Long-form · ~1,800 words · Authored by Anna Martynova, Director of Incentives
Enacted on the same April 2024 day as 485-x, RPTL §467-m is the tax incentive designed for a different part of the pipeline: the conversion of underutilized commercial buildings into rental housing. As office vacancy has remained elevated in Midtown and parts of Downtown through 2025, 467-m has moved from an interesting policy tool to one of the most economically consequential incentives in the city, anchoring projects like 25 Water Street, 5 Times Square, 55 Broad, and 222 Broadway.
The basic deal
Under 467-m, a non-residential building converted to rental housing can receive a real property tax exemption running from 25 to 35 years. In exchange, the project must meet deep affordability requirements — 25% of units affordable, with a 5% set-aside at 40% AMI — and must maintain that affordability in perpetuity, not merely for the benefit period. HPD’s final rules at 28 RCNY Chapter 64 took effect January 15, 2025.
Construction must commence after December 31, 2022 and on or before June 30, 2031. Completion must occur on or before December 31, 2039. The program is tiered: commence earlier, get a longer benefit.
Benefit structure by commencement date
- Commence by June 30, 2026: 35-year benefit.
- Commence by June 30, 2028: 30-year benefit.
- Commence by June 30, 2031: 25-year benefit.
Construction-period benefit runs up to three years at 100% exemption, stacked on top of the post-construction term.
The exemption percentage itself varies by geography. Inside the Manhattan Prime Development Area (south of 96th Street), the 35-year track runs at 90% exemption for the first 30 years before stepping down. Outside MPDA, the same term runs at 65% for the first 30 years. The 30-year and 25-year tracks follow the same logic, with their respective step-downs.
Affordability requirements
467-m affordability is deep and structurally different from 485-x:
- At least 25% of dwelling units must be affordable.
- At least 5% of units (Affordable Housing Forty Percent Units) must serve households at or below 40% AMI.
- Weighted average across all affordable units must not exceed 80% AMI.
- No more than three income bands, and no band may exceed 100% AMI.
- Initial rents set at the AMI band minus three percentage points.
- Bedroom mix: proportional to market-rate units, or at least 50% at two-bedroom or larger with no more than 25% studios.
- Permanent affordability and permanent rent stabilization — these obligations survive termination of the tax benefit.
Market-rate units are not rent-stabilized. As with 485-x, 467-m cleans up the legacy 421-a(16) regime that regulated market units below a rent threshold.
Eligibility — the 50% pre-existing building rule
The single most important eligibility rule under 467-m is the inverse of 485-x’s conversion rule. To qualify for 467-m, the pre-existing structure must constitute at least 50% of the completed building area. If a project demolishes more than half the existing structure or adds more than the existing floor area in new construction, it tips into 485-x territory instead.
467-m and 485-x are mutually exclusive. A project cannot claim both, and the 50% line decides which applies. This matters at feasibility: a full-envelope retention with interior gut is a 467-m deal; a partial retention with significant vertical addition is probably not.
Other eligibility basics: the project must have six or more dwelling units, all units must be rental (no condo or co-op), and hotels and Class B multiple dwellings are excluded.
What 467-m does not require
Unlike 485-x, 467-m has no construction wage requirement. This is material. Converting a Midtown office tower is already expensive; the absence of a wage floor for construction labor is part of what makes the math work on many projects.
Building Service prevailing wage still applies through the benefit period, unless the building has fewer than 30 units or is substantially assisted by government affordable housing subsidies. So operational staff wages are regulated; construction labor is not.
467-m also does not carry a 25% MWBE participation requirement at the project level. Individual city-subsidy overlays may impose their own MWBE obligations, but the statute itself is silent.
City of Yes changed the feasibility envelope
When City of Yes for Housing Opportunity was adopted by City Council in December 2024, it extended conversion eligibility under the zoning code to any non-residential building constructed before 1991, citywide. Pre–City of Yes conversions had been constrained to Manhattan south of 60th Street and a narrow band of eligible building ages. That change, combined with the NYS FY25 budget’s lifting of the 12 FAR cap when mandatory affordability is provided, opened the potential inventory dramatically.
