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HPD issues proposed rules on Affordable New York Housing Program - guidelines for affordable units

Last week, NYC Housing Preservation and Development (HPD) issued two proposed sets of rules governing the Affordable New York Housing Program—the new version of the tax incentive program, previously referred to as 421-a, aimed at spurring new construction and affordable housing production—as well as the model application for the new program.  This is one of three installments in which we will dissect the new rules and the application.

Part I — Affordable New York Housing Program Rules
The first set of rules released by HPD provide guidelines for the implementation of the Affordable New York Housing Program, with particular emphasis on the steps owners must take when renting an affordable housing unit. Borrowing from various existing tools used in other housing programs, HPD plans to require a series of procedures for program implementation, such as the use of:

(1) a restrictive declaration recorded against any affordable housing unit (The declaration must identify each affordable housing unit, along with the length and nature of the restrictions.);
(2) a monitoring contract with an HPD-approved marketing monitor;
(3) the city’s online lottery system—NYC Housing Connect—and;
(4) a notice of intent, filed at least nine months prior to the proposed completion date, and at least seven months prior to the commencement of marketing activities.

In addition to the procedures above, HPD will also require an affidavit from an engineer or architect to verify permissible uses of nonresidential space.

The rules also clarify additional requirements and restrictions on any affordable housing unit, such as:

1) Every tenant must be offered a one or two year lease, at their option, which lease will be subject to the rent stabilization laws.
2) Every story in an eligible multiple dwelling that contains any affordable housing unit may not have more than 30% of the units as market rate on such story, unless the eligible multiple dwelling is comprised of 51% or more affordable housing units.
3) Every building segment in an eligible multiple dwelling must contain one or more affordable housing units.
4) Common areas must be shared between affordable housing units and market rate units.
5) No affordable housing unit may be operated as a hotel or rented to a corporation, partnership or other entity, except that market rate units may be rented on a short-term basis by a nonprofit corporation for the purpose of providing government-funded emergency housing.

Of particular interest is the Notice of Intent requirement, which indicates that HPD will issue a preliminary determination on compliance with the statute regarding:

(1) the affordability option chosen;
(2) the unit mix and;
(3) the unit distribution. 

HPD can waive compliance with the notice provisions of the Notice of Intent, if HPD determines such waiver is appropriate based upon the completion date of the project.

The rules also indicate that once an affordability option is chosen and affordable housing units are designated, such designation cannot be changed. Unless, such units will be rented through referrals, from the city, for homeless households to meet HPD marketing guidelines, in which case changes are permissible to comply with the homeless set aside requirements.

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