S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   1401
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             January 17, 2023
                                ___________
 
 Introduced  by  M.  of A. THIELE, PAULIN, MAGNARELLI, DAVILA, BURDICK --
   read once and referred to the Committee on Housing
 
 AN ACT to amend the private housing finance law, the  tax  law  and  the
   real  property tax law, in relation to enacting the accessory dwelling
   unit incentive act

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Short  title. This act shall be known and may be cited as
 the "accessory dwelling unit incentive act".
   § 2. The private housing finance law is amended by adding a new  arti-
 cle 32 to read as follows:
                                ARTICLE 32
              ACCESSORY DWELLING UNIT FORGIVABLE LOAN PROGRAM
 
 SECTION 1290. LEGISLATIVE FINDINGS AND PURPOSE.
         1291. DEFINITIONS.
         1292. ACCESSORY DWELLING UNIT FORGIVABLE LOAN PROGRAM.
   § 1290. LEGISLATIVE FINDINGS AND PURPOSE. THE LEGISLATURE HEREBY FINDS
 THAT  ACCORDING TO A 2019 REPORT FROM THE STATE COMPTROLLER, MILLIONS OF
 RENTERS AND HOMEOWNERS IN OUR STATE STRUGGLE WITH HIGH HOUSING COSTS. AS
 OF 2017, NEARLY 2.8 MILLION NEW YORK HOUSEHOLDS FACED HOUSING COSTS THAT
 WERE 30 PERCENT OR MORE OF THEIR INCOME, A COMMONLY  ACCEPTED  BENCHMARK
 FOR  HOUSING AFFORDABILITY. ALMOST HALF OF ALL RENTERS AND MORE THAN ONE
 IN FOUR HOMEOWNERS WERE IN  THIS  CATEGORY,  ACCORDING  TO  U.S.  CENSUS
 BUREAU  DATA.  BASED  ON CRITERIA USED BY THE U.S. DEPARTMENT OF HOUSING
 AND URBAN DEVELOPMENT, MORE THAN 1.3 MILLION HOUSEHOLDS - INCLUDING MORE
 THAN ONE OF EVERY FOUR RENTERS - WERE  "SEVERELY  BURDENED"  BY  HOUSING
 COSTS  OF  HALF  OR  MORE  OF THEIR INCOME. HIGH HOUSING COSTS MAY FORCE
 FAMILIES AND INDIVIDUALS TO REDUCE OR FOREGO OTHER  NECESSITIES.    MANY
 FIND  IT IMPOSSIBLE TO PUT ASIDE SAVINGS FOR EMERGENCY NEEDS, COLLEGE OR
 RETIREMENT. SOME MAY FACE EVICTION OR CONCLUDE THEIR ONLY CHOICE  IS  TO
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD05689-01-3
              

