485-x has a 99-unit floor. NYC developers found it in two years.

New York enacted Real Property Tax Law § 485-x on April 20, 2024, as the replacement for the expired 421-a abatement. The statute splits buildings into two regimes at 100 units: buildings below that count get lighter obligations; buildings at 100 or above face a $40-per-hour construction wage floor and stricter affordability requirements. In the 16 years before § 485-x existed, 13 buildings in New York City were permitted with exactly 99 apartments. In the two years after the statute took effect, developers filed permits for more than 120. A second route extends the strategy to buildings too large to sit beneath the threshold any other way: condo declarations that divide a single project into two residential units, each kept below 99. This is what a hard statutory cliff produces.

What § 485-x requires, and where it stops.

Under HPD's program page for § 485-x, a rental building with fewer than 100 units receives the tax exemption if it dedicates 20 percent of apartments to income-restricted units at an average of 80 percent of area median income. No construction wage floor applies.

A building at 100 or more units (designated a "large rental project" under the statute) carries a different obligation. It must dedicate 25 percent of apartments to income-restricted units, and it must pay construction workers a minimum of $40 per hour, indexed to rise 2.5 percent annually. Buildings at 150 or more units face higher minimums still: $72.45 per hour in Zone A, $63 per hour in Zone B, each also indexed. The affordability floor rises further at this tier as well.

The threshold is a cliff, not a slope. A developer building 99 units avoids both the higher affordability requirement and the wage floor entirely. The statute offers no sliding scale between the two regimes.

120 buildings with exactly 99 units in two years.

NYC Department of Buildings permit data captures the result. Between April 2024 and early 2026, developers filed permits for more than 120 buildings with exactly 99 apartments. For comparison: the 16 years from 2008 through 2023 produced 13 such buildings. The City reported in May 2026 that the trend included would-be 200-plus-unit projects redesigned as clusters of 99-unit buildings on assembled lots.

Gothamist calculated that the behavior eliminated approximately 538 affordable apartments that compliance with the large-rental rate would have required. The figure reflects the gap between what 25 percent affordability would have produced across these projects versus what the 20 percent sub-threshold rate delivers.

The economics are legible. At 99 units with 20 percent affordability, a developer provides 20 income-restricted apartments. The same 198-unit building at 25 percent provides 50. Labor cost savings on a 99-unit project at market wages, versus the $40 floor required at 100 or more units, run into the millions depending on construction type and schedule. The threshold turned 99 into the most valuable unit count in New York City real estate.

How condo declarations extend the strategy above 99 units.

For developers building larger projects, a second approach emerged: the condominium declaration. Under New York law, a developer may file a condo offering plan with the AG's Real Estate Finance Bureau creating multiple "residential condo units" on a single zoning lot, each carrying its own tax lot. Each declaration is assessed separately for § 485-x purposes.

The structure works as follows. Condo Unit A: 99 rental apartments, eligible for the § 485-x tax exemption with 20 affordable units and no wage floor. Condo Unit B: 30 to 40 for-sale condominiums sold at market prices, carrying no affordability obligation and no § 485-x requirement. The combined building has 130 to 140 total units, well above the 100-unit threshold, but neither declaration crosses it on its own.

The affordability gap is concrete. A single 138-unit rental building subject to § 485-x would require approximately 35 income-restricted apartments under the large-rental rate. The split structure produces 20. Nothing in the current statute or in HPD's adopted implementation rules, as of mid-2026, explicitly prohibits the arrangement.

What this means if you are buying into a hybrid condo.

For a buyer purchasing into Condo Unit B (the for-sale portion of a split structure), the building carries characteristics that a standard purchase checklist will not surface.

Your building shares a physical plant with a rental component managed for the sponsor's benefit, not yours. Mechanical systems, lobbies, elevators, and roofs may straddle both declarations. Cost allocation between the two units is a contract question settled in the condo documents, not a statutory default. What the sponsor drafted governs.

The § 485-x abatement will expire. The statute sets fixed exemption periods, after which the building reverts to full Class 2 assessment. For unit owners in Condo Unit B, that expiration arrives as a carrying-cost increase using exactly the same mechanism documented in the Tier Carrying Burden framework for 421-a buildings: the tax the sponsor deferred during development flows to owners at a date the sponsor has already built into their pro forma. The 421-a carrying-cost calculator on this site models that cliff for buildings still under the old program. The § 485-x successor will produce the same curve.

Reserve fund requirements apply to the for-sale portion at its own assessed value. The rental component operates under separate governance. Major shared repairs become allocation disputes after the sponsor exits. No New York statute requires a reserve study for either component. That gap is documented at /issues/no-reserve-fund-requirement/.

The same statutory DNA as 421-a.

The parallel to 421-a is precise. Under 421-a, the abatement attached to a development decision the sponsor made; buyers purchased at the in-abatement carrying cost without modeling the post-abatement bill. Thousands of owners in buildings constructed between 2005 and 2020 are now hitting that cliff as their abatements expire in the 2025-to-2035 window.

§ 485-x repeats the design. The exemption attaches at development, the cliff arrives at expiration, and the sponsor has collected the benefit and moved on before the carrying-cost increase reaches owners. The 99-unit threshold adds a second surface: the affordable units that were not built because the cliff made 99 the rational integer for developers who could have built 150.

Albany had a technical path to a different outcome. A sliding scale, with affordability requirements and wage floors graduating continuously across a unit-count range, would have reduced the cliff to a slope and eliminated the integer arbitrage. Testimony during the 2024 budget process named the risk of a hard threshold. The statute passed with the threshold intact. The behavior followed within months, exactly as the testimony described.

The NYC local-law extraction stack documents this pattern across a dozen mandates: each contains a threshold, an optimization point, and a vendor ecosystem that profits from the gap. § 485-x added the pre-closing phase to that stack. The extraction begins before the buyer arrives.

Bottom line.

§ 485-x replaced one expiring incentive with another built on the same hard threshold. Developers found the 99-unit floor in two years, producing more than 120 permit filings at exactly 99 units against 13 in the prior 16 years. Buildings above 99 units found a second route through condo declarations. For buyers entering new construction condos today, the questions are the same as for 421-a buildings: when does the abatement expire, what does the post-abatement tax bill look like, and what was the developer optimizing for when they stopped at 99 instead of 100? The answers are in the condo documents and the offering plan. They are rarely on the broker's sheet.

Primary sources:
NY Real Property Tax Law § 485-x: full statute text (NY Senate)
NYC HPD: 485-x Affordable Neighborhoods for New Yorkers program
The City, May 7, 2026: "99-Apartment Loophole Brings 99 Problems for Affordable Housing in NYC"
Gothamist: "How a tax break program killed 538 affordable apartments in NYC"

Companion resources: Your 421-a abatement is expiring · The TCB framework for 421-a phase-out · 421-a carrying-cost calculator · Issue: no reserve fund requirement in NY · NYC local-law extraction stack