Ken Fisher discusses New York's long-term property tax exemption, 485x, in Commercial Observer. There are growing concerns over 485x, a key incentive intended to replace the expired 421a program and spur mixed-income housing construction. Since its mid-2024 enactment, 485x has produced far fewer and smaller projects than hoped, with developers avoiding buildings over 100 units due to high mandated construction wages, even as housing construction lags, coasts soar, and the city falls well short of its housing goals. Labor leaders argue that the program is working and needs more time, while developers and industry advocates say it has failed to generate large-scale housing and are calling for revisions such as adjusting wage rules, raising unit thresholds, or creating geographic exemptions.

Ken believes another year of data would better inform tax discussions regarding how to adjust the tax credit. “The demand for housing is there, but whether demand can support these extra costs is unclear, and the market is saying it can’t, except in select circumstances,” said Ken. “You’re not going to solve the affordability crisis without building new housing, and you’re not going to be able to build new housing unless a substantial part of it is privately financed, which doesn’t pencil out without an incentive program.” In the meantime, many developers are pivoting to a more attractive incentive, 467m, which supports office-to-residential conversions and has sparked a rush of applications ahead of its looming deadline, underscoring broader frustration with the state’s primary new-housing incentive.

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