On Friday April 16, 2021, Governor Cuomo signed into law the FY 2021-22 State Budget.   For those Housing Development Fund Companies (“HDFCs”) that have anxiously awaited issuance of their Exempt Organization Certificates, the FY 2021-22 budget bill included an amendment to § 577 of the Private Housing Finance Law (“PHFL”) that should serve to alleviate the anxiety.  PHFL §577 covers, inter alia, tax exemptions for HDFCs.  The amendment to PHFL clarifies, and most importantly, codifies, that HDFCs, incorporated pursuant to the not-for-profit corporation law, are exempt from sales and compensating use taxes, so long as the HDFC has entered into regulatory agreements with New York State’s Division of Housing and Community Renewal (HCR) or the New York City Department of Housing Preservation and Development (HPD). The sales and use tax exemption would last as long as the regulatory agreement is in effect. Once the term of the agreement expires, the tax exemption terminates.

Critically, the amendment applies to projects that are the subject of regulatory agreements that have been entered into on or after January 1, 2019.  The budget bill also clarifies that the HDFC is eligible for the sales and use tax exemption even if they are affiliated with a for-profit special purpose vehicle.  This amendment to the PHFL reaffirms the state’s commitment and support to the development of affordable housing.

This alert is not a substitute for advice of counsel on specific legal issues.

Harris Beach has offices throughout New York State, including Albany, Buffalo, Ithaca, Long Island, New York City, Rochester, Saratoga Springs, Syracuse and White Plains, as well as New Haven, Connecticut and Newark, New Jersey.