For over four decades, the 421-a tax exemption program helped usher new residential development across New York City. It was renewed over the years and with each renewal, naturally, came changes; but that stopped in January, when no renewal agreement could be reached. Now, Assemblyman Keith Wright, who heads the Housing Committee, has a proposal for a new program to replace the expired 421-a, the New York Daily News reports.
Instead of an up to 25-year tax abatement, developers would receive a straight subsidy of $100,000 per affordable unit. Wright estimates the program would cost $200 million a year, compared to the estimated $1 billion in taxes not collected each year with 421-a. It would be funded from a $14 billion abandoned property fund and would include $25 million for senior housing, plus job training and tutoring for "recently incarcerated individuals, parolees, certain probationers and ‘disconnected youth’" and an $8 million a year state program similar to the federal Section 8 program, the report said.
"It’s a win-win," Wright said. "It's filling the void that's been created by the lack of 421-a and we're taking a different philosophical slant." It’s that difference that has support not at the level claimed by the Assemblyman. On Wednesday, he said he had the backing of the Real Estate Board of New York (REBNY), the New York State Association for Affordable Housing (NYSAFAH), and the Building & Construction Trades Council. But Thursday, while some of them appreciated the proposal, none of them said they endorsed it.
Anecdotal evidence points to just how important the 421-a program was to developers. The biggest spike in new filings ever recorded happened in the weeks before the program’s expiration. Will a new 421-a come to life or will it be replaced by something like this? Stay tuned.
• All 421-a coverage [Curbed]