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Albany Gives Our Budget Away to REBNY As the City Faces Massive Loss of Federal Support
By: Benjamin Dulchin
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The big-real estate developers lobbying group, REBNY, announced a proposed new deal today to bring back the controversial 421a Developers Tax Exemption. As ANHD pointed out in a blog last week, the proposal is unconscionable on its face because it will give developers an additional 10-year exemption, on top of an already grossly excessive 25-year proposed exemption, creating a tax break that is unprecedented and unjustifiable on any fiscal or programmatic grounds - all at the expense of New York City taxpayers.
Albany Deal Will Give Away Billions More in Extended Real Estate Tax Exemption Proposal
The big-real estate developers lobbying group, REBNY, announced a proposed new deal today to bring back the controversial 421a Developers Tax Exemption. As ANHD pointed out in a blog last week, the proposal is unconscionable on its face because it will give developers an additional 10-year exemption, on top of an already grossly excessive 25-year proposed exemption, creating a tax break that is unprecedented and unjustifiable on any fiscal or programmatic grounds - all at the expense of New York City taxpayers.
[pullquote]It will give developers an additional 10-year exemption, on top of an already grossly excessive 25-year proposed exemption, creating a tax break that is unprecedented and unjustifiable on any fiscal or programmatic grounds - all at the expense of New York City taxpayers.[/pullquote]
The 421a Exemption - commonly referred to as the Trump Real Estate Tax Exemption because he used the program early and often - expired last year as Albany tried to engineer a deal between REBNY and the trade unions. Now, Albany again wants to pay REBNY to make a deal with the trade unions, in effect, stuffing an extra $10 into REBNY’s pocket to get the group to give 25 cents to the trade unions.
This comes at a time when the City is facing the potential loss of massive federal funds under President Trump, including funds for essential housing programs such as the Section 8 Rent Voucher program. Yet, Albany may be mortgaging away our local tax base, the exact funds we need to support our residents as Federal support is diminished.
[pullquote]This comes at a time when the City is facing the potential loss of massive federal funds under President Trump, including funds for essential housing programs such as the Section 8 Rent Voucher program. Yet, Albany may be mortgaging away our local tax base, the exact funds we need to support our residents as Federal support is diminished.[/pullquote]
The 421a proposal on the table - which would allow developers to pay ZERO taxes for the next 35 years - will make 421a appealing to even more real estate developers. The New York City Independent Budget Office projects that, as more developers flock to the enriched program, the cost of 421a to NYC tax payers will jump from $1.4 billion in FY15 to between $5.6 and $7.1 billion over the next 10 years alone. And this is just from the increase in the number of developers subscribing to the program; it does not account for the billions more that 421a will cost since the building will be tax free for a lucrative 35 years - 10 years longer than under Mayor de Blasio’s plan.
This comes at a time when new data concerning building permits and land prices indicates that new construction has adjusted to a housing market without the 421a Exemption and is quickly recovering, and that the existence of 421a itself may have been hindering development in key markets by inflating land prices.