From the Daily News:Yankees star Alex Rodriguez will pay virtually no property tax for a $6 million apartment he is buying on the upper West Side.
Rodriguez will be billed around $1,200 this year in real estate tax for his 3,000-square-foot, five-bedroom penthouse with spectacular views of the Hudson River.
...how is it possible that tens of thousands of ordinary city residents struggle each year with soaring tax bills for their co-ops, condos and homes, while the Yankees' $33-million-a-year star gets to pay next to nothing?
Well, Rodriguez and many other well-heeled New Yorkers have learned to take advantage of a little-known tax abatement program that has existed for decades.
The politicians and real estate insiders call it the "421A" program. It grants as much as a 98% percent tax abatement for up to 25 years to condo owners in newly built housing.
The bulk of the 421A benefit has gone to luxury housing in Manhattan, though a few reforms by City Hall and the Legislature in 2007 at least required developers to build 20% affordable housing to qualify for the tax abatement.
This year alone, the 421A program will cost our city more than $900 million in lost revenues, the Independent Budget Office says.
That's money that could prevent layoffs of firefighters and teachers. That could fund senior citizen centers and pay for after-school programs.
You haven't heard much about this, but the 421A program ended in December for any new construction. But the city's powerful real estate industry is determined to get it renewed and even get it expanded. Its lobbyists are working feverishly behind the scenes to pressure Council and lawmakers in Albany.
20 comments:
This year alone, the 421A program will cost our city more than $900 million in lost revenues, the Independent Budget Office says.
That's money that could prevent layoffs of firefighters and teachers. That could fund senior citizen centers and pay for after-school programs.
B I N G O ! ! !
That could fund senior citizen centers
I got mine (North Flushing Senior Center) so why should I give a rat's ass about anyone else?
The RICH get rich and the POOR get poorer!!!!
Many of us have known about these scams for decades.
The R.E.industry paints itself as great benefactors of the City --while draining it's citizens and using the funds to buy influence with lawmakers.
Both parties have a degree of blame. However the gop bears the greatest share in weakening regulations the protect tenants and taxpayers.
Whenever they are confronted about disgraces like this, they cry that "the rich will take their money elsewhere if they aren't granted these breaks".
I ask: Where? Dubai? Fine.
"Whenever they are confronted about disgraces like this, they cry that "the rich will take their money elsewhere if they aren't granted these breaks".
I say then "G O O D B Y E"!
What did Alex Rodriguez have to do with this story? He bought an apartment? Where are the names of the developers and the politicians who benefited fron this debacle. And yes I'm sure they both benefited from it.
The tax abatement that developers receive are candy to lure buyers or investors with little or no taxes to be paid for a significant amount of years 10-25 years.
The really stupid part about this is that they were granted during the peak housing buying frenzy in which tax abatements were not necessary to lure building or attracting investors.
Now that we need more tax revenues these are lost for 25 years while the uber rich like ARod clean up!
The tax abatement should be curtailed only as an incentive to build affordable housing for the rental market under a certain price point and as well for apartment sales. Discounted tax abatements could be phased out %100 at $600K while increasing rapidly upwards until 1.3M at the full rate. Most new luxury construction provide units for sale at the median of 1.3M which is at the lowest price point and ranges typically if the market will bear it to 8-9M
There are a number of Queens building projects that raced to beat a deadline to capture a tax abatement by insuring a foundation had to be in the ground by a certain date. This allowed the developer to have a significantly improved building site without completing the remainder of the building. now we are left with these holes in the ground that are eyesores, dangerous and are not on the tax roles. Basically these developers saw the housing market tank but built the foundation so that they could flip the project to another investor or hold onto it until the housing boom became healthy again. Most went bankrupt with other picking these properties at a song and are able to hold onto it.
I suggest new laws addressing these properties which could lose their tax abatement if they don't complete the entire structure within a year - this will force the hand of these developers to take some form of action or lose the advantages.
As a second measure, the city should significantly impliment the full tax if the remainder of the building is not completed to force the developer/investor to take action on the property. The carry cost will be significant on a property that bears no return. It's an economic incentive to move rapidly so that these properties cease to be eysores or dangerious!
What did Alex Rodriguez have to do with this story? He bought an apartment?
Yes, I agree!
ARod is just an oppressed person of color! Why should we expect him to know anything? He probably attended a second-rate elementary school, and got a poor education due to budget cuts by those racist Republicans!
I'm sure ARod didn't even bother to read any of the disclosures provided by his real estate broker. And why should he? He probably can't read anyways, because he's an oppressed minority.
Lastly, why would the real estate agent bother to mention the real estate tax break to ARod? That couldn't possibly be a selling point, could it?
"Yes, I agree! ARod is just an oppressed person of color! Why should we expect him to know anything?"
Good lord, that attempt at sarcasm is so far off the mark that I can't resist.
First, you're "agreeing" to the commenter's question. How do you agree to a question? What does that even mean?
