Wednesday, March 18, 2015
Developers sweating over possible loss of tax break
From the Crains:
Nearly 5,500 affordable apartments in just nine projects would never have been planned if not for a four-decade-old tax break due to end in three months, according to a report by the Real Estate Board of New York.
The 421a abatement, which lowers property taxes on new apartments for up to 25 years, expires June 15. The REBNY report is intended to counter critics who say 421a mainly subsidizes luxury apartments and should be left to die. Developers are rushing to lay foundations for projects across the city before they lose the benefit, which is already going to 71,950 dwellings.
REBNY analyzed a sampling of nine large residential projects, including the Pacific Park (formerly Atlantic Yards) and Domino Sugar developments in Brooklyn and Astoria Cove in Queens, at various stages of development. The group determined that the tax break is responsible for 5,484 below-market-rate apartments and 13,801 market-rate units in those projects.
"The renewal of 421a is one critical element of the city's plan to address our housing shortage," said Steven Spinola, president of REBNY, in a statement. "Without 421a, our housing crisis will take an immediate turn for the worse."
The 40-year-old program, which forgave $1.1 billion in city property taxes in the year ending June 30, 2014, will likely be renewed but made less generous to builders. Even some supporters agree it needs to be revised to require projects in more of the city to include affordable housing in order to receive the tax break. Mayor Bill de Blasio has yet to reveal his position on 421a, although his aides have praised it for producing affordable apartments in affluent neighborhoods.