 A. 1401                             2
 
 MOVE TO LOWER-COST LOCATIONS. SUCH OUTCOMES HAVE BROADER, HARMFUL IMPLI-
 CATIONS FOR NEW YORK'S ECONOMY.
   THE  HOUSING  AFFORDABILITY  CHALLENGE  RESULTS  FROM A COMBINATION OF
 FACTORS. STATEWIDE, MEDIAN RENTAL COSTS ROSE BY NEARLY 13 PERCENT, AFTER
 ADJUSTING FOR INFLATION, OVER THE DECADE ENDING IN 2017, COMPARED  TO  A
 2.5 PERCENT INCREASE IN MEDIAN HOUSEHOLD INCOME FOR RENTERS.
   WHILE  RENTAL  AND  HOMEOWNER  COSTS ARE GENERALLY HIGHER IN DOWNSTATE
 REGIONS, THE CHALLENGE OF  AFFORDABILITY  EXTENDS  THROUGHOUT  NEW  YORK
 STATE.  HOUSING  AFFORDABILITY  CAN BE ELUSIVE FOR NEW YORKERS IN URBAN,
 SUBURBAN AND RURAL SETTINGS ALIKE.
   THESE HOUSING AFFORDABILITY CHALLENGES HAVE ONLY BEEN  EXACERBATED  BY
 THE  COVID-19 PANDEMIC, WITH HOUSING COSTS INCREASING AND HOUSING AVAIL-
 ABILITY DECREASING, WHILE NEW YORKERS FACE A MYRIAD  OF  OTHER  ECONOMIC
 AND  PERSONAL CHALLENGES BROUGHT ON BY THE PANDEMIC. THE AVAILABILITY OF
 AFFORDABLE HOUSING HAS REACHED CRISIS PROPORTIONS.
   ONE PROVEN SOLUTION TO AUGMENTING THE INVENTORY OF AFFORDABLE  HOUSING
 IS  THE  CREATION  OF ACCESSORY DWELLING UNITS. ACCESSORY DWELLING UNITS
 ARE  ATTACHED  OR  DETACHED  RESIDENTIAL  DWELLING  UNITS  THAT  PROVIDE
 COMPLETE  INDEPENDENT  LIVING FACILITIES FOR ONE OR MORE PERSONS LOCATED
 ON A LOT WITH A PROPOSED  OR  EXISTING  PRIMARY  RESIDENCE.  SUCH  UNITS
 INCLUDE  PERMANENT PROVISIONS FOR LIVING, SLEEPING, EATING, COOKING, AND
 SANITATION ON THE SAME LOT AS THE SINGLE-FAMILY OR MULTIFAMILY DWELLING.
   ONE OF THE LARGEST IMPEDIMENTS TO THE CREATION OF  ACCESSORY  DWELLING
 UNITS,  WHERE THEY ARE ALREADY LEGALLY PERMITTED, IS THE UPFRONT CAPITAL
 COST OF PERMITTING, DESIGN, AND CONSTRUCTION. IT IS THE PURPOSE OF  THIS
 ARTICLE TO CREATE A FORGIVABLE LOAN PROGRAM FOR THE CREATION OF ACCESSO-
 RY  DWELLING UNITS TO PROVIDE AN INCENTIVE TO PROPERTY OWNERS WHERE SUCH
 UNITS ARE LEGALLY PERMITTED BY LOCAL GOVERNMENT IN ORDER TO INCREASE THE
 LEVEL OF AFFORDABLE HOUSING OPPORTUNITIES FOR ALL NEW YORKERS.
   § 1291. DEFINITIONS. AS USED IN  THIS  ARTICLE,  THE  FOLLOWING  TERMS
 SHALL HAVE THE FOLLOWING MEANINGS:
   1.  "ACCESSORY  DWELLING  UNIT"  SHALL  MEAN AN ATTACHED OR A DETACHED
 RESIDENTIAL DWELLING UNIT  THAT  PROVIDES  COMPLETE  INDEPENDENT  LIVING
 FACILITIES  FOR  ONE  OR  MORE  PERSONS WHICH IS LOCATED ON A LOT WITH A
 PROPOSED OR EXISTING  PRIMARY  RESIDENCE  AND  SHALL  INCLUDE  PERMANENT
 PROVISIONS  FOR LIVING, SLEEPING, EATING, COOKING, AND SANITATION ON THE
 SAME LOT AS THE SINGLE-FAMILY OR MULTIFAMILY DWELLING.
   2. "DIVISION" SHALL MEAN THE NEW YORK  STATE  DIVISION  OF  HOMES  AND
 COMMUNITY RENEWAL.
   §  1292.  ACCESSORY  DWELLING UNIT FORGIVABLE LOAN PROGRAM.  1. WITHIN
 THE LIMIT OF FUNDS AVAILABLE, THE DIVISION SHALL ESTABLISH AN  ACCESSORY
 DWELLING UNIT FORGIVABLE LOAN PROGRAM, AS PROVIDED FOR BY THIS ARTICLE.
   2.  THE  DIVISION  SHALL PROMULGATE RULES AND REGULATIONS NECESSARY TO
 CARRY OUT SUCH PROGRAM, CONSISTENT WITH THIS ARTICLE.
   3. SUCH RULES AND REGULATIONS SHALL INCLUDE THE FOLLOWING CRITERIA:
   (A) THE ACCESSORY DWELLING UNIT MUST BE LOCATED ON AN  OWNER  OCCUPIED
 PROPERTY.
   (B)  THE  FORGIVABLE  LOAN  SHALL  INCLUDE, BUT NOT BE LIMITED TO, THE
 FOLLOWING REQUIREMENTS:
   (I) THE LOAN SHALL NOT EXCEED A MAXIMUM AMOUNT OF  SEVENTY-FIVE  THOU-
 SAND  DOLLARS  OR  FIFTY  PERCENT  OF  THE ELIGIBLE COST OF THE PROJECT,
 WHICHEVER IS LESS;
   (II) THE INTEREST RATE SHALL BE THE PREVAILING MARKET RATE, AS  DETER-
 MINED BY DIVISION;
   (III) THE TERM OF THE LOAN SHALL BE TWENTY YEARS;
 A. 1401                             3
 
