City Council Passes Basement Apartment Pilot Program

The New York City Council recently voted in favor of creating a pilot program to expand the city’s housing stock by facilitating the creation of basement apartments in East New York. This program would also aid eligible property owners with low-cost loans. While modest in its initial scope at 40 units, the program could have an impact on the city’s housing supply if it’s adopted in all five boroughs.

Councilmember Brad Lander introduced the legislation, which is backed by Mayor Bill de Blasio and co-sponsored by nine other Council members, as a case study to eventually expand the program across the city. For several decades, basements and cellars have been illegal and considered uninhabitable largely for public health reasons, according to HPD. Such units typically lack light and air and usually retain moisture, which can lead to unsafe living conditions such as mold.

The new policy would modify the city’s building and fire codes to allow qualified basement units to be made habitable and legal. An interagency group including the Department of Buildings, Department of Housing Preservation, and Development and Department of City Planning will determine how and whether a basement or cellar can be converted into a legal apartment.

Currently, basement apartments are potentially legal and cellar apartments are illegal. A basement apartment is less than 50 percent below grade and the latter is more than 50 percent below grade. In other words, an apartment that has 8-foot ceilings is a basement and legal if the floor is less than 4 feet below street level and a few other conditions are met. If that same apartment with the 8-foot ceilings were to have a floor that’s more than 4 feet below street level, it would mean the space is a cellar, and, therefore, it’s illegal to rent out that space.

The program will also offer $12 million in low-interest loans and grants, which will be overseen by HPD, to low- and moderate-income homeowners for improvements so they may comply with the new regulations. The amount is based on estimates that it will require between $160,000 and $260,000 to convert basement areas into habitable units. The city expects the lion’s share of this money to be returned as owners pay back their loans.