The Gowanus Neighborhood Mixed Income Housing Development Program offers real property tax abatement for affordable housing projects located in the Special Gowanus Mixed Use District, an 82-block former industrial area along the Gowanus Canal in Brooklyn, New York. The Program addresses the uncertainty arising from the sunset of Section 421-a(16) of the New York Real Property Tax Law (421-a(16)) for projects in the pre-development or development stage.
Applications are due to Empire State Development on or before September 23, 2023.
What Projects are Eligible
A development project located in the Special Gowanus Mixed Use District is eligible for the Program if excavation and construction of initial footings and foundations lawfully began on or before June 15, 2022. An eligible Project must, among other things, provide for at least 50 rental residential units; consist of units that comply with the affordability and rent stabilization requirements under 421-a (16), except they will be permanently affordable; not receive any other residential tax exemption, abatement or credit, except tax credits related to Brownfield Cleanup Program or another environmental remediation program; and comply with ESD’s MWBE contracting requirements and the Gowanus Neighborhood Rezoning requirements (Chapter 9 | Zoning Resolution (nyc.gov)), building code and other regulatory requirements. Projects must be approved by Empire State Development and the Public Authorities Control Board.
How Does the Program Work
The owner will convey nominal fee title to the Project to ESD (for nominal consideration) for the duration of the site’s involvement with the Program. ESD will lease the Project back under a lease with a supplemental rent payment (i.e., payment in lieu of taxes (PILOT)) that would mirror the payments under the residential tax exemption that the Project would have received under 421-a (16) in exchange for affordable housing requirements. At the conclusion of the 35-year lease term, the lease would terminate, title to the Project will revert to the owner or its designee and the site would become subject to the applicable real estate property taxes at that time. The affordable units are permanently restricted. Developments must receive a Temporary Certificate of Occupancy for all residential units within 48 months of construction commencement subject to extension at the discretion of ESD.
How to Apply
The application form and instructions may be downloaded from Request for Applications – Gowanus Neighborhood Mixed Income Housing Development Program | Empire State Development (ny.gov). The application fee is $3,000 per unit.
Bousquet Holstein’s real estate and public finance professionals have extensive experience with lease arrangements and PILOT arrangements with local and State government and will work closely with our Brownfield Tax Group to assist you with the applying, structuring and getting to closing under the Program.