Res. No. 663
Resolution calling upon the New York State Legislature to pass, and the Governor to sign, legislation extending the commencement and completion deadlines for benefits under the Affordable Housing from Commercial Conversions (AHCC) tax incentive program
By Council Member Epstein
Whereas, For the past decade, New York City’s (“NYC” or “City”) housing production has not kept up with its population and job growth, with a citywide net rental vacancy rate of 1.4 percent according to the 2023 NYC Housing and Vacancy Survey, the lowest recorded rate since 1968; and
Whereas, The COVID-19 pandemic drastically altered the demand for commercial office space in NYC, leaving a substantial amount of vacant and underutilized office space in buildings, particularly in Manhattan, where, according to a New York City Economic Development Corporation’s March 2023 report, the Manhattan office vacancy rates rose to 18.3 percent in the fourth quarter of 2022, compared with the pre-COVID 2019 average rate of 10.3% in 2019; and
Whereas, On April 20, 2024, as part of the New York State (State) Fiscal Year 2025 Enacted Budget, which was lauded as one of the most comprehensive State housing packages in decades, the State established the Affordable Housing from Commercial Conversions (AHCC) tax incentive program, codified in section 467-m of the Real Property Tax Law; and
Whereas, The AHCC program was enacted in response to the decline of the City’s commercial office market in the wake of the COVID-19 pandemic; and
Whereas, The AHCC program requires that not less than 25 percent of residential units created through the covered conversion be affordable housing units, subject to income restrictions based on area median income, and requires such affordable housing units to remain subject to rent stabilization in perpetuity; and
Whereas, The AHCC program provides for declining benefit periods based on a project’s commencement date, with eligible conversions commencing on or before June 30, 2026 qualifying for a 35-year property tax exemption, those commencing between July 1, 2026 and June 30, 2028 qualifying for a 30-year exemption, and those commencing between July 1, 2028 and June 30, 2031 qualifying for a 25-year exemption, with all eligible conversions required to be completed by December 31, 2039; and
Whereas, Office-to-residential conversions are complex, capital-intensive, and require lengthy predevelopment timelines to secure financing, develop project plans, and obtain necessary permits, among other State and City requirements; and
Whereas, Because the AHCC program was enacted in April 2024, eligible conversion projects only had around two years to complete these necessary predevelopment activities and meet the June 30, 2026 commencement deadline to qualify for the longest benefit period, which may have prevented some otherwise viable projects from meeting the deadline; and
Whereas, Lengthy predevelopment timelines may also limit the ability of projects to meet the AHCC program’s subsequent commencement deadlines and December 31, 2039 completion deadline; and
Whereas, According to the 2025 Office-to-Residential Conversions in NYC: Economics and Fiscal Estimates report published by the Office of the New York City Comptroller, the AHCC program is an effective accelerator for the current wave of office-to-residential conversions throughout the City and provides access to income-restricted units in Manhattan neighborhoods where affordable housing has historically been difficult to achieve; and
Whereas, The Comptroller’s report also estimates that approximately 12.2 million square feet of commercial space in Manhattan south of 59th Street could potentially be converted into over 14,000 apartments, including approximately 3,600 income-restricted units; and
Whereas, NYC has already invested significant resources in guiding building owners through the office-to-residential conversion process, including through the creation of the Office Conversion Accelerator, an interagency program that provides building owners with a single point of contact within City government to help ensure that office conversion projects can be completed in a code-compliant and timely manner; and
Whereas, Extending the AHCC program’s commencement and completion deadlines would provide property owners with additional time to utilize City resources supporting office-to-residential conversions, encourage more program applicants, and help sustain the current wave of interest in office-to-residential conversions, thereby maximizing the number of housing units, including affordable units, created in the City; now, therefore, be it
Resolved, That the Council of the City of New York calls upon the New York State Legislature to pass, and the Governor to sign, legislation extending the commencement and completion deadlines for benefits under the Affordable Housing from Commercial Conversions (AHCC) tax incentive program.
BS
8/24/2026
LS 25986