Mayor Steve Noble’s effort to bring more housing to Kingston continues. The mayor’s local law opting to adopt a 421-P tax exemption gets a reading before the common council on Tuesday, June 4.
“A new state law was passed as part of the budget,” the mayor last week explained to the Housing and Development Committee. “The general concept is that for people that are interested in building new housing developments, there’s now going to be a new exemption for folks who are building 60 percent to 80 percent of the Area Median Income. A quarter of the units in the building have to be able to be in that category to be able to receive an exemption.”
The city’s stated goal is to see 1000 new housing units approved by 2029. The new exemption would apply only to newly constructed or converted multiple rental dwelling units with ten or more units.
This exemption resembles payment in lieu of taxes deals (PILOT) offered as incentives to attract commercial development. One important difference is that no other taxing jurisdictions than the city will be affected. Under 421-P, neither the Kingston school district nor the county government need agree to a decrease in the tax revenues they collect — unless the city can talk them into it.
“If the council is supportive of adopting into this state law, we [Noble and director of housing initiatives Bartok Starodaj] would then go on a road show, and we would take this to the county legislature and to the Kingston City School District,” said Noble, “and ask that they also opt-in so that we would have an entire taxing jurisdiction within the City of Kingston participating in the program.”
In other respects, 421-P resembles a PILOT both in its 25-year duration and the exemption granted during the initial stages of planning and construction.
“The property owner is still responsible for paying the base taxes that were paid on the site prior to the housing development,” Noble said. “During the first three years of construction, the improvements made are 100 percent exempt from taxes, and then after that they pay more taxes each year …, We’re not hurt as a municipality because we’re not getting less taxes. That, we hope, would help instill some new development happening in the city. Because it’ll be new growth, it won’t have a tax impact.”
The 421-P is with one exception an all-or-nothing buy-in.
“There’s one thing we are allowed to change, and that is the benefit area,” explained Noble. “We could say, if we wanted to, that this exemption only applies to properties along Abeel Street. But there’s a strong case to be made given the new zoning that [421-P] should apply throughout the entire city. We’re looking to spread out the benefits and also impacts of new housing across the entire city.”
In the short term, Noble acknowledged that the City of Kingston will lose out on what he termed “a relatively small portion of the tax bill”, which would have been levied had the developer not received an exemption to build housing. As housing, a much-needed commodity, is in short supply in the city, Noble argued, building it should be incentivized.
Starodaj pointed out that the AMI range for the quarter of apartments necessary to receive the tax exemption was a weighted average, a feature providing the flexibility to build a variety of housing stock.
Taking issue with slippery averages, councilmember Teryl Mickens was worried that a motivated developer could attempt to game the terms of the tax deal. By renting one unit far below the average targeted AMI and another high above it, she said, the average produced by the two would still fall into the desired AMI range and a family member could be installed in the cheaper unit.
Starodaj expressed confidence that a system of oversight implemented scrupulously by himself and the city assessor would discourage complicated number-juggling. If a property owner was found to be violating the terms of their exemption, he said, losing their exemption would be “a big deal for them financially.”
The 421-P exemption is not designed to be 100 percent affordable, Noble noted. “We have other tax-abatement programs for [those projects].”
Golden Hill gets governor’s gold
Last August Pennrose, the Pennsylvania-based apartment property development and management firm which had contracted with the county to build a 164-apartment complex at Golden Hill, made the county legislature aware of the troubled financial straits the project had found itself in. With a cost of $80.2 million available for the development, project lead Will D’Avela said, the project faced a $3.1 million gap.
Legislator Joe Maloney and others were certain the occasion was a preamble to touch the county up for more money.
To reassure legislators who shared Maloney’s opinion, Pennrose regional vice-president Dylan Salmon explained that the developers had submitted $25 million worth of financing applications to the state “which would hopefully more than address that $3-million gap.”
Pennrose got what it asked for. On May 29, governor Kathy Hochul announced a final $10 million for the project.
Under the auspices of her newly created $150-million taxpayer-funded kitty known as the Mid-Hudson Momentum Fund (MHMF), the governor rewards municipalities for their efforts to increase the housing supply in the mid-Hudson region. An executive order signed by the governor in July 2023 declared that Pro-Housing Communities get priority in their applications for eight discretionary funding programs operating in New York State.
Kingston had previously qualified for that designation, which recognizes local governments that have developed policies and programs to address the shortage of affordable housing.
“As the first state program to reward our Pro-Housing Communities,” said Hochul in announcing the awardees, “the Mid-Hudson Momentum Fund is not just helping them build more housing. It’s helping them chart a path toward a more affordable New York.”
Pennrose’s Golden Hill project and the 100-unit Barrel Factory Apartments were the two Kingston projects to receive grant monies through the program.
“This is a huge win for Kingston,” announced mayor Steve Noble. “These two major housing development projects in our city will bring 264 new, much-needed units to our housing inventory.”
Some 164 units of 30-year regulated, affordable housing at Golden Hill will be serving tenants from the extremely-low-income, very-low-income, low-income and moderate-income tiers. The apartment complex is projected to come online in the summer or fall of 2025.
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