersection of said bulkhead line and 14th Street extended; thence westerly to 14th Street and continuing along 14th Street to Broadway; thence southerly along Broadway to Houston Street; thence westerly along Houston Street to Thompson Street; thence southerly along Thompson Street to Spring Street; thence westerly along Spring Street to Avenue of the Americas; thence northerly along Avenue of the Americas to Vandam Street; thence westerly along Vandam Street to Varick Street; thence northerly along Varick Street to Houston Street; thence westerly along Houston Street and continuing to its westerly terminus; thence westerly to the intersection of Houston Street extended and the bulkhead line in the Hudson River; thence northerly along said bulkhead line to the intersection of said bulkhead line and 11th Avenue extended; thence northerly to 11th Avenue and continuing along 11th Avenue to 14th Street; thence easterly along 14th Street to 10th Avenue; thence northerly along 10th Avenue to 28th Street; thence easterly along 28th Street to 9th Avenue; thence northerly along 9th Avenue to 33rd Street; thence easterly along 33rd Street to 8th Avenue; thence northerly along 8th Avenue to 34th Street; thence easterly along 34th Street to 7th Avenue; thence northerly along 7th Avenue to 41st Street; thence westerly along 41st Street and continuing to its westerly terminus; thence westerly to the intersection of 41st Street extended and the bulkhead line in the Hudson River; thence northerly along said bulkhead line to the place of beginning;

         (ii)   any project commenced, as that term is defined herein, on or after March 7, 2006 and before May 11, 2007 within the geographic exclusion area, bounded and described as follows: Beginning at the intersection of the bulkhead line in the Hudson River and 96th Street extended; thence easterly to 96th Street and continuing along 96th Street to its easterly terminus; thence easterly to the intersection of 96th Street extended and the bulkhead line in the East River; thence southerly along said bulkhead line to the intersection of said bulkhead line and 14th Street extended; thence westerly to 14th Street and continuing along 14th Street to Broadway; thence southerly along Broadway to Houston Street; thence westerly along Houston Street to Thompson Street; thence southerly along Thompson Street to Spring Street; thence westerly along Spring Street to Avenue of the Americas; thence northerly along Avenue of the Americas to Vandam Street; thence westerly along Vandam Street to Varick Street; thence northerly along Varick Street to Houston Street; thence westerly along Houston Street and continuing to its westerly terminus; thence westerly to the intersection of Houston Street extended and the bulkhead line in the Hudson River; thence northerly along said bulkhead line to the intersection of said bulkhead line and 11th Avenue extended; thence northerly to 11th Avenue and continuing along 11th Avenue to 14th Street; thence easterly along 14th Street to 10th Avenue; thence northerly along 10th Avenue to 30th Street; thence westerly along 30th Street to 11th Avenue; thence northerly along 11th Avenue to 41st Street; thence westerly along 41st Street and continuing to its westerly terminus; thence westerly to the intersection of 41st Street extended and the bulkhead line in the Hudson River; thence northerly along said bulkhead line to the place of beginning; or

         (iii)   any project commenced, as that term is defined herein, on or after May 11, 2007 and before July 1, 2008 within the geographic exclusion area, bounded and described as follows: Beginning at the intersection of the bulkhead line in the Hudson River and 96th Street extended; thence easterly to 96th Street and continuing along 96th Street to its easterly terminus; thence easterly to the intersection of 96th Street extended and the bulkhead line in the East River; thence southerly along said bulkhead line to the intersection of said bulkhead line and 14th Street extended; thence westerly to 14th Street and continuing along 14th Street to Broadway; thence southerly along Broadway to Houston Street; thence westerly along Houston Street to Thompson Street; thence southerly along Thompson Street to Spring Street; thence westerly along Spring Street to Avenue of the Americas; thence northerly along Avenue of the Americas to Vandam Street; thence westerly along Vandam Street to Varick Street; thence northerly along Varick Street to Houston Street; thence westerly along Houston Street and continuing to its westerly terminus; thence westerly to the intersection of Houston Street extended and the bulkhead line in the Hudson River; thence northerly along said bulkhead line to the intersection of said bulkhead line and 30th Street extended; thence easterly along 30th Street to 11th Avenue; thence northerly along 11th Avenue to 41st Street; thence westerly along 41st Street and continuing to its westerly terminus; thence westerly to the intersection of 41st Street extended and the bulkhead line in the Hudson River; thence northerly along said bulkhead line to the place of beginning; or

         (iv)   any project commenced on or after July 1, 2008 within the geographic exclusion area as defined pursuant to 28 RCNY § 6-09 except as otherwise provided in such 28 RCNY § 6-09.

   (d)   Duration of exemption. Eligible buildings may receive a ten, fifteen, twenty or twenty-five year tax exemption, as described herein. In order to qualify for such benefits, the multiple dwelling must meet the eligibility requirements described below for each level of exemption.

      (1)   Only the ten year exemption is available to buildings located within the geographic exclusion area described in 28 RCNY § 6-02(c)(10), above, and such buildings shall be eligible to receive such benefits only if each building meets one of the following conditions:

         (i)   construction is carried out with substantial governmental assistance, or

         (ii)   the Department has imposed a requirement or has certified pursuant to 28 RCNY § 6-08 that 20 percent (20%) of the units are affordable to persons of low and moderate income, or

         (iii)   pursuant to an agreement with the Department, in conformity with the requirements of 28 RCNY § 6-08, housing units affordable to persons of low and moderate income are either newly constructed or substantially rehabilitated off-site.

      (2)   The ten year exemption is available to buildings located outside the geographic exclusion area but in Manhattan on tax lots south of or adjacent to either side of 110th Street, the construction of which commenced on or after July 1, 1985, except that the fifteen year exemption shall be available to such buildings if:

         (i)   construction is carried out with substantial governmental assistance; or

         (ii)   the Department has imposed a requirement or has certified pursuant to herein that 20 percent (20%) of the units are affordable to persons of low and moderate income.

      (3)   The fifteen year exemption is available to buildings located in the boroughs of the Bronx, Brooklyn, Queens, Staten Island and in Manhattan north of 110th Street, the construction of which commenced on or after July 1, 1985, unless such multiple dwellings are eligible for the twenty-five year exemption described in (5) below.

      (4)   The twenty year exemption is available in the borough of Manhattan for buildings on tax lots now existing or hereafter created south of or adjacent to either side of one hundred tenth street which commenced construction after July 1, 1992 and before December 28, 2010, only if:

         (i)   construction is carried out with substantial governmental assistance; or

         (ii)   the Department has imposed a requirement or has certified pursuant to 28 RCNY § 6-08 that 20 percent (20%) of the units are affordable to families of low and moderate income.

