A surge of residential development plans across New York City reveals a striking pattern: a growing number of new buildings are being designed with exactly 99 apartments. According to city data, developers have filed permits for more than 150 such buildings in the last two years.
This trend is driven by a desire to utilize a major tax break while avoiding the more stringent requirements triggered by larger projects. By keeping unit counts just under 100, builders can avoid higher minimum wage mandates for construction workers and reduce the number of affordable units they must provide.
The 485-x Tax Loophole
The practice centers on the 485-x tax exemption program, which was authorized by the state in 2024 to replace the previous 421-a program. The program aims to create housing through private funding, combining market-rate and affordable units.
Under the rules of 485-x, any building with 100 or more apartments requires developers to pay construction workers a minimum hourly wage of $40. For projects with fewer than 100 units, no such wage minimum applies.
Affordability requirements also shift at the 100-unit mark. Buildings with fewer than 100 apartments must designate only 20% of units as permanently rent-stabilized and income-restricted. For buildings with 100 to 149 units, that requirement increases to 25% for families of four earning approximately $129,600.
Architectural Workarounds and ‘Clustering’
To maximize land use without triggering the 100-unit threshold, some developers are clustering multiple 99-unit buildings on a single lot. In some cases, these buildings share a common facade to appear as one larger structure.
Examples of this strategy include a project in Downtown Brooklyn with five 99-unit buildings on one lot and a development in Boerum Hill with three such buildings that appear seamlessly connected in architectural drawings.
Toby Snyder, a senior associate at FXCollaborative Architects, notes that this approach leads to duplicative elements like extra stairs, elevators, and trash rooms. Snyder states this results in a loss of square footage that could have been used for units, instead utilizing expensive, high-carbon structural elements.
Labor and Policy Conflict
Labor leaders have been vocal in their opposition to the trend. Gary LaBarbera, president of the Building and Construction Trades Council of Greater New York, has described the practice as a “scam,” arguing that the public suffers because fewer affordable units are being built.
Kevin Elkins, political director of the carpenters’ union, warns that developers may risk losing their tax breaks if it is proven that clustered buildings are effectively one single project. He notes that many of these projects share the same mortgage, amenities, and tax lots.
The trend may complicate the goals of Mayor Zohran Mamdani, who campaigned on building 200,000 affordable apartments using union labor. City Hall spokesperson Matt Rauschenbach stated that officials are monitoring the program’s implementation.
Exceptions and Future Outlook
Some developers continue to build large-scale projects under 485-x. TF Cornerstone is planning 1,060 apartments across three buildings in Greenpoint and 278 apartments in Chelsea. Jon McMillan, senior vice president at TF Cornerstone, attributed this to the company’s status as a long-time union contractor and its use of internal financing.
Other developers suggest that the 99-unit trend may shift if economic conditions change. Eli Weiss, principal at Joy Construction Corp, indicated that a lower interest rate environment and decreased commodity pricing could make the $40 wage floor viable for larger projects.
Frequently Asked Questions
What is the 485-x program?
It is a tax exemption program authorized in 2024 to replace the 421-a program, designed to encourage the construction of market-rate and affordable housing using private funds.
Why are developers specifically building 99 units?
At 99 units, developers can avoid a mandatory $40 minimum hourly wage for construction workers and can limit the required proportion of affordable, rent-stabilized units to 20%.
What are the risks of the “clustered” building approach?
Architects note it creates inefficient use of space and higher carbon footprints due to duplicative structural elements. Union leaders suggest developers could lose tax breaks if clustered buildings are legally deemed a single project.
Do you believe tax incentives should be restructured to prevent developers from using unit-count loopholes?
