Pratt Center Opines on 421-a Program
With all the debate recently about renewing the 421-a tax incentives for developers, the Pratt Center and Habitat for Humanity NYC got together to try to assess how much the program has benefited affordable housing. The study looked at ten buildings around the city, including two in Brooklyn (182 Montague, above, and 85 Adams). The…
With all the debate recently about renewing the 421-a tax incentives for developers, the
Pratt Center and Habitat for Humanity NYC got together to try to assess how much the program has benefited affordable housing. The study looked at ten buildings around the city, including two in Brooklyn (182 Montague, above, and 85 Adams). The bottom line? Developers have made out like bandits. Since its inception, the program has subsidized over 100,000 units — only 8% of which are affordable or to low or moderate incomes. The average unit in the ten buildings received $73,000 of tax breaks over its lifetime and not a single one included a two-bedroom rental for less than $2,000 a month.
In its present form, the 421-a program is a massive misuse of the tax dollars of New York City residents. It continues to subsidize luxury homes in expensive neighborhoods, with nearly 80% of the benefits going to Manhattan. It subsidizes buildings that would have been built anyway – at an annual cost to the City of $300 million and rising fast. And it creates very little affordable housing.
Our opinion: It seems pretty hard to justify in this day and age.
Reforming NYC’s 421-a Program [Pratt Center]
NY Times: 421-a Program Outdated, Unfair [Brownstoner]
Controversial 421-a Program May Get Extended [Brownstoner]
I know it’s trendy and fun to demonize evil developers, but in this case it’s not accurate. The tax abatements don’t make the developers rich, because the land owners who sell the property to the developers take the abatement into account when selling the land to a potential developer, so the tax abatement raises the cost of acquiring development sites. To the developer, the net effect is zero. The land owners make out like bandits, and the rich people who buy the luxury units and only have to pay reduced taxes on them, but the developers make as much money as they would have without the abatements. Oh well, I guess you all will have to find some other excuse to hate on developers.
I just left a community meeting where this issue was brought up. Just like this blog, the issue kept getting dragged into the more important issue of “Affordable housing.”
This is a term invented by rich Developers. It’s real meaning is -Welfare for the rich.
Once and for all 421a has nothing to do with “Affordable housing.” There is no reason that the issue of affordable housing has to be linked to this welfare for the rich.
Does anyone really believe that if this stupid law is allowed to expire then all the poor and low income people in this city will be thrown to the wolves.
The first thing that anyone needs to look at is – Who is it that keeps bringing “Affordable Housing” into the debate about 421a? The Answer is – The Developers. Every time we let this conversation go down that road we are falling right into there trap.
Second question – Why is there even a debate about this issue now? Especially since up until now most people didn’t even know that this abatement existed.
Answer – Because it’s supposed to expire and the rich Developers along with there Political crony’s don’t want that to happen. So they reinvent the issue as some sort of panacea for the poor or low income people of the City. “Let everyone believe that it will somehow hurt the Poor and then they wont let it expire.”
Bottom line – Let it expire
If you are really concerned about the poor or low income people of this City, then just think of how much you could help them with the over 400 million dollars that will be added to our tax revenue once we tell the Rich Developers to go look some place else for a free handout.
Actually the original program was created to use “underdeveloped open space” for the most part.
“worthwhile to replace it with newer stock, because after all, that is what the program is created to do.”
That’s the crux of where you and I diffrer in general.
Well then, let’s agree to disagree…
As we have done in the past 😉
That was me again, typekey keeps logging me out 🙁
I agree, taxation, while needed, is inherently unfair and skewed to one side or another. Jealousy, my dear iceberg, has nothing to do with it. Economics does. I feel, personally, EVERYONE should have the same fair shake in life, taxes, work, love, etc. Idealistic I know, but that’s the basis for how I view my own karma.
Due to the 421a developments in our area, housing prices of existing stock have sky rocked (way out of scale with reality) due to the very same developers coming into a desirable, or up-in-coming area, and offering inflated prices for old housing stock, to tear them down and build 421a subsidized luxury condos. Old housing stock is no longer affordable to area residents, nor are the new condos.
No affordable housing is being build in my area of the Boro, with the exception of a low income and senior housing by the Fifth Avenue Committee on 5th Ave in the South Slope (where a underutilized municipal parking lot was, good trade off in my book).
So, where’s the benefit? And I never said there should be no taxation, just fair, standard across the board taxes. A home that is worth $400K and a condo worth $400K should pay the same taxes, assumedly they are assessed the same.
Is that some kind of whacky economics?
Why the photo of Jens Lehman’s red card send-off in last May/June(?) Champions League final? Are Barcelona or Arsenal considering moving to or investing in NYC real estate?
my 2 cents:
1) it’s bad for affordable housing (no earth shattering revelation).
2) it’s good to the city. the tax losses are made up by property sale taxes (hundreds of thousands of high end luxury properties coming on the market).
I think this is overall financial win for the city (from a purely economic perspective), albeit a slightly corrupt one. I still can’t figure out where all the income tax, sales tax and property tax are going though. We still have crappy roads, the subways are dreadful (why don’t we have high tech mag-lev subways), horrible summer electric outages and rampant crime(e.g., I still can’t get over the shooting near Fort Greene Park; after all, it’s only 3 or so blocks away from Metrotech).
Maybe the city $$ are going for these type of services:
http://tinyurl.com/y62wng
and this:
http://tinyurl.com/wzqfl
I think these abuses far out-weigh abuses of the 421-a Program.
Ooops, last post was me, forgot to sign in.
Want to take credit for my rants 😉
Iceberg, as per usual, all of us have to “parse” what you write…
I was playing off the “reality” (not hypothetical nonsense) of the 421a abatement. Be serious, do you really believe that no new housing stock would have been built in the 5 Boro’s in the past 30 years without 421a?
Read the report a little closer, especially the “fact vs. myth” section. Seems more than 80% of the 421a’s have NOT been built in blighted or up-in-coming neighborhoods, according to the NY Observer.
Development, in one of the most vibrant and sought after Cities, if you look at the long haul, say from 1950 to the present, has had a steady growth record. I truly doubt 421a, under it’s improper use, would have some how staved off development if it had not been around.
I truly wish it had/was being utilized for what it was created for: affordable housing. Hand in hand with the J-51 affordable house rent control program, it “could have worked.” It did not. It has been abused and must be redone or tossed.
I have 32 units on my block that “as of right” get the 421a abatement for a minimum of 10 years. How is that fair to the neighborhood where the common home owner pays double the taxes. Let me do the math, while the City will eek out a bit more in taxes, four 2 and 3 family homes that used to pay 100% of their assessed taxes are now being replaced by four 8 family houses that will pay a fraction of the taxes for the next 10 years, 1/3rd I think. So that’s 100% to 30% of the tax base, even with the increase in units. So less taxes, which by the way means no new infrastructure: streets, sewers, schools, etc. Explain to me the logic in this?
If these new units were paying straight taxes, we’d gain a 800% increase in the tax base on my block alone. Now, I’m an artist, and sometimes fuzzy with numbers, so please forgive me if my math is a wee off…but not way off.
OK, your serve…