- The 485x tax abatement includes a wage floor for projects with 100 or more units, which has completely halted development of large mixed-income buildings since its rollout in April 2024.
- Developers are now capping projects at 99 units to avoid higher labor costs, dramatically reducing housing supply and the efficiency of new developments.
- Advocates argue that reducing market-rate construction doesn’t increase affordable housing, as the two sectors rely on separate funding models and deliver housing at different scales and speeds.
100-Unit Projects? Zero
New York’s new 485x property tax break has done more than slow down large-scale development—it’s brought it to a full stop, per The Real Deal. Since the program began in April 2024, no mixed-income housing projects with 100 or more units have registered for the abatement. That’s a stark contrast from the now-expired 421a program, where large developments accounted for the majority of new housing.
The reason? A union-backed wage floor requirement built into 485x for projects with 100+ units. Rather than absorb the extra cost, developers are sidestepping the rule entirely.
Developers Go Small—But Not by Choice
According to REBNY’s analysis of 180 projects seeking 485x benefits, not a single one exceeds 99 units, with 14 projects built right up to that limit. The average project size is just 31 units, and only 350 of the 5,546 total planned units are located in Manhattan.
Under 421a, projects with 100 or more units produced nearly 60% of all new homes. With those off the table, the city’s housing pipeline has drastically shrunk.
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Affordable vs. Market-Rate: Different Lanes
Some larger projects are still happening—but only in the all-affordable category, which is not subject to 485x’s wage rules. However, these developments are limited by complex financing structures and slower timelines due to reliance on public funding and approvals.
That’s why many in the industry argue that reducing market-rate supply doesn’t boost affordable housing—they operate under fundamentally different systems. As one critic put it: “Shrinking the elephant population doesn’t increase the number of mice.”
Workarounds and Warnings
Developers are adapting by splitting parcels into multiple 99-unit or smaller buildings to skirt the 100-unit threshold, but that’s a patchwork solution with lower overall output.
Meanwhile, affordable developers can’t just take over the slack, as they’re constrained by limited subsidies and agency capacity. In many neighborhoods, land prices still favor sub-100-unit market-rate projects, even for larger sites.
What’s Next: A Fix in Albany
With the state legislative session beginning next month, industry leaders and YIMBY advocates are urging lawmakers to revisit 485x. The call to action: Adjust the policy to allow 100+ unit developments without triggering punitive wage requirements that make projects unfeasible. That uncertainty is compounded by how the city is still in the process of refining the rules and rollout of 485x and related property tax breaks—adding another layer of unpredictability for developers weighing whether to move forward.
If not, large-scale housing in NYC may remain on indefinite hold—just as the city’s affordability crisis deepens.
