For years, housing groups have pushed for the expansion of a key source of funding for affordable housing. On Friday, they got it, but potential housing cuts are on the horizon and threaten to undercut the long-sought policy change.
The massive domestic policy bill signed into law on Friday gutted social safety net programs and could add $3.4 trillion to the national deficit between 2025 and 2034. It also included changes to the federal low-income housing tax credit program that have long garnered bipartisan support but have repeatedly failed to make it over the finish line.
It permanently extended a 12 percent increase in annual allocations of 9 percent low-income housing tax credits. It also changed the so-called 50 percent test that limited the use of 4 percent credits. To access 4 percent credits, developers needed to source at least 50 percent of their funding for a housing project from private activity bonds, which are capped. The spending package reduced that threshold to 25 percent, meaning that more projects can use the 4 percent credits.
These changes could help finance more than one million rentals over the next decade, including 73,500 units in New York state, according to Novogradac.
But looming large are appropriations for fiscal year 2026 and potential deep cuts to federal housing funds. President Donald Trump has proposed cutting the Department of Housing and Urban Development’s budget by $33 billion, or 42 percent. That includes slashing $26 billion in funding for rental assistance and turning the Housing Choice Voucher Program, known as Section 8, into a limited grant program.
The New York Housing Conference estimates that New York could lose $4.4 billion, or nearly half of its federal housing funding, under Trump’s plan. It is unclear how much of Trump’s budget requests will be picked up by Congress. A recent Furman Center report noted that the expansion to the low-income housing tax credit would not make up for the massive cuts proposed by the president.
In the immediate, cities and states will need to figure out how to handle the cuts to Medicaid and federal food assistance programs. In a press release, Gov. Kathy Hochul estimated that the megabill approved last week will result in 1.5 million New Yorkers losing their healthcare coverage.
What we’re thinking about: Which of the land use changes to the city charter proposed by the Charter Revision Commission do you think would have the biggest impact on housing construction if approved by voters? Send a note to kathryn@therealdeal.com.
A thing we’ve learned: Director Steven Spielberg had a nickname for the mechanical shark in “Jaws.” The shark went by Bruce, named after Spielberg’s lawyer, according to Mental Floss.
Elsewhere in New York…
— No, you drop out! Mayor Eric Adams and former Gov. Andrew Cuomo are calling on each other to end their mayoral campaigns, Politico New York reports. Attorney Jim Walden, who is also running as an independent, has suggested conducting an independent poll to determine who among the independent and Republican candidates has the best chance of beating Zohran Mamdani, who won the Democratic nomination, in the general election.
— Since July 1, city-operated drones have spotted nine sharks near Rockaway Beach, causing closures that have totaled 12 hours, Gothamist reports. The city is on pace to surpass previous shark sightings (drones run by the fire department spotted 11 sharks last summer), but that doesn’t signal an uptick in sharks in New York waters. It just means the city has more drones looking for them.
— Six months after launching congestion pricing, the number of vehicles entering the “Congestion Relief Zone” is down 11 percent, or 67,000 fewer vehicles per day, Spectrum News reports. The governor celebrated the stats as proof that the program is working. “Six months in, it’s clear: congestion pricing has been a huge success, making life in New York better,” Hochul said in a statement.
Closing Time
Residential: The top residential deal recorded Monday was $9.9 million for a condominium unit at 2376 Broadway. The condo is located at The Boulevard on the Upper West Side.
Commercial: The top commercial deal recorded was $45.6 million for an apartment building at 10 West 65th Street. The building has six stories and has a gross floor area of 82,200 square feet.
New to the Market: The highest price for a residential property hitting the market was $10.4 million for a penthouse unit at 30 East 29th Street. The NoMad condo unit is 2,600 square feet and listed by Compass’s Kiran Mummidichetty.
— Joseph Jungermann
