421amap0607.pngIn a move not likely to boost fundraising efforts with developers, state lawmakers yesterday agreed on a tougher version of the 421-a bill than the city had proposed last December; it is expected to pass when it is brought to the floor on Thursday. The 421-a program, originally enacted in 1971 to spur development in a weak market and set to expire at the end of this year, gives builders significant tax breaks over anywhere from 10 to 25 years. In recent years, even luxury projects in the ritziest neighborhoods have benefited from the law, sparking criticism that the tax breaks are nothing but give-aways in a booming market that would support the creation of new housing on its own. When the City Council proposed extending the bill for another four years back in December, it did so with the proviso that projects in certain upscale neighborhoods be required to set aside 20 percent of its units for people making less than $56,000 a year. (A map from The New York Times of the City’s plan is at right.) The State version not only expands the affordable housing zone (called the “exclusion area”) by 12 neighborhoods but it also brings the income hurdle down to $42,000. (Additionally, it calls for developers to pay workers a “prevailing wage” on participating projects.) While stiffening the affordable housing requirements, the State bill does throw developers one bone: It pushes back the start-date for the new rules to July 2008 which should lead to a wave of projects looking to get grandfathered under the existing rules.
Albany Likely to OK Affordable Housing Bill [NY Sun]
State Revises 421-a “Corporate Welfare” Subsidy [AY Report]
Legislators Agree on 421-a Reform Bill [Crain’s]


What's Your Take? Leave a Comment

  1. Just to show how corrupt the system is and why 421-a should be totally abolished look at the fact that Ratners Atlantic Yard fiasco has been carved out to be eligible for continued Government subsidies (under the old 421-a regulations), despite the fact that it is no were near having any foundations in and that everything else around it will now be part of the new regulations.

  2. /\ Halt. No.

    Market come crashing, yes. Both here and on Curbed, people have this arrogance like “My house will never devalue becuase i live in NY”. Bullshit, wait till the era of 1,000+ homcidies come back. Or if Wall St tanks. Both, as well as other scenairos, can happen.

    I’m all for affordable housing, but then we slap them with insane taxes and downzonings, which slice profit margins very thin. Trust me, most of the heavy hitters in real estate in this city got their money either in hedge funds or they’re overseas investors scamming condo buyers. It’s hard to make money building in NY outright. Nevermind trying to price it for the middle class.

    I can assure you, ActionJackson, you will see a complete halt to most private investment in NYC if we continue to make it less profitable to build here. Then the only housing being built would be Michell-Llama or even worse………..NYCHA(read: projects).

    Trust me, that’s not what you want….