      (5)   The twenty-five year exemption is available to buildings located in the boroughs of the Bronx, Brooklyn, Queens, Staten Island or Manhattan north of 110th Street, the construction of which commenced on or after July 1, 1985, if the multiple dwelling:

         (i)   is located in one of the following areas:

            (A)   Neighborhood Preservation Program Areas as determined by the Department as of June 1, 1985, or

            (B)   Neighborhood Preservation Areas as determined by the New York City Planning Commission as of June 1, 1985, or

            (C)   an area eligible for mortgage insurance provided by the Rehabilitation Mortgage Insurance Corporation (REMIC) as of May 1, 1992, or

            (D)   an area receiving funding for a neighborhood preservation project pursuant to the Neighborhood Reinvestment Corporation Act (42 U.S.C. §§ 180 et seq.) as of June 1, 1985, or

         (ii)   meets one of the following conditions:

            (A)   is constructed with substantial governmental assistance, or

            (B)   is a building where the Department has imposed a requirement or has certified that 20 percent (20%) of the units contained in that multiple dwelling are affordable to persons of low and moderate income, exclusive of those units created pursuant to 28 RCNY § 6-08.

   (e)   Construction requirements. To be eligible for partial tax exemption, a multiple dwelling must meet the following requirements:

      (1)   It shall contain at all times not less than the number of dwelling units specified in 28 RCNY § 6-02(b)(1). A multiple dwelling containing the requisite number of dwelling units may include: garden type maisonette dwelling projects containing a series of attached dwelling units which are provided as a group collectively with all essential services such as, but not limited to, water supply and house sewers, and which units are located on a site or plot under common ownership, including ownership as a condominium; and buildings erected at the same time with common exterior walls, provided that in each case such buildings are operated as a unit under a single ownership, notwithstanding that Certificates of Occupancy were issued by the Department of Buildings for separate portions thereof covering less than the requisite number of units.

      (2)   If a multiple dwelling contains more than one hundred dwelling units, not less than ten percent of the dwelling units in such multiple dwelling shall contain at least four and one-half rooms and, in addition, not less than fifteen percent shall contain at least three and one-half rooms. The number of rooms in a dwelling unit shall be computed in accordance with the definition of "room count" contained in subdivision (c) of 28 RCNY § 6-01. Those units consisting of four and one-half rooms or more, to the extent that they comprise ten percent of all units in the multiple dwelling, shall not be included as part of the units which must contain three and one-half rooms, comprising a total of fifteen percent of all the units in the multiple dwelling. This room count requirement may be waived in writing at the discretion of the Department:

         (i)   where the multiple dwelling is to provide housing for the elderly; or

         (ii)   upon the filing of adequate documentation from which the Department determines that compliance with the room count requirement would impose an undue and unreasonable economic hardship. The necessity of alteration of existing construction shall not in itself be deemed such a hardship.

      (3)   If construction of a new multiple dwelling commences on or after August 1, 1981 and such construction takes place on land which, immediately prior to the commencement of construction, was improved with a residential building or buildings that have since been substantially demolished, and the new building or buildings contain more than twenty dwelling units, then such new building or buildings shall contain at least five dwelling units for each Class A dwelling unit in existence immediately prior to the demolition preceding construction. The calculation of the ratio of new to old units shall be made based on the entire site included in the 421-a application. For purposes of this paragraph, "immediately prior to the commencement of construction" shall be deemed to be a date which is one month prior to the commencement of construction.

   (f)   Site requirements.

      (1)   To be eligible for partial tax exemption, the land upon which an eligible project is located must have been vacant, predominantly vacant, under-utilized, or improved with a non-conforming use on the operative date. The operative date shall be:

         (i)   thirty-six months prior to the commencement of construction, if construction commences on or after August 1, 1981; or

         (ii)   October 1, 1971, if construction commenced before August, 1981.

      (2)   If only part of the land upon which an otherwise eligible project is located satisfies the requirement set forth in paragraph (1), above, or if only part of a building or structure on said land would satisfy that requirement, partial tax exemption shall be available in accordance with the following formula:

         (i)   If fifty-one percent (51%) or more of the area of the land satisfies the requirement set forth above, then the partial tax exemption shall be reduced by an amount equal to the percent of the area of the site which does not satisfy that requirement;

         (ii)   If less than fifty-one percent (51%) of the area of the land satisfies the requirement set forth above, then the entire site is ineligible for partial tax exemption hereunder.

      (3)   Definitions. For the purpose of this subdivision (f), the following definitions are applicable:

         Actual Assessed Valuation. "Actual assessed valuation" shall mean the assessed valuation of a tax lot without reference to § 1805(3) of the Real Property Tax Law.

         Land improved with a non-conforming use. "Land improved with a nonconforming use" is defined in the same manner as that term was defined in the Zoning Resolution in effect on the operative date.

         Predominantly vacant. "Predominantly vacant" land is a plot of land on which not more than fifteen percent (15%) of the lot area contained enclosed, permanent, improvements. Fences, sheds, garage attendant's booths, pier bulkheads, lighting fixtures and similar items, or any improvement having an Actual Assessed Value of less than $2,000 shall not constitute an enclosed, permanent improvement.

         Under-utilized. "Under-utilized" land is land or space which was under-utilized by virtue of the fact that:

            (A)   It was improved with a residential building or buildings

               (a)   whose room count in occupied dwelling units numbered not more than seventy percent of the room count in dwelling units in the new building or buildings; or

               (b)   whose aggregate floor area was no greater than seventy percent of the aggregate floor area of the new building or buildings.

               (c)   provided, however, that buildings commenced prior to the effective date of these rules shall be governed by the rules in effect at the time of commencement.