Second, the question was: What does ARod have to do with this story? It's actually a valid question. Of course, ARod is being used by the media as a real-life example of the purported absurdity of the tax-break program. But the point behind the question is actually valid - it's not ARod, nor any of the buyers who benefit from the program, who are to "blame." It's the pols who implemented the program and the developers who behaved badly in trying to take advantage of it.
So, the whole "oppressed minority" thing is just bizarre man. Get a grip. I think your comment belongs on another thread or something.
If the featured buyer was an unknown white executive from Goldman Sachs the story wouldn't have the same sensational effect. But that wouldn't change the point of the story (the absurdity of the program), nor would it change the commenter's point (that the buyers are not culpable of anything).
ARod then is a WELFARE Queen in my book!
I thought the city had no money. This is criminal. This guy has the ability to pay taxes. Many middle and lower class people are living paycheck to paycheck and can barely pay their taxes. Something is very wrong with this entire tax system. Everybody should pay something for all the services utilized. Millionaires should pay their fair share just like everyone else. Time for discussion of the flat tax.
It always cracks me up when they say that there is no money in NYC. There is so much money in this city the problem is only a handful of people are making it! There is so much corruption going on , is there all the time in the papers every day.
"Its all Bullshit ! And its bad for you!"
If the featured buyer was an unknown white executive from Goldman Sachs the story wouldn't have the same sensational effect.
BS.
There may be "unknown white executives from Goldman Sachs", but that's only because they're unknown to you and the general public. Just because you've never heard of some guy doesn't mean he does not exist.
Do you really think Lloyd Blankfein gets a "free pass" from the press? Then you haven't been paying much attention in the past couple years.
If Blankfein bought an apartment and received the benefit of a real estate tax break, he would get even MORE heat than ARod.
In either case, it's not right.
So stop it with your ARod hero worship.
But that wouldn't change the point of the story (the absurdity of the program), nor would it change the commenter's point (that the buyers are not culpable of anything).
Why aren't the buyers culpable? Do you really think ARod is completely ignorant of the RE tax break? I'm sure that was one of the major selling points.
He hasn't done anything illegal. But it's not going to help with his image.
The City should close the loophole, no disagreement with that. Corporate welfare is just the same as individual welfare, it's just a matter of 000's. Both should be ended.
Vote Ron Paul!
To his credit, A-Rod will be living in the City, and will be paying the very high State and City income taxes we pay. Almost all the other high-income professional baseball/basketball/football players and coaches (Yankees/Mets/Giants/Jets/Knicks) avoid living here, and pay only nominal taxes.
"If Blankfein bought an apartment and received the benefit of a real estate tax break, he would get even MORE heat than ARod. In either case, it's not right. So stop it with your ARod hero worship"
My friend, I'm not picking on you. But what on God's blue earth are you talking about? I think most of us can agree that there's something wrong with giving these tax breaks to people who don't "need" them. But that's a separate issue.
This is the point of the story, in
one sentence: "Well, Rodriguez and many other well-heeled New Yorkers have learned to take advantage of a little-known tax abatement program that has existed for decades."
So, the commenter you jumped on was making a valid point: the fault doesn't lie with the buyer; it lies in the people who implemented this program.
"Culpable" means blameworthy, usually in some kind of legal or moral sense. There's no question the buyers did nothing legally wrong. And I don't think anyone can really say that they are doing something morally wrong, unless they have a very, very strict moral code. If that's the debate you want to have, cool. We can have that one. But I think you have the uphill battle. Should they take the 421A places, but pay extra taxes anyway? Are they morally obligated to not buy such places b/c they have too much money? Hmmmm. Enlighten us.
And Ron Paul is great. I agree. But even your man Ron would not blame the consumer (in this case, the buyer) for acting rationally and choosing to spend money on something that maximizes his economic benefit. That's Free Market 101.
So, what was your point again?
And please, try to not bring up non-sequiturs like "oppressed minorit[ies]" or "hero worship." That just confuses things.
"And Ron Paul is great. I agree. But even your man Ron would not blame the consumer (in this case, the buyer) for acting rationally and choosing to spend money on something that maximizes his economic benefit. That's Free Market 101."
. . . which is why Libertarianism is the MOST IDIOTIC political philosophy known to man - it relies on the INTEGRITY of man to succeed - which is why is NEVER WILL.
ARod is getting a discounted apartment in the Rushmore do that the developer gets his building "The Rushmore" attention in the spring buying season for his slow moving, overly priced units in the building. In the process, ARod get a great unit, at a lower price and little monthly taxes to pay for the next 10-25 years. My guess is that ARod will sell this apartment in a year to get a gain on the discount, his celebrity stamp (he seeds all over the apt!!) and low monthly taxes to some idiot who goes for this type of glitz. In the end ARod is was paying 35K monthly to rent will instead own this place and will come away cash postive averall - it a win win and we pay for a portion of it!
TAX THE FUCK OUT THE RICH!
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