HPD’s official estimate at adoption: approximately 20,000 new homes through 467-m. The Mayor’s office has referenced roughly 40,000 New Yorkers housed as the population figure. As of mid-2025, about 10,000 apartments have been completed or started through commercial conversions since the program took effect — a fast pace relative to the 485-x new-construction pipeline.
Stacking with UAP
The Universal Affordability Preference, also part of City of Yes, applies to conversions in eligible zoning districts. For a 467-m project in a UAP-eligible district, the developer can layer UAP’s floor area increase on top of the 467-m tax abatement. The affordability obligations interact — UAP’s 60% weighted AMI average is deeper than 467-m’s 80%, so projects stacking both need to model carefully to ensure the affordable unit set satisfies both programs simultaneously.
Application workflow
The 467-m procedural path mirrors 485-x’s but with its own forms and windows:
- Workbook submission using HPD’s 467-m Units Workbook (most recently updated April 30, 2025), establishing unit designations, income bands, and initial rents.
- Notice of Intent to Begin Marketing, triggered after workbook approval.
- Execution of a Marketing Monitoring Contract with an HPD-approved Marketing Monitor.
- Application for Certificate of Eligibility, filed between Completion and one year after. Filing fee is at least $3,000 per unit.
Benefits apply retroactively to the Commencement Date once the Certificate of Eligibility is issued, so the application window is the last major compliance gate.
Where 467-m is landing
The flagship 467-m project is 5 Times Square, announced by Governor Hochul and Mayor Adams in May 2025: up to 1,250 units with 313 permanently affordable, converting a 1.1-million-square-foot office tower. Other major 467-m projects include:
- 25 Water Street — the country’s largest office-to-residential conversion, approaching 1,300 units.
- 55 Broad Street — a full-block conversion in the Financial District.
- 222 Broadway — a conversion anchoring the Fulton corridor.
- Midtown office towers including 750 Third Avenue, 675 Third Avenue, and 767 Third Avenue.
Between 467-m’s adoption and Q2 2025, NYC Comptroller Lander’s office estimated roughly 17,400 net new units in Manhattan from the active conversion pipeline.
Key risks to watch
Converting commercial to residential is not simply a tax analysis; it is a floorplate analysis. A few recurring risks:
- Light and air. Deep office floorplates frequently produce dark interior apartments that struggle to lease, even in otherwise strong locations. Pro formas should account for light courts, unit-count reductions, or interior carve-outs.
- MEP. Risers designed for office loads rarely serve the density and diversity of residential plumbing and electrical demand. Budget for major vertical infrastructure replacement.
- Façade. Curtain walls detailed for Class A office rarely meet residential thermal and acoustic requirements without major retrofit.
- Affordability math at lease-up. 5% of units at 40% AMI is a deep affordability commitment on Midtown cost basis. Model the rent impact carefully against the exemption value.
- Commencement-date tiering. A project slipping from a 35-year benefit into a 30-year benefit because commencement misses the June 30, 2026 window is a meaningful value loss. Do not leave commencement on the critical path without contingency.
Our take
467-m is unusual in New York City tax incentive history in that it was calibrated, in real time, to an observable market condition: structural office vacancy in a city that also faces a housing shortage. The program’s deep affordability requirements mean it is not free money — 25% affordable with 5% at 40% AMI is a real obligation — but the permanent benefit structure, the absence of construction wage rules, and the post–City of Yes zoning framework have aligned to make conversions feasible on a scale that was not available before April 2024. Developers considering conversions should be modeling 467-m, UAP, and City of Yes zoning as a single integrated question.
Regtime Builder models 467-m feasibility for commercial-to-residential conversions, including MPDA vs. non-MPDA comparison, UAP stacking, and City of Yes zoning analysis. Our team manages the 467-m application workflow end-to-end.
