A Two Bridges landlord is set to receive a multi-million dollar tax break in exchange for keeping 1,590 apartments affordable for the next 50 years.
The City Council adopted a resolution this week to keep the Knickerbocker Village complex, located just south of the Manhattan Bridge, from raising rents 13 percent though an abatement that would slash the development’s taxes by $3 million annually, according to Councilmember Margaret Chin, who represents the area and introduced the resolution.
“In neighborhoods like Two Bridges, we have seen the cost of [the affordability] crisis as rising rents, gentrification and a shrinking pool of affordable places to live threaten to fundamentally change the community and displace longtime residents,” Chin said in a statement. “To meet the challenge before us, we must pursue an all-in strategy to maximize every resource—including saving as many affordable units as possible.”
The low- and-middle income New Yorkers who live in the dozen 13-story buildings that make up Knickerbocker Village have been fighting the proposed 13 percent rent hike since at least 2014; the increase has been billed as a means to addressing $5 million in the complex’s capital needs.
But the new resolution will lower the development’s property taxes from $3.4 million to some $400,000 and open the door to a lower rent increase, according to Chin’s office. The city’s Department of Housing Preservation and Development also recommended approval of the tax break in a September letter to City Council Speaker Corey Johnson.
A spokesperson for the owner, Cherry Green Property Corp., said that the tax break will "ensure that Knickerbocker Village receives the support and investment it needs to maintain and grow the quality of life for residents."
"This 50-year tax exemption represents an initial step towards putting KV on a financially sustainable path and preserving the long term affordability for KV and it's nearly 1,600 families," the spokesperson continued.
Residents hope the resolution will pave the way to a more reasonable rent increase.
“Any rent hike will be tough for a lot of the people who live here, but keeping it down to a much more manageable number will really make a big difference for us,” said Lisa Chang, who lives in Knickerbocker Village with her elderly parents.
Knickerbocker Village is not a typical rent-stabilized complex; the development is part of the state’s Article IV program. This means that the landlord must reinvest a portion of the rent paid by tenants into the property and must abide by additional restrictions.
For instance, the rent-setting process requires more vetting. Monthly rent starts at $810 for a one-bedroom and rises to $1,250 for a three-bedroom apartment. The annual income of a tenant cannot exceed seven times the annual rent, and existing tenants whose income has increased above that limit are required to pay a surcharge.
Meanwhile, the neighborhood is experiencing a boom of luxury development, though the fate of new high-rises planned for the area is up in the air and the area currently has a glut of luxury apartments languishing on the market. The landlord has unsuccessfully fought to leave the Article IV program, which would essentially privatize the complex. The tax abatement is dependent on Knickerbocker Village maintaining its Article IV status and negotiating a lower rent hike than previously proposed.
The development also made headlines this year as one of the city’s only housing complexes to feature facial recognition technology. It is unclear if the landlord will try to leverage the cost of installing the new technology as the complex’s main means of access into the rent hike. Exactly how much that increase will be will be discussed at hearings in early November, according to Chin’s office.