NY Leg Counters Gov's Budget; No Mezz Tax or Rent Control

March 20, 2023

On March 15, the New York State Assembly and State Senate released their counterproposals to Gov. Kathy Hochul’s budget.

  • The bills do not include a mortgage recording tax on mezzanine debt or preferred equity investments. CREFC opposed a similar tax in 2021.
  • State rent control via a good cause eviction law was not included.

Why it matters: The Governor’s Budget Process is the main legislative vehicle for enacting laws in NY. While the Governor did not propose the mezz tax or good cause eviction, the legislature could have added them to its own proposals.

Hochul still could have vetoed the provisions, but inclusion in the counterproposal would have put the policies much closer to enactment if they were used as a bargaining chip or funding source.

By the numbers: While the legislature did not add in the mezz tax or rent control that could negatively impact CRE and multifamily finance, the Assembly did eliminate several affordability focused proposals that Hochul had proposed.

  • Update Tax Abatement Incentives for Affordable Multiple Dwellings in New York City: The Assembly did not include the Executive proposal to establish a partial real property tax abatement for capital improvements made to certain rental and owner-occupied buildings located in the City of New York or any city in which the multiple dwelling law applies at local option
  • Establish a Local Option Tax Incentive for Affordable Multi-Family Housing: The Assembly did not include the Executive proposal to establish a real property tax exemption for the construction of certain multi-family housing projects on previously vacant or underutilized land. The exemption would be at local option, and would apply to municipalities located outside the City of New York.
  • Authorize Tax Incentive Benefits for Converting Commercial Property to Affordable Housing: The Assembly did not include the Executive proposal to establish the Affordable Housing from Commercial Conversions Tax Incentive Benefits (AHCC) program, which would provide a partial real property tax exemption for the conversion of commercial, manufacturing and other non-residential buildings to residential rental buildings located in the City of New York.
  • Extend the Project Completion Deadline for Vested Projects in Real Property Tax Law 421-a: The Assembly did not include the Executive proposal to extend the completion deadline for projects vested in the expired 421-a program for four years, from June 15, 2026 to June 15, 2030.

What’s next: The Governor and the legislature will continue to negotiate on the provisions to pass a final budget by April 1 (though that timing may slip). CREFC will continue to monitor developments.

Contact David McCarthy (dmccarthy@crefc.org) with questions. 


David McCarthy
Managing Director, Head of Policy
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The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2023 CRE Finance Council. All rights reserved.

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