Mayor de Blasio has announced plans to attempt an overhaul of the controversial 421a tax abatement program, increase sales taxes on luxury housing, and revise rent-stabilization laws in order to significantly increase the stock of affordable housing in New York City. "No more tax breaks without building affordable housing in return," de Blasio said in a statement. "This can't be a city of just penthouses and luxury condos."
The mayor's plans for the 421a program, which is hated by pretty much everyone except for One57 developer Gary Barnett and his ilk, are not to get rid of it, but to change the rules so that it no longer results in giving up billions of dollars in tax revenue to developers in exchange for relatively little new affordable housing. Condominiums would no longer qualify for the program, and rental buildings would be required to set aside 25 to 30 percent for affordable housing, up from the current 20 percent. As a caveat for the developers, the tax abatements would last 35 years, up from 25.
De Blasio also wants to raise the so-called "mansion tax," which is currently a 1 percent tax on the sales of homes over $1 million. He wants to raise it...an amount. From the Times:
Currently, the state has a "mansion tax" of 1 percent on the sales of homes over $1 million. The de Blasio administration is calling for an additional 1 percent tax on the sale of homes in New York City over $1.75 million, which would rise to 1.5 percent tax on sales over $5 million. And Bloomberg:
De Blasio, a self-described progressive who ran for mayor in 2013 seeking higher taxes on the wealthy, also will propose a 1 percent surcharge on the transfer tax in sales of homes over $1.7 million. The "mansion tax" would rise to 1.5 percent on sales over $5 million. The city already imposes an additional 1 percent transfer levy on residential sales of more than $1 million. One thing is for sure here, and that is that Mayor Bill de Blasio has proposed raising the mansion tax, either to 2 percent for sales above $1.75 million, and 2.5 percent for sales above $5 million, or to 1.5 percent for sales above $5 million, and...who knows. Perhaps even more confusing than the wording of the proposal is that the Real Estate Board of New York says it's supporting all of the mayor's proposals, including that one.
Another part of de Blasio's plan is to rework rent-stabilization laws, which, like 421a, are set to expire on June 15. The mayor wants to eliminate the very outdated part of the law that allows a landlord to charge market rates once the rent exceeds $2,500, and get rid of the rule that lets landlords up the rent by 20 percent for rent-stabilized units in between tenants.
One big question mark in terms of implementing these changes is the current political situation in Albany, which is being purged of corrupt legislators by U.S. Attorney Preet Bharara, leaving a couple of interns and a box of paper clips (more or less) to run the state. Some see this as a potential roadblock to getting things done, while others see opportunity. State Senator Liz Krueger commented to the Times that there may be a "window of opportunity," saying, "Everything is very fluid right now."
· Mayor de Blasio's Plan Aims to Spur More Affordable Housing in New York [NYT]
· De Blasio Seeks 'Mansion Tax' And Property-Tax Break Limit [Bloomberg]
· Cuomo says he'll stay the course on 421-a [Capital]
· 421a coverage [Curbed]
· Affordable Housing coverage [Curbed]