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Silverstein’s QNS innovation is in balance
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In 2022, the foundation was completed for an assignment of 1300 units in Astoria. In October, the developer received approval from the city to build much-needed housing from some other warehouse for last-mile deliveries.
And then. . . With little chance of being completed in time to qualify for the 421a asset tax relief, the allocation was put on hold.
According to the developer, the task could begin now thanks to a provision of the agreement on the state budget. Kathy Hochul said Monday that the budget would extend the June 2026 421a structure deadline over six years.
This deadline has exacerbated difficulties in obtaining financing for projects, as lenders do not need to threaten developers for not taking advantage of the 35-year tax break and failing to repay their loans.
The delay has hurt Boris Aronov’s Halletts North, which is expected to hand over 1,279 apartments, 318 of which would be permanently affordable, to Jim Hedden, the developer’s representative.
“We are very pleased and confident that the proposed law will provide us with what we want to achieve and give us enough time to complete our project,” he said in a statement.
Last year, the real estate industry asked for an extension of the deadline, but state lawmakers failed to act. According to estimates by the Real Estate Board of New York, some 32,000 planned apartments were up for grabs.
In July, the governor introduced an option for 421a, still in the rezoned Gowanus domain. The state approved 18 bills for the program, which would mimic the benefits of 421a through bills rather than taxes.
Whether Gowanus developers return to the old 421a will depend on the main points of the expansion, said James Power of Kramer Levin. The industry is waiting for the fine print of the budget, which requires approval from the state legislature.
As it stands, projects that use a specific affordability option under Section 421a (reserving 30 percent of apartments for tenants earning 130 percent of the area’s median source of income) would not qualify for the extension.
Still, with the Gowanus alternative, developers have to jump through a number of hurdles to gain advantages, so opting for the 421a would arguably be easier.
The budget is also expected to include the replacement of the expired 421a, dubbed the 485x. The text of the budget invoice has not been released, but it is expected to set salaries in the structure at a percentage of prevailing wage rates and require 20 to 25% of apartments to be reserved for tenants earning an average of 60 to 80% of salary. Average source of income in the region. Needs depend on the location and duration of the project.
The Real Estate Board of New York said the program would produce fewer homes than its predecessor. The occupational organization negotiated with the construction unions for a lower wage scale, the governor and the legislature opted for union terms.
The result may simply be that rental projects are built in the city’s most expensive spaces, where rents are high enough to offset the prices of hard work and affordability requirements.
Salary requirements will go into effect for projects in certain areas of the city with more than 150 units, up from the 300 threshold of the previous program, the sources said.
The fate of projects that are protected under the expired 421a program will depend on the 485x. Among them is Silverstein Properties’ Innovation QNS, a stagnant progression of 3,200 Astoria units in which 45% of the apartments would be affordable.
A spokesperson for Silverstein said the company is awaiting the main details of the new program. BedRock Real Estate Partners and Kaufman Astoria Studios are partners in the $2 billion project.
Some elements of the housing agreement announced through the governor still appear to be evolving. Daniel Bernstein, an attorney who heads Rosenberg’s housing and tax incentives arm.
“We’re going to have to reach out to our consumers and say, ‘Does this work for you on your chosen sites?
Do you have or are you watching?'” he said. Will they put cash into a project, get a reasonable rate to return and produce homes?Or do the numbers still not work?