Fund Truly Affordable Housing, Not Luxury Development

In comparison, more than three quarters of rent-burdened New Yorkers make less than 50% AMI, but such apartments made up just 3.4% of 421-a units marketed on Housing Connect during the same time period. Affordable New York builds apartments for rich households, not the low-income and working-class New Yorkers who need them.

The Governor’s 485-w proposal is a sugar-coated 421-a.

Governor Hochul has proposed a new tax exemption program called “Affordable Neighborhoods for New Yorkers” or 485-w, but this is just a sugar coated version of 421-a. Like 421-a, this “affordable” program is primarily a giveaway to private developers, not an incentive to create the kind of affordable housing New York needs. The Governor’s program does not change the fundamental structure of 421-a, in which public resources in the form of lost tax revenue are used to largely subsidize market-rate housing.

Under the governor’s proposal, developers can still receive a full tax abatement for a building with 20% of units targeted to households at 90% of AMI, or $96,660 for a 3-person household, and the rest of the building unrestricted (Option B). Our analysis found that average rent for a 90% AMI 2-bedroom apartment, currently $2,323, is higher than the actual median rent of a two-bedroom in 92% of New York City’s Census tracts. As evidenced by the 2017 version of 421a, developers consistently choose the option that offers the highest AMI targets, meaning developers will likely choose Option B among the rental options in the Governor’s proposal. This means more units at 90% AMI and fewer units overall, since Option B is for smaller buildings. Instead of creating necessary affordable housing, 485-w would create housing that is more expensive than normal rent in most of New York City. The governor’s proposal also includes tax exemption for condominium development, but one that does nothing to support homeownership opportunities for most New Yorkers. In the proposal, co-op and condo properties would be eligible for Hochul’s proposed exemption for a for units are restricted to buyers earning at or below 130% AMI – an income of $139,620 – for 40 years, with the owners only having to use the home as their primary residence for 5 years. Just as 421-a has been labeled an “affordable” housing program but has actually encouraged luxury development, 485-w would be a big giveaway to real estate developers without requiring a real public benefit in return. We don’t need a 421-a program with a different name – we need truly affordable housing and protections for tenants statewide.

View this map full screen

421-a is a tax burden on NYC

421a is not only bad housing policy, it’s an enormous waste of public money. 421-a is the City’s single largest expenditure on housing, costing approx $1.7 billion per year; that is more than tenant vouchers, NYCHA, and subsidies for affordable housing development^[2]. Given existing 421-a developments, New York City is already stuck subsidizing $14 billion in luxury and market rate housing over the next 10 years.^[3] We simply can’t afford to keep adding to this price tag while starving actual affordable housing programs of desperately needed resources.