            (B)   It consisted of air rights above a public roadway, waterway, railroad right-of-way, public buildings, or other similar property used by the general public, provided that the public building was used by the general public on the operative date and continues to be so used and classified after the completion of the eligible construction, and provided further that "public building" shall mean structures or parts of structures in which persons congregate for civic, political, educational, religious or recreational purposes, or in which persons are harbored to receive medical, charitable or other care or treatment, or in which persons are held or detained by reason of public or civic duty, or for correctional purposes, including among others, court houses, schools, colleges, libraries, museums, exhibition buildings, lecture halls, churches, assembly halls, lodge rooms, club houses with more than five sleeping rooms, dance halls, theatres, bath houses, hospitals, asylums, armories, fire houses, police stations, jails and passenger depots; or

            (C)   Construction commenced on or after November 29, 1985 and before May 12, 2000 on land that was improved with a non-residential building or buildings

               (a)   each of which contained:

                  (1)   no more than the permissible floor area ratio for non-residential buildings in the zoning district in question, and

                  (2)   a floor area ratio which was twenty percent (20%) or less of the maximum floor area ratio for residential buildings for such zoning district, or

               (b)   each of which had an actual assessed valuation equal to or less than twenty percent (20%) of the actual assessed valuation of the land on which the building or buildings were situated, or

               (c)   which, by reason of the building's configuration or substantial structural defects not brought about by deferred maintenance practices or intentional conduct, could no longer be functionally or economically utilized, on the operative date, in the capacity in which it was formerly utilized.

            (D)   Except as provided in subparagraph (E) of this paragraph, commencement of construction occurred on or after May 12, 2000 and before October 30, 2002 on land that was improved with a non-residential building or buildings

               (a)   each of which contained:

                  (1)   no more than the permissible floor area ratio for non-residential buildings in the zoning district in question, and

                  (2)   a floor area ratio which was seventy-five percent (75%) or less of the maximum floor area ratio for residential buildings for such zoning district, or

               (b)   each of which had an actual assessed valuation equal to or less than seventy-five percent (75%) of the actual assessed valuation of the land on which the building or buildings were situated, or

               (c)   which, by reason of the building's configuration, or substantial structural defects not brought about by deferred maintenance practices or intentional conduct, could no longer be functionally or economically utilized, on the operative date, in the capacity in which it was formerly utilized.

            (E)   Commencement of construction occurred on or after May 12, 2000 and before October 30, 2002 on a tax lot now existing or hereafter created which is located south of or adjacent to either side of 110th Street in the borough of Manhattan and on land that was improved with a non-residential building or buildings

               (a)   each of which contained:

                  (1)   no more than the permissible floor area ratio for non-residential buildings in the zoning district in question, and

                  (2)   a floor area ratio which was fifty percent (50%) or less of the maximum floor area ratio for residential buildings in such zoning district, or

               (b)   each of which had an actual assessed valuation equal to or less than fifty percent (50%) of the actual assessed valuation of the land on which the building or buildings were situated, or

               (c)   which, by reason of the building's configuration, or substantial structural defects not brought about by deferred maintenance practices or intentional conduct, could no longer be functionally or economically utilized, on the operative date, in the capacity in which it was formerly utilized.

            (F)   Except as provided in subparagraph (G) of this paragraph, commencement of construction occurred on or after October 30, 2002 on land that was improved with a nonresidential building or buildings

               (a)   each of which contained:

                  (1)   no more than the permissible floor area ratio for non-residential buildings in the zoning district in question, and

                  (2)   (i)   a floor area ratio which was seventy-five percent (75%) or less of the maximum floor area ratio for residential buildings in such zoning district, or

                     (ii)   if the land was not zoned to permit residential use on the operative date, had a floor area ratio which was seventy-five percent (75%) or less of the floor area ratio of the residential building which replaces such non-residential building; or

               (b)   each of which had an actual assessed valuation equal to or less than seventy-five percent (75%) of the actual assessed valuation of the land on which the building or buildings were situated, or

               (c)   which, by reason of the building's configuration, or substantial structural defects not brought about by deferred maintenance practices or intentional conduct, could no longer be functionally or economically utilized, on the operative date, in the capacity in which it was formerly utilized.

            (G)   Commencement of construction occurred on or after October 30, 2002 on a tax lot now existing or hereafter created which is located south of or adjacent to either side of 110th Street in the borough of Manhattan and on land that was improved with a non-residential building or buildings

               (a)   each of which contained:

                  (1)   no more than the permissible floor area ratio for non-residential buildings in the zoning district in question, and

                  (2)   (i)   a floor area ratio which was fifty percent (50%) or less of the maximum floor area ratio for residential buildings in such zoning district, or

                     (ii)   if the land was not zoned to permit residential use on the operative date, had a floor area ratio which was fifty percent (50%) or less of the floor area ratio of the residential building which replaces such non-residential building; or

               (b)   each of which had an actual assessed valuation equal to or less than fifty percent (50%) of the actual assessed valuation of the land on which the building or buildings were situated, or

               (c)   which, by reason of the building's configuration, or substantial structural defects not brought about by deferred maintenance practices or intentional conduct, could not longer be functionally or economically utilized, on the operative date, in the capacity in which it was formerly utilized.

         Vacant. "Vacant" land is land, including land under water, which contains no enclosed, permanent improvement. Fences, sheds, garage attendant's booths, piers, bulkheads, lighting fixtures, and similar items, or any improvement having an Actual Assessed Value of less than $2,000 shall not constitute an enclosed, permanent improvement.

   (g)   Rent regulatory requirements. To be eligible for partial tax exemption the land upon which the eligible project is located must meet the following letting, rental and occupancy requirements:

      (1)   If a building which, on December 31, 1974, contained more than twenty-five occupied dwelling units administered under the City Rent and Rehabilitation Law, the Rent Stabilization Law of nineteen hundred sixty-nine, or the Emergency Tenant Protection Act of nineteen hundred seventy-four, is displaced, or any unit therein is displaced, the new multiple dwelling will be eligible for partial tax exemption only if a Certificate of Eviction was issued for at least one dwelling unit in the displaced building. If only one unit is displaced as the result of eligible construction, the Certificate of Eviction must pertain to that displaced unit. Notwithstanding the foregoing, the sale, transfer or utilization of air rights over residential buildings which were not demolished shall not be construed as a displacement within the purview of this subdivision (g).

