The Private Housing Finance Act (PHFL) states that in order to qualify for an Article XI exemption, the project must be owned by a housing fund company (“HDFC”), a specific type of New York corporation typically formed under the PHFL and the New York State Nonprofit Corporations Act and subject to HPD oversight. This is most often achieved through a nominee structure where the HDFC holds the simple legal right to the property, while a for-profit entity, typically a limited liability company or limited partnership, holds the economic and equitable interest under an appointment agreement between the for-profit entity and the HDFC. In general, the regulatory agreement provides for regulations and restrictions related to corporate matters, such as: B. : principal residence requirements, environmentally-based income requirements, rent and sublease restrictions, profit sharing or reverse taxes payable to hdFC on resales and annual reporting and building monitoring programs. Sometimes the HDFC needs to hire a co-op monitor (for example, the Urban Homestead Assistance Board (“UHAB”), which are non-profit organizations that monitor THE ACTIVITIES OF THE HDFC and help them comply with regulatory requirements. In organizing the HDFC, NYC will sometimes require the HDFC to enter into a regulatory agreement to ensure that the HDFC continues to operate the premises as intended as affordable housing. The HDFC will enter into the regulatory agreement with Nyc through its Department of Housing Preservation and Development (“HPD”), and these agreements typically cover a long-term period of several years. According to the PHFL`s long-standing interpretation, at least two-thirds of housing must be affordable for households with a median income in the region of 165% or less. However, in the application, HPD usually exists at significantly lower AMI levels, often with a certain number of AMIs in each project. The restrictions agreed upon by HPD and the landlord are set out in a registered regulatory agreement against the property, which, among other things, subjects the property to rent stabilization beyond the duration of the exemption.
Under Section XI of the New York State Private Housing Act (“Section XI”), which is administered by HPD in New York City, the City Council may exempt real estate from tax for up to forty years if there is an agreement to rent only to tenants eligible for affordable rents. Article XI is one of the most important tools at the city`s disposal to maintain existing affordable housing, even in completely unregulated real estate. [1] Under the new terms and conditions, HPD will prioritize projects with the following characteristics, consistent with past practices: [1] The percentage of affordable housing depends on the affordability option selected under the 421-a program(16). Overall, many people benefit from the existence of HDFC and if you are in the market to buy an HDFC co-op apartment, we recommend that you first check the building`s regulatory agreement to understand the possible restrictions on their ownership of the apartment. The 421-a(16) program is a legislated partial exemption program that requires that at least 25% or 30% [1] of the units in a rental project be affordable housing and may result in property tax exemption benefits for rental projects for up to 35 years after construction. In addition, there is an option that applies to residential real estate projects, for which eligible projects can receive benefits for up to 20 years after construction. The IHP requires that a percentage of a project`s floor area be reserved for low-income affordable housing tenants, resulting in a space premium for eligible projects. A developer can use both programs at the same time for some new construction projects. We discuss housing preservation opportunities from HPD`s recently updated termsheet, which includes notable changes to the Article XI property tax exemption available to apartment property owners in New York City. HPD has announced that there will be NO EXTENSIONS for both deadlines. Author(s): Aaron J.
Yowell, Abigail Patterson, Joseph J. Lynch, Susanna Mitchell Upon expiration of the regulatory agreement, these restrictions would no longer apply, but hdFC may voluntarily (intentionally or by default) continue to comply with these restrictions in connection with the operation of the premises. HPD also announced that to fall under the PFASH program before it expires, one must do the following: Despite the city`s reduction in affordable housing support under PFASH, there are housing development incentive programs under the New York Affordable Housing Program (“421-a (16)”) and the Inclusive Housing Program (IHP). who are not affected by the pfASH cut-off. It should be noted that the repeal of the PFASH terms sheet has no impact on the development of projects that use the Senior Affordable Rental Apartments (SARA) program, which provides financing in the form of low-interest loans to support the construction and renovation of affordable housing for seniors. .