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    4. NYS budget provides real property tax relief to Mitchell-Lama properties

      Alerts

    Alert / Affordable Housing

    NYS budget provides real property tax relief to Mitchell-Lama properties

    May 20, 2025

    LinkedInX (Twitter)EmailCopy URL

    By Deborah VanAmerongen, Joseph Lynch, Meghan Altidor and Aaron Yowell

    What’s the impact?

    • Mitchell-Lama housing in New York City will benefit from a reduction in real property tax payments due to the City of New York.
    • Mitchell-Lama housing outside New York City will be able to pursue a conversation with the municipality where they are located about granting this relief.

    DOWNLOAD

    Mitchell-Lama properties get real property tax relief (PDF)

    The Mitchell-Lama program, created under Article 2 of the New York State Private Housing Finance Law, covers hundreds of properties operated in New York City and throughout New York state. The program provides affordable housing—both rental and cooperatively owned—to low- and middle-income households. Amid growing concerns regarding housing affordability, the program plays a crucial role in preserving access to reasonably priced homes, and the state’s final budget includes real property tax relief for Mitchell-Lama developments in New York City and the opportunity for relief for Mitchell-Lama housing located outside of New York City.

    What is “shelter rent” under Mitchell-Lama?

    Since the inception of the Mitchell-Lama program properties financed under this program had been required to pay 10% of “shelter rent” in real property taxes. Shelter rent is defined as the total rents (including any rental subsidies) received from the residents of the project minus the cost of providing electricity, gas, heat, and other utilities. An owner had to receive approval from the local legislative body, such as the New York City Council or a city council or town or village board outside the City, to receive this exemption. Now, Mitchell-Lama housing in New York City have taxes cut in half and will pay no more than 5% of shelter rent as property tax with the final budget. Mitchell-Lama properties in the rest of the state have the opportunity to also pay 5% or less of the annual shelter rent as property tax with the consent of the local legislative body. Any consent granted by such local legislative body shall expire every ten years; otherwise the rate of taxation shall revert to the previous level prior to such consent.

    Regulation of rents in Mitchell-Lama properties

    Rents in all Mitchell-Lama properties are subject to regulation by either the New York State Division of Housing & Community Renewal (DHCR, now known as Homes and Community Renewal, or HCR) or New York City’s Department of Housing Preservation & Development (HPD). Rent increases are determined by review of a budget-based rent increase submission by the owner. Because many residents of Mitchell-Lama properties are low- or moderate-income, but do not receive any rental assistance, DHCR and HPD have always been sensitive to imposing large rent increases which could adversely impact these residents.

    Property tax relief may offset other challenges

    Mitchell-Lama housing, along with almost all multifamily rental properties, have suffered from inflationary pressures, most particularly in regards to insurance and utilities, while at the same time confronting challenges with collecting on rent arrears. These combined challenges—increased costs and constraints on revenue—have resulted in some owners struggling to keep up with the needs of properties and have led to deferred maintenance and in some cases deterioration of property conditions.

    This real property tax relief will aid many Mitchell-Lama properties to address needs without having to charge residents more rent. Our affordable housing attorneys are ready to help property owners, operators, and developers leverage Mitchell-Lama real property tax relief to maximize opportunities to maintain and improve their properties without burdening residents. With former HUD attorneys and a team focused on cooperative and condominium law, we offer unmatched guidance through every facet of this evolving regulatory environment. The Nixon Peabody team is monitoring all facets of the new budget and will keep clients apprised on how these developments will impact their day-to-day operations and long-term goals.

    Locations

    New York CityRochesterAlbany

    Practices

    Real EstateAffordable HousingCooperatives & Condominiums

    Industries

    Real Estate

    Key Contacts

    For more information, please contact:

    Deborah VanAmerongen

    Strategic Policy Advisor / Deputy Practice Group Leader, Affordable Housing & Real Estate

    • Office+1 212.940.3054
    • dvanamerongen@nixonpeabody.com

    Joseph J. Lynch

    Partner

    • Office+1 212.940.3717
    • jjlynch@nixonpeabody.com

    Meghan C. Altidor

    Partner

    • Office+1 212.940.3021
    • maltidor@nixonpeabody.com

    Aaron J. Yowell

    Partner / Chief Innovation Officer

    • Office+1 212.940.3161
    • ayowell@nixonpeabody.com

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    The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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