      (2)   Notwithstanding the provisions of any local law for the stabilization of rents in multiple dwellings or the Emergency Tenant Protection Act of 1974, the rents of a unit shall be fully subject to regulation under such local law or such Act, unless exempt under such local law or such act from regulation by reason of the cooperative or condominium status of the unit, for the entire period during which the property is receiving tax benefits pursuant to the Act, or for the period any such applicable local law or such Act is in effect, whichever is shorter. Thereafter, such rents shall continue to be subject to such regulation to the same extent and in the same manner as if this subdivision (g) had never applied thereto, except that for dwelling units in buildings completed, as that term is defined herein, on or after January 1, 1974, such rents shall be deregulated if:

         (i)   with respect to dwelling units located in multiple dwellings completed after January 1, 1974 such unit becomes vacant after the expiration of the lease for the unit in effect when such benefit period or applicable law or Act expires, provided, however, such unit shall not be deregulated if the Commissioner of the New York State Division of Housing and Community Renewal or a court of competent jurisdiction finds the unit became vacant because the owner thereof or any person acting on his or her behalf engaged in any course of conduct, including but not limited to, interruption or discontinuance of essential services which interfered with or disturbed or was intended to interfere with or disturb the comfort, repose, peace or quiet of the tenant in his use or occupancy of such unit, and that upon such finding in addition to being subject to any other penalties or remedies permitted by law, the owner of such unit shall be barred from collecting rent for such unit in excess of that charged to the tenant, if the tenant so desires, in which case the rent of such tenant shall be established as if such tenant had not vacated such unit, or compliance with such other remedy, including, but not limited to, all remedies provided for by the emergency tenant protection act of nineteen seventy-four for rent overcharge or failure to comply with any order of the Commissioner of the New York State Division of Housing and Community Renewal, as shall be determined by said Commissioner to be appropriate; provided, however, that if a tenant fails to accept any such offer of restoration of possession, such unit shall return to rent stabilization at the previously regulated rent.

         (ii)   with respect to dwelling units located in multiple dwellings with became subject to the rent stabilization provisions of the Act on or after July 1, 1984, the lease for the unit expires after such tax benefit period expires, provided that each lease and renewal thereof for such unit for the tenant entitled to a lease at the time of such deregulation contained a notice in at least twelve (12) point type informing such tenant that the unit shall be subject to deregulation upon the expiration of such benefit period and stated the approximate date on which such benefit period was expected to expire. If each lease and renewal thereof has not contained such notice, a unit covered by such lease shall be subject to subdivision (i) above even though it became subject to the rent stabilization provisions of the Act on or after July 1, 1984. This subdivision (ii) shall not apply to any unit in any multiple dwelling which was subject to the rent stabilization provisions of the Act prior to July 1, 1984, notwithstanding any contrary provision in any lease or renewal thereof.

      (3)   Notwithstanding paragraph (2) above, dwelling units in multiple dwellings owned as cooperatives or condominiums which are exempt from such provisions of law shall not be required to be subject to the provisions of law set forth in that paragraph (2) during the time period specified therein. Newly created dwelling units in a building for which a prospectus for condominium or cooperative formation has been submitted to the Attorney General at the time of application for benefits to the Office, shall not be required to be registered with the New York State Division of Housing and Community Renewal, provided that an affidavit has been filed with the Office stating that the sponsor will register the building and all units as they become occupied, with the New York State Division of Housing and Community Renewal within fifteen months from the date of issuance of a Final Certificate of Eligibility if a cooperative or condominium plan has not been declared effective by that time.

      (4)   The offering by the owner to all tenants in rental dwelling units in the multiple dwelling, of an initial lease of at least two years; unless the dwelling unit's rent is regulated by local laws, such as § 26-401 of the Administrative Code, which do not provide for the offering of leases for fixed terms. This requirement shall not preclude a shorter lease where requested by the tenant, or where a lease of at least two years is specifically prohibited by the terms of a Department of Housing and Urban Development regulatory agreement for an insured subsidized project, or where, through foreclosure, title to a building eligible for partial tax exemption pursuant to the Act is held subsequently by the Department of Housing and Urban Development.

      (5)   No lease for dwelling units subject to the Rent Stabilization Law or Emergency Tenant Protection Act which are registered with the New York State Division of Housing and Community Renewal shall contain escalation clauses for real estate taxes or any other provisions for increasing the rent set forth in the lease other than permitting an increase in rent pursuant to an order of the New York State Division of Housing and Community Renewal or the Rent Guidelines Board; or an increase of 2.2 percent pursuant to 28 RCNY § 6-04(b).

§ 6-03 Local Community Planning Board Review.

   (a)   Submission of application to local community board. An applicant for partial tax exemption pursuant to the Act whose project contains more than twenty dwelling units shall send a complete copy of the application for a Preliminary Certificate of Eligibility and supporting papers by certified mail or hand delivery to the local Community Planning Board for the area in which such project is located within ten days of submission of the application to the Department. A copy of the receipt shall be hand delivered or mailed to the Department for annexation to the application no later than ten days after the date appearing on such receipt.

   (b)   Standards for review. The local Community Board shall have a forty-five day period after receipt of such application and supporting papers to file objections with the Department as to the applicant's eligibility for partial tax exemption hereunder. Such objections, if any, may only be based upon an applicant's eligibility under subdivision two of § 421-a of the Real Property Tax Law or the applicant's failure to comply with the eligibility requirements in 28 RCNY § 6-02. The local Community Board may, in its own discretion and within the forty-five day period, hold a public hearing to determine whether any objections as to eligibility should be filed. Nothing contained in this section shall preclude a final determination of ineligibility of an applicant by the Department prior to the expiration of the forty-five day period.

   (c)   Notification to community board. In the event the local Community Board files objections, the Department shall make a determination thereon and notify such Community Board within forty-five days after receipt of the objections.

   (d)   Review of projects containing more than one hundred fifty dwelling units. Where a project contains more than one hundred fifty dwelling units, the local Community Board may, within thirty days of the receipt of a copy of an applicant's notification, request the Department to hold a public hearing solely on the question of the applicant's eligibility under subdivision two of § 421-a of the Real Property Tax Law or the applicant's failure to comply with the eligibility requirements in 28 RCNY § 6-02. If such request is made, the Department shall hold a hearing before the Commissioner or other person or persons whom he or she may designate, make a determination, and notify the Community Board within forty-five days after such hearing.

§ 6-04 Determination of Initial Rent; Rent Increases.

   (a)   Determining the initial adjusted monthly rent and the comparative adjusted monthly rent for rental dwelling units. No certification of eligibility shall be issued by the Department until the Department determines the initial adjusted monthly rent to be paid by tenants residing in rental dwelling units contained within the multiple dwelling. Except for affordable units, the initial adjusted monthly rent is determined in accordance with the provisions of paragraph (3) below.

