Dive Brief:

• Three-thousand landlords in New York City are expected to be notified this week by city housing and finance officials that they stand to lose the 421-a property tax abatement if they fail to comply with the required rent stabilization measures, according to The Real Deal.

• The city previously offered the tax break without formally affirming compliance. City officials are now drawing up a memorandum of understanding requiring landlords to prove they are meeting basic requirements like restrictions on rent increases in order to get the break. The change is expected to mainly impact the owners of small buildings.

• The 421-a program grants roughly $1.4 billion annually in tax mitigation and was recently reintroduced to encourage developers to include affordable homes in newly constructed housing projects. 

Dive Insight:

The latest move by city officials comes in response to a recent call for the city’s housing agency to audit at least 20% of all the 421-a listed buildings annually. A recent investigation by ProPublica discovered that nearly two-thirds of the nearly 6,400 rental properties involved in the tax program do not have an application that has been given the correct authorization by the city’s Finance Department.

Under the new measure, the owners of these buildings will have until Jan. 5, 2018, to secure the correct authorization for the program or risk having their abatement deferred.

The tax break’s revival came after city, state and union officials agreed on a new tiered wage structure based on a project’s location. And it forms part of New York City Mayor Bill de Blasio’s plan to provide 200,000 new or existing affordable homes in the city over the next 10 years.

NYC is one of many U.S. metros facing a severe shortage of affordable homes as populations swell and housing projects are slow to get off the ground. Council members in Seattle recently approved a $29 million 30-year bond to buy or convert affordable housing properties, while voters in Portland, OR, approved a $258.4 million bond earlier this month that will fund the construction of 1,300 such units.

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