   (IV)  THE  ACCESSORY  DWELLING UNIT MUST BE RENTED TO A TENANT MEETING
 THE INCOME AND RENT GUIDELINES ESTABLISHED BY THE DIVISION;
   (V) THE LOAN SHALL BE FORGIVEN IF THE ACCESSORY DWELLING UNIT IS RENT-
 ED  TO TENANTS IN COMPLIANCE WITH THE INCOME AND RENT GUIDELINES FOR THE
 ENTIRE TWENTY-YEAR PERIOD;
   (VI) THE LOAN AND  RENT  RESTRICTIONS  SHALL  BE  SECURED  BY  A  DULY
 EXECUTED  LEGAL  INSTRUMENT WHICH SHALL BE RECORDED AGAINST THE PROPERTY
 WITH THE APPROPRIATE LOCAL RECORDING OFFICER;
   (VII) TOTAL LIENS, INCLUDING THE  LOAN  AUTHORIZED  BY  THIS  ARTICLE,
 SHALL  NOT  EXCEED ONE HUNDRED PERCENT OF THE POST-CONSTRUCTION VALUE OF
 THE PROPERTY AT THE TIME OF THE LOAN CLOSING; AND
   (VIII) ELIGIBLE COSTS FOR THE LOAN SHALL INCLUDE PERMIT FEES,  DESIGN,
 AND CONSTRUCTION.
   (C)  INCOME FOR INDIVIDUALS OCCUPYING AN ACCESSORY DWELLING UNIT UNDER
 THIS PROGRAM SHALL NOT EXCEED ONE HUNDRED PERCENT OF THE  INCOME  LIMITS
 AS  ESTABLISHED  BY  THE  STATE OF NEW YORK MORTGAGE AGENCY LOW INTEREST
 RATE LOAN PROGRAM IN NON-TARGET CATEGORIES FOR A  REGION  IN  WHICH  THE
 ACCESSORY DWELLING UNIT IS LOCATED, ADJUSTED FOR HOUSEHOLD SIZE.
   (D)  RENT  LIMITS FOR EACH ACCESSORY DWELLING UNIT SHALL BE CALCULATED
 AT SEVENTY PERCENT OF THE AREA MEDIAN INCOME  (AMI)  ADJUSTED  FOR  UNIT
 SIZE AND INCLUDING UTILITY ALLOWANCES.
   (E) THE DIVISION SHALL ALSO CERTIFY THE MARKET RATE RENT FOR ACCESSORY
 DWELLING  UNITS ON A REGIONAL BASIS ADJUSTED FOR UNIT SIZE AND INCLUDING
 UTILITY ALLOWANCES.
   (F) THERE SHALL BE NO INCOME LIMIT FOR THE BORROWER.
   (G) THE DIVISION MAY MAKE REASONABLE EXCEPTIONS TO THESE  REQUIREMENTS
 WHERE THEY WOULD RESULT IN AN UNDUE HARDSHIP.
   4.  AN  ACCESSORY  DWELLING  UNIT FINANCED WITH THE ASSISTANCE OF THIS
 PROGRAM SHALL NOT BE RENTED FOR A TERM LESS THAN ONE YEAR.
   5. THE DIVISION SHALL ISSUE AN ANNUAL REPORT, ON OR BEFORE JULY  FIRST
 OF  EACH  YEAR,  THAT INCLUDES AN ITEMIZED LIST OF EACH PROJECT FINANCED
 THROUGH THE PROGRAM, INCLUDING A BRIEF DESCRIPTION OF THE  PROJECT,  ZIP
 CODE, AND COUNTY.
   6. THE DIVISION SHALL ESTABLISH A PROGRAM TO PROVIDE TECHNICAL ASSIST-
 ANCE TO ALL HOMEOWNERS SEEKING TO CREATE AN ACCESSORY DWELLING UNIT.
   §  3. Section 606 of the tax law is amended by adding a new subsection
 (bbb) to read as follows:
   (BBB) CREDIT FOR ACCESSORY DWELLING UNIT MEETING AFFORDABLE INCOME AND
 RENTAL GUIDELINES. (1) A TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST  THE
 TAX  IMPOSED  UNDER  THIS ARTICLE, WHERE SUCH RESIDENT OWNER POSSESSES A
 VALID CERTIFICATE OF OCCUPANCY FOR AN ACCESSORY DWELLING UNIT AND  RENTS
 SAID  UNIT IN ACCORDANCE WITH THE OCCUPANCY, INCOME, AND RENT GUIDELINES
 ESTABLISHED FOR ACCESSORY DWELLING UNITS, PURSUANT TO ARTICLE THIRTY-TWO
 OF THE PRIVATE HOUSING FINANCE LAW.
   (2) THE CREDIT SHALL BE IN AN AMOUNT EQUAL TO  FIFTY  PERCENT  OF  THE
 DIFFERENCE  BETWEEN THE MARKET RATE RENT CERTIFIED PURSUANT TO PARAGRAPH
 (E) OF SUBDIVISION THREE OF SECTION TWELVE  HUNDRED  NINETY-TWO  OF  THE
 PRIVATE  HOUSING  FINANCE  LAW  AND  THE AMOUNT OF RENT ACTUALLY CHARGED
 UNDER THE AFFORDABLE RENT GUIDELINES ENACTED PURSUANT TO  PARAGRAPH  (D)
 OF SUBDIVISION THREE OF SECTION TWELVE HUNDRED NINETY-TWO OF THE PRIVATE
 HOUSING  FINANCE  LAW, BUT NOT TO EXCEED THE MAXIMUM CREDIT OF TEN THOU-
 SAND DOLLARS.
   (3) FOR THE PURPOSES OF THIS SUBSECTION THE TERM  "ACCESSORY  DWELLING
 UNIT"  SHALL HAVE THE SAME MEANING AS PROVIDED FOR IN SUBDIVISION ONE OF
 SECTION TWELVE HUNDRED NINETY-ONE OF THE PRIVATE HOUSING FINANCE LAW.
 A. 1401                             4
 
