It’s official: Governor Hochul announced that they have reached a conceptual agreement with legislative leaders on the $237 Billion budget. The successor program to 421-a is here: 485-x!

Highlights of the budget, specifically on housing include:

• a new tax incentive for affordable housing dubbed “485-x”
• extending the 421a incentive for projects already in the pipeline
• making it easier to convert unused office space into affordable housing
• lifting the cap on FAR of 12; eliminating outdated density caps in New York City
• unlocking the potential of units that have been vacant since 2019
• establishing a new law to protect tenants from price gouging

Details on Affordability Levels are to come. Stay tuned.

485-x coupled with the proposed City of Yes Zoning Changes, will make for a land development boom in NYC.

Some real world examples of city of yes for housing opportunities (which I detailed below as well) are as follows:

• Low-Density District Changes: The R5 zoning districts current FAR is 1.25; under the proposal the new FAR would jump to 2.0X! R4’s would go to .90 FAR to 1.5 FAR; R1’s, R2’s and R3’s would go from 0.50 & 0.60 to 1.0 FAR. & Minimum lot sizes to build would be reduced.
• The Universal Affordability Preference would allow buildings to be at least 20% bigger if the additional space is occupied by permanently affordable housing. For example, an R6 outside of MN core would go from 3.0 FAR to 3.90 FAR; R7 would go from 3.44/4.0 to 5.0 FAR, R8 on a wide street goes from 7.2 to 8.64 FAR; R9’s to 9.0 FAR; R9X to 10.8 FAR; R10’s go from 10 FAR to 12 FAR, R11 gets an FAR of 12.5X and R12 will be 15X FAR!
• No Parking! City of Yes for Housing Opportunity would lift parking mandates for new housing; making building parking optional.
• Convert Non-Residential Buildings to Housing: Shift Conversion Date: The cut-off date of eligibility will be moved to 1991 from 1961 or 1977, allowing more buildings to convert into
• Small & Shared Housing: This proposal would enable buildings with only studios, as well as homes with private bedrooms and shared kitchens or other common facilities. Removing the dwelling unit factor in the Greater Transit Zone can create more housing in areas that have greater access to mass transit. City of Yes would allow for more small apartments

Notable Recent Land Sales

1. 112 Liberty Street, Financial District, MN - Zoning: C5-5 (R10 equivalent) - 91,500 ZFA- Sale Price: $21,687,500 - $237/ZFA - Under Contract on 3/6/2024 - Closed on 3/28/2024
2. 616 11th Avenue, Hells Kitchen, MN - Zoning: R8A, C2-5 - 127,613 ZFA - Sale Price: $33,200,000 - $260/ZFA - Under Contract on 12/21/2023 - Closed on 3/21/2024
3. 220 East 9th Street, East Village, MN - Zoning: R8B - 31,496 ZFA - Sale Price: $14,000,000 - $444/ZFA - Under Contract on 10/30/2023 - Closed on 3/1/2024
4. 245-247 West 34th Street, Midtown South, MN - Zoning: C6-4M (R10 equivalent) - 45,026 ZFA - Sale Price: $15,000,000 -  $333/ZFA - Under Contract on 11/22/2023 - Closed on 3/18/2024
5. 268 Bergen Street, Boerum Hill, BK- Zoning: R7A, R7D, C2-4, MIH- 238,000 ZFA - Sale Price: $39,715,000 - $167/ZFA - Under Contract on 7/18/2023 - Closed on 4/1/2024
6. 42-50 24th Street, Hunters Point, QN - Zoning: M1-5/R9/LIC - 270,960 ZFA- Sale Price: $57,500,000 - $212/ZFA - Under Contract on 11/21/2023 - Closed on 2/22/2024

Financial Market Snapshot:

• Federal Prime Rate: 8.5%
• Secured Overnight Financing Rate (SOFR): 5.32%
• United States Federal Funds Rate: 5.5%
• United States Annual Inflation Rate: 3.48% (up from 3.15% last month)
• US 1-Year Treasury Rate: 5.18% (up from 5.09% last month)
• US 10-Year Treasury Rate: 4.636% (up from 4.15% last month)
• Treasury Bill Auction Rates:
• 4-Week Term: 5.270%
• 13-Week Term: 5.25%
• 26-Week Term: 5.155%
• US Bonds:
• 20-Year Bond: 4.542%
• 30-Year Bond: 4.671%
• Mortgage Rates:
• 30-Year Fixed Rate: 7.44% (up from 6.92% last month)
• 15-Year Fixed Rate: 6.85% (up from 6.44% last month)
• 5-Year Commercial Rate: 7.38% (up from 6.6% last month)
• Ground Up Construction Rates: 8.5%+
• Hard Money Lending Rates: 11%+
• Highest Interest Rate for Bank Savings Account: 5.55% (NYCB)

city of yes for Housing Opportunity

The plan has eight key components:

1. Universal Affordability Preference
2. Convert Offices and Other Buildings to Housing
3. Town Center Zoning: Legalize housing above businesses in low-density areas.
4. Remove Costly Parking Mandates
5. Allow Accessory Dwelling Units
6. Transit-Oriented Development
7. Make it easier for campuses & churches to add new buildings
8. Lift restrictions on small and shared Housing

Check out the illustrated guide here!