S T A T E   O F   N E W   Y O R K
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                                   9872
 
                           I N  A S S E M B L Y
 
                              April 19, 2022
                                ___________
 
 Introduced by M. of A. THIELE -- 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
 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.
              

 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD15045-02-2
 A. 9872                             2
 
   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;
   (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;
 A. 9872                             3
 
   (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
 (nnn) to read as follows:
   (NNN) 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.
   (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
 A. 9872                             4
 
 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
 be  final, such judgment shall not have the effect of rendering this act
 invalid, inoperative and void.
   § 6. This act shall take effect immediately.