421-a’s revival, Affordable New York, incentivizes low-income housing

As part of the $153.1 billion budget brokered by Governor Andrew Cuomo and state legislators last Friday, an agreement was finally hammered out to revive the 421-a program, which provided tax breaks to developers building affordable housing.

In the wake of that decision, the New York Times took a look at this new iteration of 421-a, dubbed Affordable New York Housing Program. Negotiations between Mayor de Blasio, Governor Cuomo, and real estate big-wigs lasted nearly two years and were often contentious, given the affordable housing crisis currently faced in New York City.

What’s just been passed is similar to 421-a in that it still offers developers tax breaks to build affordable housing. (Developers have long said New York’s high costs of land, as well as taxes, make it near impossible to build affordable rentals in the city without some form of subsidy.)

But in a change to 421-a, developers will be required to pay a “fair wage” to construction workers to qualify for the city tax benefits, according to the Times. Developers must pay construction workers an average of $60/hour in wages, benefits and payroll taxes at projects below 96th Street in Manhattan, and $45/hour at projects within a mile of the East River waterfront. Outside of these “zones,” projects can opt into the program if they fulfill all the requirements. The city comptroller will ultimately determine if developers have complied with the minimum-wage standards.

Another provision of the new program: Developers of market-rate rentals with 300 or more units in certain neighborhoods can get a full property tax exemption for 35 years if they set aside 25 to 30 percent of units for low- and moderate-income tenants. Earlier versions of the program offered shorter exemption periods.

Not everyone is thrilled with the outcome of such long negotiations. Mayor de Blasio, who called the earlier iteration of 421-a “a giveaway to developers,” said the Affordable New York Housing Program is “certainly an outcome we can live with.” But he noted it fell short of his original replacement set forth in 2015. According to the Times, “the city estimates that the housing program will cost $82 million a year more in unrealized taxes than it would have under the 2015 proposal.” (The 421-a tax breaks cost the city about $1.4 billion a year in forgiven taxes.)

The Association for Neighborhood and Housing Development, an advocacy group, flat-out criticized the replacement, noting that “79 cents of every 421-a dollar [will be] spent going to luxury development and only 11 cents going to support affordability.”

Still, Cuomo and de Blasio defeated a push by Senate Republicans to make luxury condominiums eligible for tax breaks. The agreement also makes available $2.5 billion for a state program intended to build 100,000 units of affordable housing and 6,000 units of supportive housing throughout the state.

• Affordable Housing Program Gives City Tax Break to Developers [NY Times]
• New York’s $153B budget takes aim at homelessness, affordable housing [Curbed]
• 421-a’s revival, Affordable New York, is one vote away from enactment [Curbed]