      (1)   The total expenses of the multiple dwelling shall be determined by the Department in order to calculate the initial adjusted monthly rent. Total expenses shall mean the annual total of the following:

         (i)   An amount for the annual cost of operation and maintenance, as established pursuant to the Annual Schedule of Reasonable Costs; plus,

         (ii)   An amount for vacancies, contingency reserves and management fees as established pursuant to the Annual Schedule of Reasonable Costs; plus,

         (iii)   Projected real property taxes to be levied on the multiple dwelling and the land on which it is situated at the time of estimated initial occupancy; plus,

         (iv)   Fourteen percent of the total project cost, as determined pursuant to 28 RCNY § 6-05(b)(1)(i) and the Annual Schedule of Reasonable Costs, which amount will include debt service; less,

         (v)   The estimated annual income to be derived from any Floor Area of Commercial, Community Facilities, and Accessory Use Space in the multiple dwelling.

      (2)   The adjusted monthly rent per room shall be determined by the Department by dividing the total expenses as determined pursuant to paragraph (1) above by twelve (12) and then dividing that amount by the Room Count as defined in subdivision (c) of 28 RCNY § 6-01 of this chapter; i.e.,

 

Total Expenses 12

=

Total Monthly Expenses

Total Monthly Expenses Room Count

=

Adjusted Monthly Rent Per Room

 

      (3)   The The initial adjusted monthly rent for each dwelling unit shall be determined by the Department by multiplying the adjusted monthly rent per room to be determined pursuant to paragraph (2) above by the Room Count, as defined in subdivision (c) of 28 RCNY § 6-01, of each rental dwelling unit. Adjustments to the initial adjusted monthly rent per room to be determined pursuant to paragraph (2) above by the Room Count, as defined in subdivision (c) of 28 RCNY § 6-01, of each rental dwelling unit. Adjustments to the initial adjusted monthly rent for any dwelling unit may be allowed by the Department provided that the total of the rentals charged in the multiple dwelling do not exceed the total expenses of such multiple dwelling, as determined pursuant to paragraph (1) above; i.e.,

 

Adjusted Monthly Rent Per Room × Room Count Per Dwelling Unit

=

Initial Adjusted Monthly Rent for Such Dwelling Unit

 

   (b)   Rent increases. The owner of a multiple dwelling receiving partial tax exemption may insert in each lease to be effective during the period of gradual diminution of tax exemption, as defined in 28 RCNY § 6-06(e), a provision for an annual rent increase over the initial adjusted monthly rental at a rate not to exceed 2.2 percent per annum on the anniversary date of the first lease for the unit provided, however, that no increase shall be permitted pursuant to this subdivision (b) unless specifically provided for in each affected lease, and provided further that no more than one such increase per unit may be charged or collected in each given year regardless of the number of lease renewals or new leases which may pertain to that unit. The initial 2.2 percent escalation and all subsequent escalations shall be based solely on the actual rental amount in effect (regardless of whether the legal regulated rent may be greater) at the commencement of the period during which the increase may be charged and shall not be compounded from year to year but rather shall remain constant based on said rent. In addition, the increase shall be independent of any other escalation authorized by the Rent Guidelines Board and shall not be considered or included when a Rent Guidelines Board increase is effected, making the latter increase effective upon the base rent, excluding the 2.2 percent escalation. The maximum increase permitted by this subdivision (b) is 19.8 percent over the actual rental amount in effect at the commencement of the period during which the increase may be charged. The maximum increase permitted by this subdivision (b) may be charged in each year following the expiration of the tax benefit period, but shall not exceed 19.8 percent, or that amount charged in the last year of the exemption period, and shall not become part of the base rent.

   (c)   Annual rent schedule. Each year the owner shall make available to the Office a schedule of rents for each unit in the building.

§ 6-05 Application Procedure; Documentation.

   (a)   Application forms. All prescribed forms and applications must be obtained from the Department of Housing Preservation and Development, Office of Tax Incentive Programs, 3rd Floor, 150 William Street, New York, New York 10038. All applications shall be submitted to the Department on such form or forms as shall be prescribed by the Department. Only applications complete in all detail shall be considered for a Certificate of Eligibility. All forms must be filled out fully and legibly by the applicant and shall be typewritten or inscribed in permanent ink.

   (b)   Preliminary Certificate of Eligibility; documentation. An application for a Preliminary Certificate of Eligibility must be made to the Office after the commencement of construction but prior to the issuance of either a Temporary Certificate of Occupancy for all residential areas or a Permanent Certificate of Occupancy. For a public project, the Department may grant an extension of up to four years for filing the application for a Preliminary Certificate of Eligibility. The application for a Preliminary Certificate of Eligibility shall consist of an affidavit in the form required by the Office and shall include the following:

      (1)   A sworn statement by the owner (if the owner is other than an individual, the statement must be certified by the chief executive officer or managing partner of the owner), together with certifications by certified public accountants, appraisers, engineers and architects where required by this chapter, attesting to the accuracy of information provided to the Department concerning the eligibility of a project under 28 RCNY § 6-02 and the initial adjusted monthly rent required by the Act for each rental dwelling unit contained within the multiple dwelling. This sworn statement shall include, as a minimum, a statement of the following:

         (i)   Total project cost of the newly constructed building and a breakdown of the costs:

            (A)   Land acquisition cost or purchase price shall be certified to by an independent certified public accountant or by an appraisal of value of the land and any improvements thereon prepared by an independent appraiser found to be qualified by the Department if the land was purchased more than two years prior to the date of the commencement of construction or in the event that the land was obtained by other than purchase; provided further that in the event the land is leased and not purchased, rent attributable to the development period shall be included in total project cost.

            (B)   Site preparation costs not covered by an appraisal in subparagraph (A) above shall be certified to by an affidavit from a licensed architect or engineer on a date not more than ninety days prior to the filing of an application for a Preliminary Certificate of Eligibility, and an estimate of the balance of such costs to be incurred prepared by such a licensed engineer or architect. The application for a Final Certificate of Eligibility shall contain a statement of all site preparation costs incurred, which shall be certified to by an independent certified public accountant. Site preparation costs may include, but are not limited to, costs expended to demolish structures. Site preparation costs may also include relocation expenses, which may be independently certified to by the owner or applicant;

            (C)   A good faith estimate of construction costs as well as an estimate prepared by a licensed engineer of any abnormal, unique or special foundation costs which may be incurred;

            (D)   An allowance for off-site costs, including but not limited to legal, engineering, and architectural fees, insurance, interest and taxes during construction, title and mortgage fees;

            (E)   Specific other amounts which would ordinarily and customarily be incurred in connection with the construction of an eligible project.

