More than a month behind schedule, New York Gov. Kathy Hochul finally announced the framework for a budget deal on Thursday, one that directly affects the real estate industry.
Hochul’s agreement on a $268 billion deal was announced well after the Apr. 1 due date, Gothamist reported. It’s already on track to be the most delayed budget of Hochul’s time in office and the latest a budget will be passed since 2010.
Key tenets of the deal include limiting cooperation with federal immigration enforcement, creating rebate checks to deal with the rising costs of utilities and eliminating income tax on tips.
The real estate-related measures may be the most interesting, though.
After being announced a few weeks ago, the budget included the so-called pied-à-terre tax, an extra levy on second homes valued at $5 million and above in New York City. State officials expect the tax to raise $500 million annually for the city.
That’s not a widely held view, though. An analysis from the city’s comptroller estimates the tax could apply to more than 11,200 properties and potentially reach the expected tax volume, but only if a handful of assumptions pan out. Collections could fall to between $340 million and $380 million when factors such as rental exemptions and changes in owner behavior are taken into consideration, according to the report.
Details of the pied-à-terre tax still haven’t been ironed out. After announcing the budget, Hochul said during a session with reporters that a pivotal roadblock to the measure is how some properties are assessed way lower than their actual value; the city’s Department of Finance assesses many condos and co-ops below their market value.
Another major part of the budget is a move to modernize and eliminate select environmental reviews, which will also have an impact on real estate. In New York City, qualifying projects up to 500 units in medium and high-density areas could be exempted from review, while projects up to 250 units may be exempted in the rest of the city.
Additionally, the budget includes plans to scale back the 40 percent target for emission decreases by 2030 in an effort to mitigate rising utility costs.
Though Hochul’s announcement portrayed the proposed budget as mostly agreed-upon, not everyone seems on board. Assembly Speaker Carl Heastie reportedly told reporters after the governor’s announcement that no deal was actually made. “I said to her last night, I was comfortable with her saying to y’all, we’re close,” Heastie said.
Voting on the series of budget deals could take place as soon as next week.
Read more
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For co-ops, pied-à-terre tax leaves more questions than answers
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