It’s long past time to re-evaluate the 421a-Developer’s Tax Break. With 421a set to expire in June 2015, the City and the State cannot allow such a flawed and outdated program to continue.
While the 421a Developer’s Tax Break has been modified throughout the years, these changes have proven to be completely inadequate. The current version of 421a forfeits billions of dollars in public money to real estate developer tax breaks for minimal public benefit in return.
ANHD’s original 421a Developer’s Tax Break Analysis is currently the only report that captures the number of market-rate and affordable housing units created through the 421a Developer’s Tax Break and maps them spatially across the city.
Based on ANHD’s analysis we estimate that in a snapshot of Fiscal Year 2013, only 12,700 of a total 153,000 residential units receiving 421a tax breaks had affordability restrictions. This indicates that only 8.6 percent of the 421a residential units that received a tax exemption in FY 2013 were affordable. This small amount of affordable housing from the 421a Developer’s Tax break cost the city $1.1 Billion in forgone tax revenue in FY13alone. That is $1.1 billion that would otherwise go to public services like schools, infrastructure, hospitals -and affordable housing.
Benjamin Dulchin, ANHD’s Executive Director states, “421a is a windfall for developers, but a bad deal for New Yorkers. It’s past time to prioritize the needs of our communities over the narrow interests of the real estate industry. We cannot afford to subsidize luxury real estate development that is unaffordable to average New Yorkers.”
The current 421a Developer’s Tax Break is a bad deal for New York City neighborhoods, financially and socially, in the following three key areas:
- It fails to meet the Real Affordability needs of New Yorkers
- It inadequately creates Mixed-income Communities across the City
- It does not Maximize Financial Investments for the best public benefit.
According to ANHD’s Deputy Director, Barika Williams, “New York City’s real estate market is booming, and real estate developers are getting $1.1 billion in tax breaks, while regular New Yorkers are struggling to pay rent or keep up with their mortgages on stagnant incomes. We should be putting out resource to helping residents not profits.”
The real estate industry is already claiming that without 421a Tax breaks and low interest loans, developers couldn’t afford to build in the city. ANHD’s Moses Gates weighs in: “New York City is currently one of the strongest housing markets in the world, with national and international capital looking for every opportunity to invest in Real Estate. The idea that this would suddenly all disappear because we are no longer the only major municipality in the United States which lets new rental construction pay next-to-no taxes boggles the mind.”
With 421a set to expire in June 2015, our City and State officials will be making big decisions on 421a and Rent Regulation that will impact NYC housing affordability for years to come. We are at critical moment. It is time for some bold steps to put the public benefit of affordable housing before the private profit interests of real estate developers. Read more on 421a in ANHD’s 421a Developer’s Tax Break Analysis.