         (ii)   Compliance with eligibility requirements including:

            (A)   Statement of the conditions of the site as of thirty-six months prior to the commencement of construction, or as of October 1, 1971, as required by this chapter, along with sufficient documentation to demonstrate the conditions of the site to the satisfaction of the Department;

            (B)   A statement of the number of occupied dwelling units in existence on the site on December 31, 1974;

            (C)   A statement, if the construction is to include more than twenty dwelling units, that the building will provide no less than five Class A dwelling units for each Class A dwelling unit in existence on the site immediately prior to the commencement of new construction; as required by this chapter;

            (D)   A statement that the new multiple dwelling will contain not less than three dwelling units;

            (E)   A statement that not less than ten percent of the dwelling units in the new multiple dwelling will contain at least four and one-half rooms and that no less than fifteen percent of such dwelling units will contain at least three and one-half rooms, as determined pursuant to 28 RCNY § 6-02(d), if the multiple dwelling is to contain more than one hundred dwelling units, unless such requirements are waived in writing by the Department;

            (F)   The submission to the Department of one set of plans approved by the Department of Buildings, as evidenced by a seal of the Department of Buildings thereon or an architect's affidavit that such plans are so approved.

            (G)   If construction commenced on or before November 29, 1985, sufficient documentation to demonstrate to the satisfaction of the Department the condition of the site on November 29, 1985.

            (H)   If construction commenced after November 29, 1985 and is located within the geographic exclusion area,

               (a)   written certification by the Department in accordance with 28 RCNY § 6-08, that 20 percent (20%) of the units contained in that building will be affordable to persons of low and moderate income; or

               (b)   written certification by the Department, in accordance with 28 RCNY § 6-08, that construction is being carried out with substantial governmental assistance; or

               (c)   a copy of a written agreement with the Department for the construction or substantial rehabilitation of housing units affordable to persons of low and moderate income on another site, such agreement expressly providing that the creation of said units is intended to meet the requirements of 28 RCNY § 6-08; or,

               (d)   Negotiable Certificates issued pursuant to §28 RCNY § 6-08, evidencing the bearer's entitlement to the benefits of the Act for the units for which the applicant is seeking tax benefits.

         (iii)   The date upon which it is estimated that initial occupancy will commence.

      (2)   A statement of intention that the owner will register all rental units with the New York State Department of Housing and Community Renewal prior to initial occupancy and will offer initial leases of not less than two years to tenants of such stabilized units, or such shorter term as the tenant requests, or a statement that the multiple dwelling is to be owned as a cooperative or condominium.

      (3)   A certified copy of a Certificate of Eviction, if required by 28 RCNY § 6-02(f).

      (4)   A schedule of proposed initial rents for each rental dwelling unit in the building. No requests for revision of this schedule will be considered once a Final Certificate of Eligibility has been issued for the building in question.

   (c)   Filing fees. A non-refundable deposit toward a non-refundable filing fee for each multiple dwelling for which application is made for benefits hereunder shall be paid at the time of the filing of the application for a Preliminary Certificate of Eligibility. The deposit shall be in the amount of one hundred ($100) dollars and shall form part of the non-refundable filing fee of four-tenths (4/10) of one percent (.4%) of the total project cost as determined pursuant to 28 RCNY § 6-05(b), or four-tenths (4/10) of one percent (.4%) of the total project sell-out price, if the building will be owned as a cooperative or condominium, as stated in the last amendment to the offering plan accepted for filing by the New York State Attorney General, at the option of the applicant, less any fees paid to the Department pursuant to 28 RCNY § 6-08(k)(3), which resulted in the issuance of a written agreement. Payment of the balance of this fee shall be made no later than ninety days after approval of the application for a Preliminary Certificate of Eligibility. If payment is not made within such time, a late fee of an additional one-tenth (1/10) of one percent (.1%) of the total project cost, as determined pursuant to 28 RCNY § 6-05(b) shall be charged. In no event shall any Preliminary Certificate of Eligibility be issued prior to full payment of all filing fees deemed by the Department to be outstanding. These fees shall apply to all applications where the first Certificate of Eligibility, for such application, whether Preliminary or Final, is issued after the effective date of these rules. All other applications shall be subject to the fees defined by the rules in effect immediately prior to promulgation of these rules. Payment shall be made by a certified or cashier's check payable to the Commissioner of the Department of Finance of the City of New York. If the application for a Final Certificate of Eligibility includes an increase in the amount of the total project cost, an additional filing fee shall be paid based upon such increase in the total project cost as is approved by the Department.

   (d)   Final Certificate of Eligibility: documentation.

      (1)   The owner must file an application for a Final Certificate of Eligibility which shall consist of an affidavit in the form required by the Commissioner and shall include the following:

         (i)   A sworn statement of the actual total project cost of the newly constructed building. Such actual project cost may be approved by the Department as the total project cost of such building provided all of the items comprising such actual total project cost are certified to by a certified public accountant licensed by the State of New York, and further provided that such actual total project cost does not exceed the specific costs determined by the Department pursuant to its promulgated Annual Schedule, plus any allowable abnormal, unique or special foundation costs which may be incurred. In the event that costs relating to commercial portions of the building are incomplete, an estimate of such costs may be accepted tentatively by the Office, provided a supplemental accountant's certification is provided after such costs have been determined. If additional fees are owed on the basis of such supplemental certification, benefits are subject to revocation pursuant to chapter thirty-nine of this title if the fees are not paid. Where such costs differ from the original cost certification filed with the application for a Preliminary Certificate of Eligibility, such sworn statement shall include

            (A)   the difference in costs, and

            (B)   the reason or basis for such difference in costs;

         (ii)   A revised schedule of proposed initial rents, if any, containing any modification of the original schedule filed with the application for a Preliminary Certificate, for each rental dwelling unit in the building. No requests for revision to this schedule will be considered once a Final Certificate of Eligibility has been issued for the building in question;

         (iii)   (A)   Evidence satisfactory to the Office in a form approved by the Department that the owner of rental dwelling units has registered the building and any occupied units with the New York State Division of Housing and Community Renewal, and, if the building is not fully occupied, an affidavit stating that the owner shall register all remaining units as they become occupied and shall submit proof of such registration of all remaining units in a form approved by the Department upon the earlier to occur of (1) the occupancy of the last remaining unit, or (2) one year from the date of Completion of Construction; or

            (B)   if the project is to be owned and operated as a cooperative or a condominium, a statement by the owner that if the prospective cooperative or condominium plan has not been declared effective for filing at a time fifteen months after the issuance of a Final Certificate of Eligibility, such owner will register these rental units with the New York State Division of Housing and Community Renewal no later than fifteen calendar days after such fifteen month period.

