SEQRA Reform Live, NYC Pied-à-Terre Tax Starts July

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Hey there, let’s get into today’s news at the intersection of policy and real estate:

• SEQRA reforms are officially in effect, giving builders a faster path to approvals.
• In the budget: a pied-à-terre tax with new details. Out: a cash transfer tax.
• State lawmakers earmarked $200 million in new solar incentives for property owners.

In this edition we mention: President and CEO of the New York Building Congress Carlo Scissura, State Sen. Rachel May, Executive Director of the New York Solar Energy Industries Association Noah Ginsburg, State Sen. Pete Harkham, Assembly member Didi Barrett and others.

We Heard

• Build, baby, build: Gov. Kathy Hochul on Wednesday signed part of the state budget into law, pushing through the first major overhaul of New York’s environmental review process since 1975. The changes carve out broad exemptions to the State Environmental Quality Review Act, or SEQRA, a law builders have long blamed for delaying housing projects through lengthy reviews and court challenges. Under the reforms, New York City projects with up to 500 units in medium- and high-density districts — or 250 units in low-density areas — can bypass SEQRA review. The law also exempts projects with up to 300 units in other urban areas, 100-unit developments in more rural communities and projects with 20 or fewer units in areas without zoning codes. Developers still must comply with other laws and regulations designed to protect the environment. The final framework largely mirrors Hochul’s opening budget proposal and pulls in elements of a bill previously introduced by State Sen. Rachel May. Developers and housing advocates have pushed Albany to loosen SEQRA restrictions for years, arguing the overly bureaucratic process adds costs and delays. President and CEO of the New York Building Congress Carlo Scissura called the package of reforms “transformative for our industry.” Some environmental groups, such as Riverkeeper and the Sierra Club, opposed the changes, arguing SEQRA serves as a critical safeguard on all projects. But statewide the reforms won broad backing from elected officials, affordable housing advocates and the real estate industry. The changes took effect immediately and now apply to pending projects, unless an agency has already determined that an environmental impact statement was required.
  
• Tax tradeoffs: A state budget revenue package advances the politically charged New York City pied-à-terre tax, while ditching a proposal to tax all-cash home purchases of $1 million or more (a measure that had some brokers sounding the alarm). The pied-à-terre tax largely follows the phased-in framework Hochul floated to legislative leaders earlier this month, according to a 19-page draft of the tax tucked into the state’s revenue package. If passed, the levy would take effect July 1. For the first two years, one- to three-family homes valued at $5 million or more would face tax rates between 0.8 and 1.3 percent. Condos and co-ops — the bulk of properties hit by the tax — would be taxed at 4 to 6.5 percent on units assessed by the city at $1 million or more, a threshold lawmakers say roughly equates to a $5 million market value because the city’s Department of Finance notoriously lowballs assessments of such properties. The temporary structure is meant to give the DOF time to devise a new valuation system for co-ops and condos. Beginning July 1, 2028, one- to three-family homes, condos and co-ops valued at $5 million or more under the new system would face the same tax rates. Homes valued between $5 million and $15 million would face a 0.8 percent tax rate, rising to 1.05 percent for properties worth $15 million to $25 million, and 1.3 percent for those valued above $25 million. The DOF will notify owners if their properties are subject to the tax by Aug. 30, and allow them to contest their inclusion by submitting proof that the unit is their primary residence. The tax plan allows for exemptions, notably for New Yorkers who reside permanently in the city, units occupied by family members or those leased out to tenants full-time. As written, the tax would sunset in five years. We finally have clarity on how the city will administer the tax to co-ops: DOF will add a surcharge to every unit affected by the levy to a building’s tax bill. The law requires the co-op corporation to collect the surcharge from the specific tenant-stockholder whose apartment is subject to the tax, a structure that may ruffle some feathers among co-ops now saddled with the task. Stay tuned for more coverage on how the pied-à-terre tax will be implemented.

• Solar incentives: Lawmakers plan to invest $200 million into the state’s New York Sun program, a win for property owners looking to invest in rooftop solar or join a community solar program to lower utility bills. The funding, included in the state budget that lawmakers are currently voting on, comes after the Public Service Commission last year clawed back solar rebate dollars from the program — administered by the New York State Energy Research and Development Authority — after it hit the state’s target of 10.5-gigawatt solar deployment ahead of the 2030 deadline. The rollback meant incentives for solar installations dried up far faster than expected. The new allocation would effectively revive the program, with NYSERDA tasked with developing a plan for how the funds will be deployed once approved. Noah Ginsburg, executive director of the New York Solar Energy Industries Association, said he expects the money to be directed toward boosting incentives for rooftop solar on multifamily buildings, single-family homes and commercial properties statewide, as well as community solar projects in upstate regions where land availability is less constrained. High interconnection costs and regulatory barriers continue to weigh on solar development, Ginsburg said, adding that incentives remain necessary to bridge the gap even as long-term costs are expected to decline. “For the near term, this is a really positive development for building owners who are considering installing solar,” he said. The funding is tied to a version of the Accelerate Solar for Affordable Power Act, or ASAP, folded into the budget, a policy push aimed at speeding up solar deployment across the state. However, the budget version leaves out a key provision from State Sen. Pete Harckham’s standalone bill: a proposed 2035 target of 20 gigawatts of distributed solar intended to push state agencies to further increase incentives. Harckham’s bill had already cleared the Senate, while the Assembly version, sponsored by Assembly member Didi Barrett, remains stalled in committee.

Have a tip or feedback? Reach me at caroline.spivack@therealdeal.com. 

Bill Tracker

The Catch-Up

Zohran Mamdani wanted a multibillion-dollar bailout from Albany this year, and he got one — but rather than a suite of big tax hikes, the final deal includes a mishmash of cost shifts, delayed pension payments and the pied-à-terre tax, reports New York Focus.

The final tower at the World Trade Center site is on ice as the Port Authority of New York and New Jersey and developers reassess how to move forward amid rising construction costs and volatile pricing for building materials, reports Crain’s New York Business.

HUD is stripping away a final layer of review for larger multifamily deals tapping federal assistance. The change eliminates the sign-off requirement for projects with more than 200 units or mortgages above $5 million, marking a notable easing of federal oversight on bigger housing developments, reports Bisnow.

The Trump administration narrowed the definition of an “assistance animal” allowed to live with disabled tenants in housing, raising fears that thousands of people with disabilities, and the animals with which they live, may face eviction, reports the New York Times.

The Kicker

“The 1 percent could be the person who worked as a carpenter their whole life, with their hands!” said Republican State Sen. Jack Martins (who represents part of Nassau County) on the Senate floor in defense of property owners who’ll be hit by the pied-à-terre tax. 

Read more

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For co-ops, pied-à-terre tax leaves more questions than answers

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