Developers of nearly 200 small buildings in New York City have flouted the terms of tax breaks they received by failing to place their apartments on the rent-stabilization rolls, state and city officials said.
In letters that went out Tuesday, officials from three agencies told the owners to register their units as rent-stabilized or risk a range of penalties, including being required to return the value of their tax incentives. The action affects 2,472 apartments in 194 buildings scattered across the city, but mostly in Brooklyn.
The developers received discounts on property taxes under a state program known as 421-a, which is meant to spur construction. Advocates for affordable housing and Mayor Bill de Blasio, a Democrat, had criticized the program, which led to $1 billion in forgiven taxes in New York City last year, for not producing enough low-cost housing. They persuaded the Legislature this year to modify the rules to require more units for low-income tenants in exchange for the tax breaks.
The buildings in question did not necessarily have to offer below-market rents, but if the apartments were rentals, the 421-a program required the owners to register them with the state as rent-stabilized apartments. That would entitle tenants to leases whose rents are regulated by the city and the guarantee to renew their leases every year.
The 421-a program also benefits condominiums, and in each of the 194 buildings in question, the owners had originally intended to build condos, but changed their mind, possibly because of market conditions, and decided to rent the apartments rather than sell them, officials said.
Regardless of motivation, the officials said, by avoiding rent-regulated leases the owners could give themselves flexibility to clear out tenants when they decided to go through with the sales.