   (4) TO BE ELIGIBLE FOR THIS CREDIT, THE INCOME AND  RENT  RESTRICTIONS
 SHALL  BE  SECURED  BY  A  DULY EXECUTED LEGAL INSTRUMENT WHICH SHALL BE
 RECORDED AGAINST THE PROPERTY WITH THE APPROPRIATE LOCAL RECORDING OFFI-
 CER. SAID INSTRUMENT SHALL BE FILED WITH ANY APPLICATION FOR THE CREDIT.
   (5)  IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBSECTION FOR ANY
 TAXABLE YEAR SHALL EXCEED THE TAXPAYER'S TAX FOR SUCH YEAR,  THE  EXCESS
 SHALL  BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN
 ACCORDANCE WITH THE PROVISIONS OF SECTION SIX HUNDRED EIGHTY-SIX OF THIS
 ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
   § 4. The real property tax law is amended by adding a new section  463
 to read as follows:
   § 463. AFFORDABLE ACCESSORY DWELLING UNITS. 1. AFTER A PUBLIC HEARING,
 THE  GOVERNING BODY OF A COUNTY, CITY, TOWN OR VILLAGE MAY ADOPT A LOCAL
 LAW OR A SCHOOL DISTRICT  MAY  ADOPT  A  RESOLUTION,  PROVIDING  FOR  AN
 EXEMPTION  PURSUANT TO THE PROVISIONS OF THIS SECTION. SUCH LOCAL LAW OR
 RESOLUTION MAY PROVIDE THAT AN IMPROVEMENT TO ANY REAL PROPERTY USED FOR
 RESIDENTIAL PURPOSES SHALL BE EXEMPT FROM TAXATION AND SPECIAL AD  VALO-
 REM  LEVIES  TO THE EXTENT OF ANY INCREASE IN VALUE ATTRIBUTABLE TO SUCH
 IMPROVEMENT IF SUCH IMPROVEMENT IS USED FOR THE PURPOSE OF AN AFFORDABLE
 ACCESSORY DWELLING UNIT, WHERE SUCH RESIDENT  OWNER  POSSESSES  A  VALID
 CERTIFICATE  OF  OCCUPANCY FOR AN ACCESSORY DWELLING UNIT AND RENTS SAID
 UNIT IN ACCORDANCE WITH  THE  OCCUPANCY,  INCOME,  AND  RENT  GUIDELINES
 ESTABLISHED FOR ACCESSORY DWELLING UNITS, PURSUANT TO ARTICLE THIRTY-TWO
 OF THE PRIVATE HOUSING FINANCE LAW. FOR THE PURPOSES OF THIS SECTION THE
 TERM  "ACCESSORY  DWELLING UNIT" SHALL HAVE THE SAME MEANING AS PROVIDED
 FOR IN SUBDIVISION ONE OF  SECTION  TWELVE  HUNDRED  NINETY-ONE  OF  THE
 PRIVATE  HOUSING  FINANCE LAW. TO BE ELIGIBLE FOR THE EXEMPTION PROVIDED
 FOR HEREIN, THE  OCCUPANCY,  INCOME,  AND  RENT  RESTRICTIONS  SHALL  BE
 SECURED  BY  A  DULY  EXECUTED  LEGAL INSTRUMENT WHICH SHALL BE RECORDED
