Hochul’s 421-a extension is a good step but doesn’t replace the need for a new plan

In her budget proposal, which she submitted last week, Gov. Kathy Hochul set forth a plan to extend the completion deadline for properties in the a ordable housing tax-abatement pipeline by four years. Companies working on projects under the controversial 421-a program, which o ered a tax break if developers made 30% of the units in their buildings a ordable, would now have until June 15, 2030, to nish them.

e Real Estate Board of New York had estimated that the original 2026 deadline put developers at risk of not creating roughly 33,000 housing units across 72 projects in the city. e governor’s budget proposal cited construction delays spurred by the pandemic as a reason for the extension.

creation in the state. However, the extension does not make any new projects eligible for the 421-a tax abatement, which expired in June, and her proposal does not include details on a replacement for the program.

Developers have long said that an incentive program is key to making the economics of constructing an a ordable project in New York City work.

Some stakeholders have theorized that the governor is waiting for the Legislature to advance its own replacement plan in the nal budget, especially after she proposed a replacement in her last budget, which the Legislature did not act on. Perhaps if the Legislature has to come up with its own plan, it will be more willing to get something passed—although there have been few signs so far that legislators feel particularly motivated to do this.

An Incentive Program Is Key To Making The Economics Work

With a ordability weighing heavily on the minds of most New Yorkers, the governor’s extension of the deadline is a welcome sign that she prioritizes housing

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But if Hochul is serious about having 800,000 new homes built in the state in the next 10 years, coming up with a replacement is something that must happen now, not a can that is kicked down the road. And it will require an “all hands on deck” approach. If she wants legislators to reconsider her 485-w replacement legislation, now is not the time for hints. She should say so and make sure legislators join her at the negotiating table. Her new budget proposal does detail facets of her plan to build those 800,000 homes, known as the New York Housing Compact. And it does outline new tax incentives, including an exemp-