         (iv)   A statement of the date of completion of the building.

         (v)   If construction commenced after November 29, 1985 within the geographic exclusion area, and construction was not carried out with substantial governmental assistance, a copy of the Written Agreement and proof of compliance with the requirements of 28 RCNY § 6-08, including a Permanent Certificate of Occupancy for all new or substantially rehabilitated units or a Temporary Certificate of Occupancy for the entire residential portion of a building or buildings located outside the geographic exclusion area which was constructed or rehabilitated pursuant to an agreement with the Department to qualify the building located within the geographic exclusion area for the benefits of the Act. Proof of compliance shall include the requisite number of Negotiable Certificates in accordance with the ratios set forth in 28 RCNY § 6-08(b).

         (vi)   In the event that through no fault of the applicant, and due to unforeseen circumstances which are beyond the control of the applicant, construction of the off-site units which was promptly commenced and has been diligently proceeding has not been completed before the completion of the building applying for benefits pursuant to the Act, the Department, in its sole discretion, may permit the applicant to submit a Letter of Credit equal to 150 percent of the Department approved estimate of the cost of completing the off-site units. The written agreement with the Department will be amended to provide a new completion date, after which the Department shall have the authority to use the proceeds of the Letter of Credit to complete the construction.

         (vii)   Proof that the multiple dwelling has been registered with the Department in accordance with the provisions of Article 2 of Subchapter 4 of the Housing Maintenance Code.

         (viii)   A)   For applications received on or after December 19, 2006, an affidavit from the owner certifying that whenever any household appliance in any dwelling unit, or any household appliance that provides heat or hot water for any dwelling unit in the multiple dwelling, is installed or replaced with a new household appliance on or after December 19, 2006, such new appliance shall be certified as Energy Star. If applicable, such affidavit may instead certify (a) that an appropriately-sized Energy Star certified household appliance is not manufactured, such that movement of walls or fixtures would be necessary to create sufficient space for such appliance, and/or (b) that an Energy Star certified boiler or furnace of sufficient capacity is not manufactured.

            (B)   For purposes of this subparagraph (viii), (a) "household appliance" shall mean any refrigerator, room air conditioner, dishwasher or clothes washer, within a dwelling unit in the multiple dwelling that is provided by the owner, and any boiler or furnace that provides heat or hot water for any dwelling unit in the multiple dwelling, and (b) "Energy Star" shall mean a designation from the United States Environmental Protection Agency or Department of Energy indicating that a product meets the energy efficiency standards set forth by the agency for compliance with the Energy Star program.

         (ix)   For applications received for any projects that commence construction on or after December 28, 2007, an affidavit from the owner certifying that either (A) all building service employees employed or to be employed at the building shall receive the applicable prevailing wage for the duration of such building's tax exemption pursuant to the Act, or (B) such project contains less than fifty dwelling units, or (C) at initial occupancy, at least fifty percent (50%) of the dwelling units in the multiple dwelling will be affordable to individuals or families with a gross household income at or below one hundred twenty-five percent (125%) of the area median income and that any such rental units will remain affordable for the entire period during which they receive benefits pursuant to this Act.

         (x)   For applications received for any projects that commence construction on or after the effective date of the amendment that added this subparagraph, an affidavit from the owner certifying that all units that are affordable to persons of low and moderate income that qualify buildings outside of the geographic exclusion area for a twenty-five year exemption will be marketed by the Department pursuant to a fair and open process in accordance with the Department's marketing guidelines or will be marketed in accordance with the marketing guidelines of another federal, state or local agency or instrumentality that provided substantial governmental assistance for the construction of such units.

      (2)   The application for a Final Certificate of Eligibility must be filed as follows:

         (i)   for a multiple dwelling to be owned as a rental, the application must be filed prior to occupancy of the building, but no earlier than the date of the application for a Preliminary Certificate of Eligibility.

         (ii)   for a multiple dwelling to be owned as a condominium or a cooperative, the application must be filed prior to the first taxable status date following the completion of construction. In the event such application is not timely filed, benefits of the Act shall be revoked pursuant to 28 RCNY § 6-07(e)(5) only where the failure to file such application has resulted in the extension of the construction benefit period beyond the actual period of construction.

         (iii)   (A)   For a public project, the Department may grant an extension of up to four years for filing the application for a Final Certificate of Eligibility, provided that to the extent to which the failure to file such application has resulted in the extension of the construction benefit period beyond the actual period of construction for such public project, the construction benefit period shall be retroactively adjusted so that it is coterminous with the actual construction period.

            (B)   For a building which is not a public project, the Department may grant an extension of up to two years for filing the application for a Final Certificate of Eligibility where the applicant has established that it reasonably relied upon the representations of third parties that the benefits of the Act would be available, provided that to the extent to which the failure to file such application has resulted in the extension of the construction benefit period beyond the actual period of construction for such building, the construction benefit period shall be retroactively adjusted so that it is coterminous with the actual construction period.

         (iv)   Notwithstanding the provisions contained in subparagraphs (i) through (iii) of this paragraph, the deadlines for filing an application for a Final Certificate of Eligibility shall not apply to any property for which the Department issued a Preliminary Certificate of Eligibility and which has received tax benefits pursuant to the Act on or after January 1, 1990.

      (3)   The applications for a Final Certificate of Eligibility must be completed by the applicant as follows:

         (i)   for a multiple dwelling containing one hundred units or less, within ninety days following the issuance of a permanent certificate of occupancy or a temporary certificate of occupancy covering all residential space.

         (ii)   for a multiple dwelling containing more than one hundred units, within one hundred and eighty days following the issuance of a permanent certificate of occupancy or a temporary certificate of occupancy covering all residential space.

         (iii)   where an extension has been granted under paragraph (2)(iii) of this subdivision, the application must be completed (A) within ninety days of the filing thereof for a multiple dwelling containing one hundred units or less, or (B) within one hundred and eighty days of the filing thereof for a multiple dwelling containing more than one hundred units.

      (4)   [Reserved.]

      (5)   In the event that all the required documents are not timely filed, benefits of the Act may be revoked in accordance with the procedures established pursuant to chapter thirty-nine of this title. An application shall be deemed complete when all items delineated in 28 RCNY § 6-05 have been submitted, as well as any other documents which the Office may request.

      (6)   Notwithstanding the provisions contained in paragraph (3) of this subdivision, the Office may grant an extension to complete an application for a Final Certificate of Eligibility for good cause shown.

