Developers Game 99-Unit Loophole Across Boroughs, Sidestepping Labor Rules and Affordable Quotas

Developers’ penchant for building 99-unit apartment blocks exposes loopholes in New York’s housing policy—and raises prickly questions about equity, affordability, and political will.

If you start to notice an uncanny recurrence of “99” on construction permits from Coney Island to the South Bronx, you’re not imagining it. Over the past two years, developers in New York City have filed applications for more than 150 separate residential buildings—each containing exactly 99 apartments, according to filings with the Department of Buildings. This sudden boom in 99-unit residences does not reflect an odd fixation with double digits, nor is it an architectural trend. Rather, it is the natural consequence of a tax code that unintentionally incentivises just-below-the-threshold development, with considerable ramifications for the city’s housing crisis.

At the root of this proliferation is a neat circumvention of two city rules. To claim coveted property tax breaks on new residential developments, builders must include a portion of affordable apartments. But those requirements—and an obligation to pay construction workers a higher minimum wage—kick in only at the 100-unit mark. Canny developers have responded in predictable fashion: build 99-unit blocks, and you can skirt both obligations. It is, as Gary LaBarbera, president of the Building and Construction Trades Council of Greater New York, describes, “a scam”—albeit one that is fully legal.

From Williamsburg to Astoria, these new projects have begun to stamp the city’s streetscapes, their precise scale at once modest and deliberate. Some are even clustered, sharing a facade or a lot line, giving the strong impression of a larger project cut into convenient slices. Just 1% of projects registered for tax incentives in recent years have 100 apartments or more, city data show—a paltry share that hints at how effective the regulatory thresholds have been in shaping builders’ behaviour.

The first casualty of this policy quirk is housing affordability. Slightly smaller buildings mean fewer affordable units required per project—an especially jarring outcome at a time when New York City’s vacancy rate hovers near its lowest since 1968, officially dipping below 2%. This is a city with a waiting list of over 250,000 families for public housing, and with rents that have spiralled to historic highs. Every lost affordable unit, however minuscule it seems on a developer’s spreadsheet, represents another family priced out.

Labour also suffers. Developers of 99-unit projects are exempt from the city’s higher prevailing wage rule for residential buildings with 100 units and above that benefit from public tax breaks. Workers, already contending with inflation and the city’s steep cost of living, see slimmer pay envelopes. For union advocates, the proliferation of these cleverly sized buildings symbolizes a gradual erosion of hard-won labour standards—a trend that New York, traditionally a union stronghold, cannot disregard lightly.

For city officials, the upshot is a catch-22. All sides agree New York desperately needs more housing of all shapes and sizes. Yet rules designed to ensure that new buildings provide fair wages and offer affordable apartments have instead produced a perverse effect—discouraging the very scale that might help to address the crisis. Some policy-makers acknowledge the need for reform, but inertia—and the potent influence of the real estate lobby—slows the process. Loosening the rules outright would erode what little leverage the city has to require affordable units at all. Tightening them risks driving developers out or compelling them to build elsewhere.

Beyond the city limits, New York’s 99-apartment building boom fits a national pattern. Across America, zoning codes, incentive programs, and regulatory quirks shape the housing supply, often in ways unforeseen by lawmakers. In San Francisco, minimum-parking requirements and convoluted design review boards delay new building, making construction so risky that developers simply build less. In Boston and Los Angeles, inclusionary zoning triggers similar threshold-avoiding behaviour. Local governments everywhere struggle to balance incentives with requirements; too much stick or too little carrot dampens construction, portending still rising rents and growing social discontent.

Creative compliance and the politics of loopholes

The 99-unit gambit is hardly novel, nor is it unique to housing. From campaign finance to tax law, businesses and individuals have long structured their affairs to slide just under regulatory tripwires. But in housing—perhaps the most visible manifestation of a city’s priorities—the cumulative effect is hard to ignore. For New Yorkers, the visual proliferation of near-identical 99-unit blocks in disparate neighborhoods hints at just how adept private capital is at adapting to, or evading, public intent.

Some city legislators and housing advocates are calling for a swift policy patch: lower the regulatory thresholds, or apply requirements according to overall lot size, not per-building unit count. But such moves, they warn, can prompt further gamesmanship—splitting parcels, staging projects, or deploying novel legal structures. Effective regulation, it turns out, is perpetually in cat-and-mouse mode with those incentivised to skirt it.

This latest episode should not surprise. New York’s patchwork of housing incentives—designed to satisfy affordable-unit hawks, union advocates, and budget-conscious officials—was always likely to breed creative compliance. Every well-intentioned rule begets its own genre of avoidance. In the end, the city’s most vulnerable renters, not its developers, pay the price: rising rents, shrinking options, and the gnawing sense that housing policy is at once omnipresent and strangely impotent.

Still, all is not bleak. The fact that developers are building so many new apartments, even at 99-unit increments, speaks to pent-up demand and the enduring belief in New York real estate. Cities that lose their development mojo face even starker housing shortages than the five boroughs. Yet as we reckon with the unintended consequences of narrow rules, the larger imperative for bold, joined-up housing policy cannot be put off: only political leadership—and a willingness to close obvious loopholes—can slow the tide of tricksy compliance that caters more to tax law than public good.

The proliferation of 99-apartment buildings crystallises a deeper lesson for New York and urban America: when public goals are filtered through too many convoluted rules, legal fiction often trumps practical outcomes. The city that never sleeps deserves a housing policy less easily gamed and more closely aligned with its urgent needs. ■