New York's Legal Experts Navigate the City's Evolving Housing Incentives Landscape

Written by:

Steve Marcinuk

Date:

08 Apr 2025

Share

Share via Facebook

Share via Linkedin

Share via X

Copy to clipboard

“This program, together with 485x, will significantly reshape the landscape for the next decade,” says David Shamshovich, discussing the city’s newest housing incentives with genuine enthusiasm that explains why developers across New York City seek out his specialized expertise.

As New York City’s housing crisis continues to deepen, a small cadre of legal specialists are helping developers navigate the complex web of incentives designed to stimulate affordable housing production. At the forefront of this niche field is David Shamshovich, who recently joined Belkin Burden Goldman LLP as co-lead of their newly launched Housing Incentives and Development Practice Group alongside his longtime colleague Jason Hershkowitz.

The Brooklyn-born attorney brings a unique combination of technical knowledge and strategic vision to a specialized area of real estate law that few attorneys master. His team’s work sits at the critical intersection of tax policy, zoning regulations, and affordable housing initiatives – where the city’s ambitious housing goals meet the practical reality of development economics.

The Housing Incentives Ecosystem

“For a developer to build something in New York City, it needs to pencil out,” Shamshovich explains, cutting straight to the fundamental challenge. “With taxes at full rates, developers cannot afford to pursue projects.”

This economic reality underpins New York’s complex system of tax exemptions and zoning incentives. Programs like the now-sunset 421-a and its successor 485x provide crucial tax relief that makes development viable while simultaneously creating affordable housing opportunities.

“Tax exemption programs solve two things,” Shamshovich notes. “They encourage development, which we need because the housing crisis in New York City, New York State, and the rest of the country is severe. And secondly, they promote affordable housing across diverse neighborhoods rather than concentrating it in specific areas.”

The policy goal is clear: create mixed-income communities throughout the city by incentivizing market-rate developers to include affordable units in neighborhoods where they wouldn’t naturally occur. But the implementation is anything but simple.

Navigating the Regulatory Maze

While the New York real estate legal landscape is already intricate with its complex transactions and regulatory requirements, Shamshovich and his team focus on a particularly specialized niche, guiding developers through what he describes as a “complex and multifaceted process” of securing housing incentives.

“We process applications and guide developers strategically,” he says. “It’s not just an application. We examine zoning, property issues, violations, and liaise with agencies to ensure clients navigate this process successfully.”

The work spans multiple dimensions of a project’s lifecycle – from early feasibility analysis to years-long compliance oversight. Shamshovich’s team helps developers determine optimal unit placement, prepare financial projections, and navigate regulatory agreements with government agencies.

“We strategize with developers sometimes from as early as when they’re trying to buy the site or going through a rezoning, all the way to completion,” he explains.

The complexity emerges in the details. Affordable units must be distributed on at least 65% of floors to prevent segregation. No more than two-thirds of any floor can contain affordable units. Unit sizes must meet livability standards measured in “carpet area,” not just gross square footage. And the mix of unit types must proportionally match the market-rate distribution.

“You have to have a mix that’s proportional,” Shamshovich emphasizes. “Look at the percentage of studios and one bedrooms and two bedrooms to the totality of the market rate units, and you’ve got to match that up with the affordable units.”

The “City of Yes” Initiative

The conversation becomes animated when Shamshovich discusses the city’s recent “City of Yes for Housing Opportunity” zoning text amendment – a sweeping overhaul that promises to reshape how affordable housing incentives function.

“This expands to all Middle and High Density districts,” he explains, highlighting a crucial shift from previous inclusionary housing programs that were limited to R10 zoning districts and certain designated areas. “This program is citywide, making many more sites eligible.”

The amendment replaces the Voluntary Inclusionary Housing program with a new Universal Affordability Preference framework that maintains similar mechanics but dramatically expands eligibility. Developers can still receive zoning bonuses for including affordable units, though the new 1:1 ratio means bonuses can only be used for additional affordable housing, not market-rate units.

“The core of this program is designed to work with the tax exemption,” Shamshovich explains. “If you couple the two, you create a bonus that aligns with the tax exemption. That’s where it functions very effectively.”

He believes the combination of new zoning incentives and tax exemptions will catalyze development once more developers understand the opportunity. “I’m hearing significant interest, but there’s still some skepticism… Perhaps developers want to see others test the waters first.”

Development Dynamics and Challenges

Who’s taking advantage of these programs? According to Shamshovich, the spectrum ranges widely from boutique developers building seven-unit projects to major players constructing buildings with hundreds of apartments.

However, one interesting threshold emerges in his analysis: “The 99-unit mark is extremely important for developers. Once you exceed that threshold, you hit a minimum wage requirement that can significantly increase costs.”

This wage requirement for larger projects receiving tax exemptions has created a preference for staying under 100 units unless a project is substantially larger. “Developers actively avoid crossing this threshold,” he notes. “Perhaps after observing how these programs work in practice… they might become more willing to explore larger projects.”

Another key development trend: “We’re seeing minimal condo development. For-sale condos are difficult unless you have favorable land value. Building condos requires significantly more investment because they can’t effectively qualify for the tax exemption.”

Even with expert guidance, projects face numerous potential obstacles. Chief among them: violations. “You cannot have any violations on your property if you want to complete – zero,” Shamshovich emphasizes. “I’ve seen completions delayed by one or two years as a result.”

These delays carry serious financial implications: “The longer you’re waiting, you’re still paying your loan, you’re still paying debt service, but you can’t finish and you can’t get your TCO [Temporary Certificate of Occupancy], and you’re just sitting and waiting.”

The Value of Specialized Counsel

When developers engage Shamshovich’s team varies widely – sometimes at a project’s inception, sometimes midstream. He prefers early involvement: “I love to get involved right away because then we can provide timely input, and developers can ensure compliance with requirements, rather than discovering issues after the fact.”

These relationships often span the entire development timeline. “The relationship generally starts from the planning stages to the TCO stage, which could be 7, 8, 9 years,” he says, citing a recent project that his team helped guide from acquisition through a rezoning and finally to completion nearly eight years later.

The move to Belkin Burden Goldman allows Shamshovich’s team to offer this specialized expertise within a broader platform that includes complementary practice areas like rent stabilization law – crucial since affordable units must be registered with the Division of Housing and Community Renewal.

“It creates a comprehensive solution for developers,” he notes. “They generally prefer integrated services rather than a piecemeal approach.”

Looking Ahead

For the immediate future, Shamshovich is watching for the Department of Housing Preservation and Development to release application materials for the new programs. He’s particularly encouraged by administrative streamlining in the new regulations.

“They removed from the statute any reference to an administering agent,” he points out. Previously, affordable housing lotteries required specific not-for-profit administrators approved by HPD. “That marketing agent doesn’t have to be not-for-profit, doesn’t have to be approved, which broadens market participation.”

This change alone could significantly accelerate timelines. “Eliminating that one requirement from the zoning resolution will likely save substantial time.”

With HPD preparing for an influx of applications by hiring additional staff, Shamshovich anticipates significant changes for NYC housing development. “This will substantially alter the development landscape, as more projects will incorporate affordable housing components, receive zoning bonuses, and qualify for tax exemptions.”

He concludes with measured optimism: “It’s a win-win approach that distributes affordable housing throughout the city. The results will be compelling – provided developers understand the opportunity.”