Full Breakdown
New York City Developers Shift to 99-Unit Buildings Amid Tax Program Changes
11/15/2025, 8:34:27 PM
Impact of Tax Program 485-x on Housing Development
New York City developers are increasingly opting to construct residential buildings with exactly 99 units due to the implications of a new tax program, known as 485-x. This program, implemented to enhance wages for workers involved in large-scale multi-family developments, inadvertently discourages the construction of larger buildings. Under 485-x, developers must pay workers a minimum of $40 per hour for projects with 100 units or more, resulting in increased construction costs of approximately 2%. For buildings with over 150 units, costs can escalate by 10% to 30%, according to the Real Estate Board of New York (REBNY).
The third quarter of 2025 saw a significant rise in applications for buildings with 99 units, with developers filing 21 applications compared to just 13 from 2008 to 2023. Overall, 194 applications for buildings with 99 units or fewer accounted for 90% of all residential filings during this period. This trend highlights a shift towards smaller-scale developments, which critics argue is insufficient to address the city's ongoing housing crisis.
Official Statements & Responses
REBNY has expressed concern that the 485-x program will lead to a decrease in the overall number of housing units compared to the previous 421-a program, which had lower labor costs. Zachary Steinberg, REBNY’s executive vice president, emphasized the need for policymakers to remain vigilant, stating, “The strong results come following a decade-plus of underproduction that needs to be addressed and can’t be done 99 units at a time.” The organization argues that the current tax incentives do not adequately support the large-scale development necessary to alleviate the housing shortage.
Criticism & Opposition
Critics of the 485-x program argue that it limits the potential for larger developments that could provide a significant number of affordable housing units. The shift towards 99-unit buildings may not meet the demand for housing in a city grappling with a severe affordability crisis. The REBNY has called for tools that would facilitate the production of more housing units to counteract years of underproduction.
What's Next
As New York City continues to navigate its housing crisis, the implications of the 485-x tax program will likely remain a focal point for developers and policymakers. Future discussions may center on revising the program to better balance labor costs with the need for increased housing supply. The ongoing trend of smaller developments could shape the city's residential landscape in the coming years, prompting further analysis of the effectiveness of current housing policies.
