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Hi, let’s get into today’s news at the intersection of policy and real estate:
- HPD is tweaking a 421a rule, giving developers with noncompliant affordability plans a chance to switch paths before it’s too late.
- The pied-à-terre tax opens a door to property tax reform, but don’t expect lawmakers to walk through it just yet.
- NYCHA is testing a new contracting model at the Hylan Houses, its first progressive design-build project under the Public Housing Preservation Trust.
In this edition we mention: State Sen. Brian Kavanagh, Office of Management and Budget Director Sherif Soliman, Technico Construction Services and others.
We Heard
- Developer do-over: The city is tweaking 421a rules to open the door for more projects to claim the tax break while they can. The abatement expired in 2022, but New York lawmakers threw developers a lifeline in 2024 when they passed a housing deal that gave the real estate industry five more years to complete construction and qualify their projects for the 421a program. The new completion deadline is June 15, 2031, but lawmakers required developers to deliver deeper affordability for projects utilizing the extension. In proposed rulemaking, the Department of Housing Preservation and Development acknowledges that the situation “poses a difficulty” for developers with projects that submitted workbooks — the official document that spells out affordability levels — with options that do not qualify for the extension. HPD’s current rules only allow workbook amendments in limited circumstances. Now the agency is proposing a broader pathway that would let qualifying projects make post-approval changes, allowing developers to formally switch to an eligible affordability option and preserve their shot at the 2031 extension. To qualify, projects that previously submitted workbooks with affordability levels that do not meet the extension’s requirements must have already filed a letter of intent stating they planned to pursue an alternative affordability option. Some developers filed those letters as a backup in case they missed the original deadline. They would then need to submit an updated workbook to the city. HPD will hold a hearing on the technical rule change on Aug. 4.
- Tax reform harbinger?: When state lawmakers approved the pied-à-terre tax in May, they created a value-capture bracket for one- to three-family homes and another initial one for condos and co-ops, which are assessed differently and without which some luxury units would escape the tax intended for second homes worth $5 million or more. Over the next two years, the city’s Department of Finance will create a process for assessing condos and co-ops based on their sales value. But outgoing state Sen. and housing committee chair Brian Kavanagh doesn’t expect comprehensive property tax reform being delivered on the back of the new tax, as some tax analysts have speculated. “I don’t think that getting the pied-à-terre tax done necessarily has any direct relationship to our ability to reform the whole tax system,” said Kavanagh during a recent NYU Furman Center panel on property taxes. More likely it will create a first draft of a component of broader reforms to the city’s property tax system, which Mayor Zohran Mamdani has said he is committed to reforming. In June, Office of Management and Budget Director Sherif Soliman told the City Council a reform plan won’t be ready until the next state legislative session, after saying in February that a proposal would be completed within “weeks.”
- Trust test: The New York City Public Housing Preservation Trust is executing its first progressive design-build contract with the Long Island City-based Technico Construction Services to modernize 209 apartments at the Hylan Houses in Bushwick. Unlike traditional design-build, which typically sets a price upfront, progressive design-build delays pricing until the project’s design is more fully developed. Albany approved the delivery method as part of the 2022 law that established the Public Housing Preservation Trust, which unlocked new tools for large-scale capital investments in the city’s public housing. The project is expected to be completed in 2029. The Hylan Houses is set to be the fourth NYCHA development to enter the Trust to receive comprehensive repairs.
Have a tip or feedback? Reach me at caroline.spivack@therealdeal.com.
The Catch-Up
City officials ordered an evacuation of the former Pfizer headquarters in Midtown East after inspectors discovered two support beams buckling and several upper floors sagging, reports The Real Deal’s Holden Walter-Warner.
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City officials fielded complaints about unsafe conditions at the former Pfizer tower throughout 2025. Inspectors hit the property with seven construction safety violations carrying more than $32,000 in penalties, reports TRD’s Ben Miller.
The city shelled out $465,000 to a public housing plumber supervisor who claimed 2,560 hours of overtime in 2025. At the same time, he was operating two private plumbing businesses — prompting a Department of Buildings investigation, reports The New York Times.
Construction spending is cooling down, reports Inc.
The Kicker
“A lot of the housing plan is really going to depend on a strong market response,” said Rachel Fee, executive director of the New York Housing Conference, on how the mayor can deliver on his housing agenda.