 AGAINST THE PROPERTY WITH THE APPROPRIATE LOCAL RECORDING OFFICER.
   2. SUCH EXEMPTION SHALL BE GRANTED ONLY UPON APPLICATION BY THE  OWNER
 OR  ALL OF THE OWNERS OF THE REAL PROPERTY ON A FORM PRESCRIBED AND MADE
 AVAILABLE BY THE COMMISSIONER. THE APPLICANT SHALL FURNISH SUCH INFORMA-
 TION AS THE COMMISSIONER SHALL REQUIRE. THE APPLICATION SHALL  BE  FILED
 TOGETHER  WITH  A COPY OF THE LEGAL INSTRUMENT WITH THE APPLICABLE OCCU-
 PANCY, INCOME AND RENT RESTRICTIONS RECORDED AGAINST THE  PROPERTY  WITH
 THE  ASSESSOR  OF  THE  APPROPRIATE COUNTY, CITY, TOWN, OR VILLAGE ON OR
 BEFORE THE TAXABLE STATUS DATE OF SUCH COUNTY, CITY, TOWN, OR VILLAGE.
   3. NOTWITHSTANDING  THE  PROVISIONS  OF  THIS  SECTION  OR  ANY  OTHER
 PROVISION  OF LAW, IN A CITY HAVING A POPULATION OF ONE MILLION OR MORE,
 APPLICATIONS FOR THE EXEMPTION AUTHORIZED PURSUANT TO THIS SECTION SHALL
 BE CONSIDERED TIMELY FILED IF THEY ARE FILED ON OR BEFORE THE  FIFTEENTH
 DAY OF MARCH OF THE APPROPRIATE YEAR.
   4.  IF  THE ASSESSOR IS SATISFIED THAT THE APPLICANT IS ENTITLED TO AN
 EXEMPTION PURSUANT TO THIS  SECTION,  THE  ASSESSOR  SHALL  APPROVE  THE
 APPLICATION AND ENTER THE TAXABLE ASSESSED VALUE OF THE PARCEL FOR WHICH
 AN EXEMPTION HAS BEEN GRANTED PURSUANT TO THIS SECTION ON THE ASSESSMENT
 ROLL  WITH  THE  TAXABLE  PROPERTY,  WITH THE AMOUNT OF THE EXEMPTION AS
 DETERMINED PURSUANT TO SUBDIVISION ONE OF THIS  SECTION  IN  A  SEPARATE
 COLUMN.  ONCE GRANTED, THE EXEMPTION SHALL CONTINUE ON THE REAL PROPERTY
 AS LONG AS THE ASSESSOR IS SATISFIED THAT THE APPLICANT IS  ENTITLED  TO
 AN EXEMPTION PURSUANT TO THIS SECTION AND THAT THE REQUIREMENTS PROVIDED
 FOR HEREIN CONTINUE TO BE MET.
   §  5. If any clause, sentence, subdivision, paragraph, section or part
 of this act shall be adjudged by any court of competent jurisdiction  to
 be  invalid, and such decision is not reversed or is otherwise deemed to
 A. 1401                             5

 be final, such judgment shall not have the effect of rendering this  act
 invalid, inoperative and void.
   § 6. This act shall take effect immediately.