Table of Contents
1. Program Overview
The 467-m tax abatement program was created as part of NYC's efforts to address the housing shortage while also addressing the changing office market. With remote work reducing demand for older office space, particularly Class B and C buildings, the city introduced incentives to convert these buildings to much-needed residential units.
The program is codified in Section 467-m of the Real Property Tax Law and has been expanded and modified over time to encourage more conversion activity. Recent versions have focused on geographic expansion and affordable housing integration.
Program Goals
- Create new housing units from underutilized commercial space
- Include affordable housing in conversion projects
- Revitalize older commercial districts
- Reduce office vacancy and improve neighborhood vitality
2. Eligibility Requirements
Not all buildings qualify for 467-m benefits. Key eligibility criteria include:
Building Age
The building must have been primarily used as an office or for commercial purposes before December 31, 1990. This ensures the program targets older buildings that may be obsolete as office space.
Prior Use
The property must have been occupied primarily (typically 75%+) for commercial or manufacturing purposes. Hotels, residential buildings, and certain other uses may not qualify.
Location
Eligible areas have been expanded over time. Originally focused on lower Manhattan, the program now covers broader areas of Manhattan and potentially other boroughs. Check current geographic restrictions.
Conversion Scope
The project must create multiple dwelling units. Full gut renovations typically qualify, while partial conversions may have different treatment.
3. Tax Benefits Structure
The 467-m abatement provides substantial property tax relief, though the exact structure varies based on project specifics and program version:
Typical Abatement Structure
Note: Actual abatement schedule varies by program version and affordable housing commitments. Consult with tax counsel for project-specific analysis.
4. Affordable Housing Requirements
Most 467-m projects must include affordable housing units. Requirements vary by location:
Typical Requirements
- 20-30% affordable units
- Set at various AMI levels
- Permanent affordability in some cases
- On-site preferred over off-site
AMI Income Bands
- Extremely Low: 0-30% AMI
- Very Low: 31-50% AMI
- Low: 51-80% AMI
- Moderate: 81-120% AMI
5. Application Process
Applying for 467-m benefits requires coordination with multiple city agencies:
Pre-Application
Confirm eligibility with HPD and DOF. Engage experienced tax counsel and development consultants early in the process.
Application Submission
Submit formal application to HPD with project plans, affordable housing commitment, and supporting documentation.
Regulatory Agreement
Negotiate and execute regulatory agreement outlining project commitments, affordable housing terms, and compliance requirements.
Completion & Certification
Upon project completion, obtain final certification to commence abatement benefits. Ongoing compliance monitoring required.
6. Project Economics
The 467-m abatement can significantly improve conversion project economics. Consider this example:
Pro Tip: Model the full abatement schedule in your pro forma. While early-year savings are substantial, declining benefits affect long-term returns. Use our Office Conversion Calculator to analyze your project.
7. Frequently Asked Questions
Can 467-m be combined with other tax incentives?
In some cases, 467-m can be combined with other programs like 421-a (for additional affordable housing benefits) or Industrial & Commercial Abatement Program (ICAP) components. However, stacking benefits requires careful analysis and approval. Consult with tax professionals.
What if my building was built after 1990?
Buildings constructed after December 31, 1990 generally do not qualify for 467-m. However, other incentive programs may be available depending on location and project characteristics. The city continues to evaluate expansion of eligible building dates.
Are there penalties for non-compliance?
Yes. Failure to comply with affordable housing commitments or other regulatory requirements can result in revocation of benefits and repayment of tax savings received. Ongoing compliance monitoring and reporting are required throughout the benefit period.