   (e)   Issuance of a Certificate of Eligibility.

      (1)   Upon receipt of the application for a Preliminary Certificate of Eligibility the Department shall determine the initial adjusted monthly rent and the comparative adjusted monthly rent with respect to rental dwelling units contained within the multiple dwelling pursuant to 28 RCNY § 6-04(a). Upon the Commissioner's determination that a multiple dwelling is entitled to partial tax exemption hereunder the Department shall issue a Preliminary Certificate of Eligibility to be delivered by the applicant to the appropriate borough officer of the Property Division of the Department of Finance together with his, her or its application to the Department of Finance for partial tax exemption. Such certification shall be conditioned upon the filing and approval of an application for a Final Certificate of Eligibility as herein provided.

      (2)   Upon receipt of the application for a Final Certificate of Eligibility and either a Temporary Certificate of Occupancy for all residential areas in the multiple dwelling or a Permanent Certificate of Occupancy, and upon the Commissioner's determination that a multiple dwelling is entitled to partial tax exemption hereunder, the Department shall issue a Final Certificate of Eligibility to be delivered by the owner to the appropriate borough officer of the Property Division of the Department of Finance between February 1st and March 15th, together with his, her or its application to the Department of Finance for partial tax exemption.

   (f)   Voluntary withdrawal. Once an application for a Preliminary Certificate of Eligibility or a Final Certificate of Eligibility has been approved, an owner may withdraw the application only if (i) all taxes which would have been owed absent the exemption are paid to the City, with all interest accrued thereon, and (ii) the building for which the application was made is substantially incomplete or unoccupied by residential tenants.

   (g)   Declaratory rulings. A declaratory ruling with respect to an analysis of a specific or hypothetical site, project, fact pattern or document or an interpretation of the applicability of a specific provision of the 421-a statute or Rules to an actual or hypothetical site, project, fact pattern or document or any other issue related to eligibility may be given in the discretion of the Office upon payment of a non-refundable fee in the amount of $1,500 payable at the time such declaratory ruling is requested in writing. In no event shall a declaratory ruling bind the Office as to the overall eligibility of a project for 421-a benefits.

(Amended City Record 6/19/2017, eff. 7/19/2017)

§ 6-06 The Tax Exemption.

   (a)   Taxes on prior assessed valuation not subject to exemption. Taxes on the assessed value of land receiving benefits under this section, and any improvements thereon, during the tax year preceding the commencement of construction are not eligible for exemption under the Act. Tax exemption under the Act is not available until the tax year following the first year taxable status date following commencement of construction. The Prior Assessed Valuation remains subject to taxation at the prevailing rate from year to year.

   (b)   Diminution of tax exemption for excess commercial space. As of July 1, 1975, in the event the multiple dwelling contains Floor Area of Commercial, Community Facility and/or Accessory Use Space which exceeds twelve percent (12%) of the Aggregate Floor Area, there shall be a diminution of the tax exemption in an amount equal to the ratio of Floor Area of Commercial, Community Facility and/or Accessory Use Space in excess of twelve percent (12%) of the Aggregate Floor Area to the Aggregate Area. Where a project contains a separately assessed parcel such as a residential condominium located above a separately owned commercial space, the proportionate reduction of tax exemption resulting from Commercial, Community Facility and Accessory Use Space in excess of twelve percent (12%) shall be allocated entirely to the non-residential parcel or parcels up to the point that no exemption exists for any such parcel before applying the reduction in exemption to the residential space, provided, however, that such allocation shall only be made with respect to properties for which a preliminary application for benefits is received after July 26, 1993 or for which a final application is received after such date if no preliminary application was received.

   (c)   Exemption during construction. Multiple Dwellings which satisfy all of the requirements set forth herein and have received a Preliminary Certificate of Eligibility shall be exempt from real property taxes, other than assessments for local improvements, upon any increase in assessed valuation over the Prior Assessed Valuation during the statutorily defined period of construction, or for a period of three years, whichever is less, provided that taxes shall be paid in each tax year in which full or partial exemption is in effect on the Prior Assessed Valuation, as defined in 28 RCNY § 6-01(c).

   (d)   Exemption after construction. After the first taxable status date immediately following the completion of construction any increase in assessed valuation over the Prior Assessed Valuation of eligible multiple dwellings which have received a Final Certificate of Eligibility shall be exempt from real property taxes, other than assessments for local improvements, for either ten, fifteen, twenty or twenty-five consecutive tax years, as provided in 28 RCNY § 6-02(d), pursuant to the following schedules. In addition, owners must pay full taxes on the Prior Assessed Valuation, as defined in 28 RCNY § 6-01)(c).

TEN YEAR EXEMPTION
Year	Percent of Increased Assessed Valuation Which is Exempt
First	100%
Second	100%
Third	80%
Fourth	80%
Fifth	60%
Sixth	60%
Seventh	40%
Eighth	40%
Ninth	20%
Tenth	20%
Eleventh	0%

 

FIFTEEN YEAR EXEMPTION
Year	Percent of Increased Assessed Valuation Which is Exempt
First through Eleventh	100%
Twelfth	80%
Thirteenth	60%
Fourteenth	40%
Fifteenth	20%
Sixteenth	0%

 

TWENTY YEAR EXEMPTION
Year	Percent of Increased Assessed Valuation Which is Exempt
First through Twelfth	100%
Thirteenth and Fourteenth	80%
Fifteenth and Sixteenth	60%
Seventeenth and Eighteenth	40%
Nineteenth and Twentieth	20%
Twenty-first	0%

 

TWENTY-FIVE YEAR EXEMPTION
Year	Percent of Increased Assessed Valuation Which is Exempt
First through twenty-first	100%
Twenty-second	80%
Twenty-third	60%
Twenty-fourth	40%
Twenty-fifth	20%
Twenty-sixth	0%

 

   (e)   Period of gradual diminution of tax exemption. Solely for purposes of 28 RCNY § 6-04(b), the period of gradual diminution of tax exemption shall be the following:

      (1)   For the ten year benefit period, the ten years beginning in the first year of exemption after completion of construction.

      (2)   For the fifteen year benefit period, the five years beginning in the eleventh year of exemption after completion of construction.

      (3)   For the twenty year benefit period, the eight years beginning in the thirteenth year after completion of construction.

      (4)   For the twenty-five year benefit period, the five years beginning in the twenty-first year of exemption after completion of construction.

§ 6-07 Record Keeping; Revocation of Tax Exemption; Discrimination Prohibited. [Repealed]