Gov. Kathy Hochul, who failed to persuade the NY legislature to extend a 2026 deadline for completing multifamily projects that will be eligible for 421a tax abatements that expired in June 2022—her entire housing agenda did not make it into this year's budget deal—announced a workaround that will provide an equivalent of the tax breaks.

The new program initially will be limited to projects in the Gowanus neighborhood of Brooklyn, but Hochul has promised to expand it if developers are receptive to it.

Under the governor's plan, the state will temporarily take over multifamily development sites and rent them back to developers through long-term ground leases. Property owners will then make payments in lieu of taxes (known as PILOTs) at a discount to what they would pay in property taxes. The developers regain the property at the end of the benefit period.