14.19.1 Bond-Financed Projects in New York City

A. Section 42 of the IRS Code provides that for projects located in New York City, the “40-60” test (restricting 40% of the units for the use of tenants earning no more than 60% of median income) for determining whether a project qualifies as a low-income project, is replaced by a “25-60” test. Thus, the affordability requirement is reduced from 40% to 25% of the units to be set aside at 60% of area median income. HUD will consider this exception to the set-aside on a case-by-case basis, when the Lender’s application demonstrates that the NYC market rents for the additional 15% unrestricted units that would otherwise have been restricted, will still provide for significant affordability in the local market.