City of Yes & 485-x: The New Development Playbook
Zoning density bonuses (UAP) and the 485-x "Option B" incentive have decoupled asset values in Brooklyn. 2026 is the year of the "Regulatory Alpha."
Mendy Lipsker
Principal | Analyst
Me***@*********ty.com
The "City of Yes" Effect: Universal Affordability
The passage of the "City of Yes for Housing Opportunity" in late 2025 has fundamentally altered the math for mid-block development in Crown Heights and Bed-Stuy. The new Universal Affordability Preference (UAP) replaces the old voluntary inclusionary housing model, offering a 20% floor area ratio (FAR) bonus in R6-R10 districts.
For developers, this means projects that were previously mathematically thin can now unlock critical density. However, the requirement is strict: the bonus area must be permanently affordable at an average of 60% AMI.
2026 Regulatory Impact Score
485-x (ANNY): The "Option B" Strategy
With 421-a expired, the new 485-x program is the only game in town. For Brooklyn infill developers, Option B (Modest Rental Projects) is the sweet spot. It covers buildings with 6 to 99 units and provides a 35-year exemption. The tradeoff? You must deliver 20% of units at 80% AMI.
| Incentive / Law | Key Requirement | Benefit / Penalty | 2026 Strategy |
|---|---|---|---|
| 485-x (Option B) | 20% @ 80% AMI | 35-Year Tax Break | Build 6-99 Unit Infill |
| City of Yes (UAP) | Perm. Affordable | 20% Density Bonus | Maximize FAR |
| ADU Conversions | Owner Occupied | Rental Income | Garage/Basement Conv. |
| Local Law 97 | Carbon Caps | $268/Ton Fine | Retrofit Before 2030 |
Local Law 97: The 2030 Cliff
While 2026 is a "reporting" year, the real pain arrives in 2030 when emissions limits tighten by ~40%. Buildings that are merely "passing" today will be facing six-figure fines in four years. We are advising clients to perform retrofits now—heat pumps, window skins, and solar—while incentives are liquid.
"The value of a non-compliant Class B multifamily building in Brooklyn will discount significantly by 2027 as buyers factor in the capitalized cost of future carbon penalties."
Mendy Realty Inc. is a licensed real estate broker. We are not attorneys, zoning architects, or tax advisors. The information presented herein regarding "City of Yes," 485-x, and Local Law 97 is for general informational purposes only and based on our understanding of regulations as of year-end 2025. Zoning laws and tax codes are subject to change.
No Zoning or Legal Advice: Do not rely on this page for development decisions. You must conduct your own due diligence and consult with qualified land-use attorneys and architects before purchasing property or commencing construction.
No Copyright Infringement Intended: All regulatory terms are cited from public NYC.gov and HPD documents. This content is original analysis.
No Misleading Claims: Projections for 2026 and 2027 are forecasts, not guarantees of future performance. Real estate investments carry risk.
Brooklyn Real Estate Intelligence 2026-2027
Mendy Realty is a leading brokerage specializing in NYC commercial investment sales and multifamily dispositions. Our 2026 advisory focus includes City of Yes zoning analysis, 485-x tax incentive compliance, and Brooklyn ADU development strategy. We serve the core markets of Crown Heights, Bedford-Stuyvesant, and Williamsburg.
