The new regulations for the 421-a tax-abatement program, which long offered developers a tax break in exchange for building affordable housing in certain parts of the city, are set to go into effect at the end of June. The bulk of reporting on the subject has focused on the fact that the program’s new rules will mean developers can’t receive abatements in many neighborhoods they used to, including large swaths of Brooklyn. According to a story in today’s Times, however, changes to 421-a will also mark the end of its “negotiable certificate” program, whereby affordable housing builders could transfer or sell off the abatements they received for building affordable units to another developer who was building market-rate housing at a completely different project. The certificate transfers thus generated revenue for affordable builders and gave market-rate developers tax-abatements they could offer to their building’s buyers. A spokesperson for HPD says very few affordable developers used the transfer program, though developer Gary Barnett of Extell Development Corp., for example, says the change will mean there will definitely be a slowdown in affordable development, and development in general, in the city. Carol Lamberg, executive director of the Settlement Housing Fund, a nonprofit group that has built low-income homes in New York since 1969, says that while the certificate transfer program favored affordable developers who were well capitalized, its sunsetting is still a blow for the larger affordable housing development community. It’s one less tool, and we need every tool we can get, she says.
Developer of Affordable Housing Faces New Challenge [NY Times]
421-a Compromise Reached; AY Carve-Out Reduced [Brownstoner]
Downtown Boosters Wary of Credit Crunch, 421-a Revamp [Brownstoner]