Mayor Steve Noble has signed into law new measures offering major tax breaks to developers of affordable housing and homeowners who build accessory dwelling units on their property. Noble pushed for both new initiatives, which were approved by the Common Council in July and earlier this month.

During the spring budget process, state lawmakers passed amendments to the tax code 420-P and 420-P*2 that allow communities to opt-in to providing tax breaks for affordable housing and ADUs. The program operates similarly to the payment in lieu of taxes (PILOT) agreements frequently granted to housing developers, but are standardized, do not need to be negotiated with the city and are available to all who meet the criteria.

Under 420-P, developers of new multifamily residential projects with at least 10 units built on undeveloped or underutilized land will get a 100 percent property tax exemption during construction for up to three years. After that the tax break diminishes by 4 percent annually for 25 years. In exchange for the exemption, developers must make at least 25 percent of all units affordable to tenants making between 60 and 80 percent of the Area Median Income. Property owners must also pay taxes based on the land’s pre-construction assessed value.

420-P*2 applies to builders of accessory dwelling units, small stand-alone living spaces built into the envelope of or on the same parcel as a single-family home. The law allows property owners to exempt 100 percent of the value of the ADU from their property tax bill for 10 years. To qualify, the ADU must meet the criteria for an independent living space as defined in the city’s new Kingston Forward zoning code. The space cannot be used as a short-term rental. (Under the code, all ADUs in the city are barred from hosting short-term rentals).

The tax exemptions will only apply to city taxes. In an email to Kingston Wire on Thursday, Noble said he had already sent letters to the county and the Kingston City School District asking them to consider following the city’s lead in order to provide full tax relief to participants and offering to make a presentation on the benefits of mixed-income housing and the city’s role in managing the program. Noble called the tax breaks a “new tool” that would likely prove attractive to developers seeking to build mixed-income housing. Noble added that he expected developers of 100 percent-subsidized housing to continue to rely on PILOT agreements that offer even deeper tax relief based on state assessment laws.

“I believe [the new legislation] will spur the creation of much needed housing units in Kingston, helping us to reach our goal of approving 1,000 units of housing by 2029,” said Noble. “We need housing on every level and across the city. This legislation allows for both homeowners to create additional housing on their property as well as developers who want to create or redevelop larger housing projects.”

The tax breaks are intended to complement a number of provisions in the new zoning code adopted last year that city officials are hoping will spur residential construction in a community where housing affordability has emerged as a full-blown crisis in recent years. Among the new rules are a mandate that new residential buildings with seven or more units include 10 percent affordable housing and a “density bonus” that allows developers to add extra floors to residential buildings that go beyond that mandate. The new code also dropped all off-street parking requirements in hopes of opening up to development parcels that would have been unbuildable under the former code.