421A-holes

 

THE CITY 

The clock is ticking on the final days of a likely-to-expire tax break real estate developers rely on to build new apartments — and the rush is on to get foundations in the ground before June 15, when 421-a will end unless the state legislature passes an extension.

In Astoria, Queens, the second phase of the Durst Organization’s massive Hallett’s Point development will have laid all its foundations by the middle of next month — allowing those buildings to qualify for the lucrative property tax incentive. But Phase 3 and its 800 more apartments will be shelved if 421-a expires, says the developer.

“The only place we could build a market rate apartment building without 421-a is near Union Square or maybe in a few other slices of Manhattan,” said Jordan Barowitz, a company vice-president.

In Williamsburg, Brooklyn, Two Trees Management Co. has begun constructing 350 Kent as part of its equally massive Domino development, which will add 400 units — 30% of them designated as affordable, or rented to households earning specific incomes, under the city’s inclusionary housing program. But a rep for the developer says the future is “cloudy” for another planned building at Domino and the first two structures planned at its newly approved River Ring site because they may not be able to pour their foundations before the deadline.

New units issued permits soared to 4,091 in March, according to Census Bureau’s building permits survey data analyzed by THE CITY, compared with 2,678 in January and February combined. Sources who have seen preliminary data for April and early May say the surge has continued.

How "affordable housing" infects your property taxes

   

Carribean Times

Recently, as I was walking back from petitioning, I approached a homeowner. I introduced myself and made my pitch. She looked at me and said, “Why should I help you? – What are you going to do about THAT?” – pointing to a new 6 story building right next to her house. Her house is a sprawling corner lot, with a handsome wood-frame home. She looked at me sternly as I tried to answer and asked, “How are you going to stop that?” I politely responded, “we cannot”.

Obviously, she was not happy with my response. I don’t blame her to be honest. Nonetheless, it is the truth, as much as it pains me to say so. However, her concerns reveal a much deeper and bigger issue in our community about “housing”. What does that mean? The answer depends on who you ask. For some, housing means being able to afford rent for an apartment in a reasonably safe neighborhood. For others, housing means being able to hold on to the house you purchased. How does one reconcile the two? 

The term “affordable housing” is actually a misnomer, a proverbial urban myth.  It cost the same amount of money to build an “affordable apartment” versus a “market rate” apartment. The difference is how property tax is applied. Ironically, when we ask for “affordable housing” in our community, we are making homeownership less affordable. “Subsidized housing” is a better term because through the 421-A, a state property tax abatement, homeowners are offsetting property tax for developers. New apartment buildings in our community DO NOT PAY property tax. Instead, our appraised property value increases to make up for the “subsidy” used to help finance those new buildings. This is important for homeowners to know, as we explore why our community is changing so rapidly and becoming less affordable.

Homeowners with large wood frame houses are in danger. As property tax becomes higher, it is harder and harder to afford maintaining these large houses. You need to invest at least 5 to 8 thousand dollars per year to maintain your home. If you are not spending on maintenance, you are likely not keeping up the “value” of your home (which is different than the value of your land).

When your home falls into disrepair, over time, the land your house sits on becomes more valuable than the house itself. The reason is simple. If your home is in disrepair, it is less likely to be purchased by another family or “end-user” because the cost of buying and repairing the home in disrepair is usually beyond the means of first-time home buyers, and banks will not offer loans to purchase a home that “won’t appraise”. This simply means, a bank will not provide a borrower a loan to pay more than what a “house in disrepair” is worth. This makes it much more likely those houses will be purchased by DEVELOPERS!