While many developers are under the impression that a lucrative tax abatement program will sunset next month, 4,100 new market-rate condominiums could be built under the 421-a program, which provides owners with a break on city taxes for up to 10 years.

The perk could be critical for luring buyers at a time when the condominium market in some areas of the city is showing signs of softening.

The 421-a program, which was created in 1971 to spur housing development in the city, will undergo major changes next month. But one vestige will continue, in slightly altered form, through 2010: the certificate program. This program allows developers that build low- and middle-income housing to generate certificates, which they then sell to market-rate developers, who cash them in for tax abatements on their luxury condominiums.

While no new certificates can be generated after next month, about 4,000 certificates are still available. If market-rate developers buy the certificates and begin their projects before June 30, they confer full tax benefits under the original program. If they’re used for projects in the ground after July 1, only the first $65,000 of an apartment’s billable exempt assessed value would be eligible for the tax abatement.

“Many people have the impression that if they haven’t started putting their foundations in the ground by June 30, it’s over,” Sol Arker, principal of the Arker Cos., a low- and middle-income developer whose business model is based on generating these certificates, said. Because financing is so difficult to secure and so few developers are aware that these certificates are still valid, his company has sold “only a trickle,” and if things continue as they are, he said it will significantly reduce the amount of subsidized housing it produces. “This year, we have 300 in the pipeline. After that, I don’t know,” he said.

For market-rate developer Dominick Sarta, who said he is “fighting” to get a five-condominium building on Bay Ridge Parkway in Brooklyn in the ground before the June deadline, the additional certificates could make all the difference.

“Everybody’s a little confused,” said Mr. Sarta, who added he hadn’t known the certificates would be valid after next month. He said the end of the certificates program will have a profound impact on his business, as buyers are anxious for tax abatements. “That’s the first question out of everyone’s mouth: ‘Is it abated or not?'” he said.

Because few developers know about the existence of these certificates, sales “have been very slow of late,” a partner at real estate law firm Seiden & Schein, Alvin Schein, said.

Still, the 2007 certificates can be very valuable to developers, especially those in boroughs other than Manhattan, Mr. Schein said. “It’s still a substantial benefit,” he said. “It may make the difference between a saleable product and not a saleable product.”

Lack of awareness of the remaining certificates may ultimately reduce the number available, Mr. Schein said. Subsidized housing developers have found it difficult to get financing for their projects, in part because so few certificates have been sold. If their projects are abandoned, the allotted certificates disappear forever. “If market-rate developers don’t support these, they may not be available at all,” he said.

The new rules for the 421-a program were established in December 2006, as city officials questioned why, during the recent real estate boom, buyers of expensive condominiums were being awarded tax abatements. The legislation that was passed expanded the area where developers are required to provide low- and middle-income housing in exchange for 421-a tax benefits to all of Manhattan and areas of Brooklyn, and it replaced the certificate program with an Affordable Housing Trust Fund, which is targeted at the city’s poorest communities. It is administered by the New York City Housing Development Corp.

While some developers bemoan the end of the certificates, the city claims it wasn’t an efficient way to generate housing for poorer New Yorkers, as it leveraged only 15% to 20% of the value of the tax benefit for subsidized developments, a spokesman for the Department of Housing Preservation and Development, Neill Coleman, said. “Eliminating the certificates will lead to a greater mix of affordable and market-rate units citywide, and the production of more affordable housing in high-price neighborhoods,” he said.

While the chief executive of L&M Equities, Ron Moelis, said the certificate program did have flaws, “it could have been resolved through change to the program. It’s a shame because the of the timing. It’s going to kill market-rate development.”