A new law has opened the door for owners of certain large mixed-income housing developments to partially convert to condominiums in order to protect at-risk affordable housing units in New York City.
The Affordable Housing Retention Act (AHRA) meets two important goals—increasing homeownership opportunities and permanently preserving affordable units, says Erica Buckley, a partner at the Nixon Peabody law firm, where she leads the firm’s cooperatives and condominiums and state attorneys general teams.
To qualify, a project must have at least 100 units and been built after 1996. It must also contain income-restricted rental units that are either at risk of expiring affordability restrictions or are permanently affordable but require additional support to remain viable.
In addition, the building must have received substantial government assistance such as low-income housing tax credits, bond financing, or property tax exemptions.
AHRA is part of the fiscal 2026 budget recently signed by Gov. Kathy Hochul and will take effect later this year. A number of other housing initiatives were also approved.
The conversions would be subject to approval by New York Homes and Community Renewal or the New York City Department of Housing Preservation and Development and have ongoing regulatory oversight over the affordable units, which would be owned by separate nonprofits. The New York State Attorney General’s office will oversee the review and filing of preservation plans, according to Hochul’s office.
When the condo conversion takes place, the owner has a year to transfer the affordable units to a nonprofit. That nonprofit then has an opportunity to get to know the tenants and explore a “tenant opportunity to purchase.” If the tenants also want to pursue homeownership, the statute allows for an affordable co-op conversion, explains Buckley, who recently reported the new law.
Authorities say the eligible buildings are likely to be 80/20 properties, where 80% of the units are market-rate and 20% are affordable.
A lot of these developments were placed in service around 1996, making them about 30 years old. “We think this is a timely tool,” Buckley says. “If you have properties going into service in the late 1990s, the expiration of affordability restrictions is imminent, so this could be a nice option for those buildings.”
She’s been working on the legislation with Habitat for Humanity New York City and Westchester County since 2021. AHRA was sponsored by state Sen. Cordell Cleare and Assemblyman Harvey Epstein.
The new law may be meaningful to housing groups for multiple reasons.
“There are current landlords who pride themselves on being really good landlords and property owners in New York City, and from a policy perspective they don’t want to see affordable housing units lost,” Buckley says. “The current property owners want to do this because they believe continuing to provide affordable housing is important.”
There are also nonprofits such as Habitat for Humanity that want to be involved and expand their role in the market, but that’s extremely difficult given the tough competition and high development costs.
“It’s hard for not-for-profits to do business,” she says. “An option like AHRA is important because it gives nonprofits an ability to gain housing stock in a way that’s more cost effective. It makes it so they can have a role in the marketplace when it has become extremely difficult.”
Following in the footsteps of other city housing programs, AHRA also requires the establishment of two funds. A condominium board of managers must receive a reserve fund by the sponsor to be used for buildingwide capital repairs for the health and safety of all residents. The amount will generally be 3% of the total price of all units. In addition, the owner of the affordable units will receive a dedicated capital fund that’s 0.5% of the total price to be used for maintenance and repairs within the income-restricted units.
“Using condo conversions for affordable housing preservation is great,” Buckley says. “The housing market in New York is still supercharged. There’s definitely an appetite out there for the purchase of these units so the idea of leveraging that to support permanent affordable housing is good policy.”
