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City Council Speaker Christine Quinn will introduce a bill that will restrict the 421a tax abatement many developers have been using to build their new properties. The 421a tax abatement program was originally designed to, in the city's words, "promote multi-family residential construction by providing a declining exemption on the new value that is created by the improvement." Create low-income housing, you'll get a tax break.
But there is a loophole that also allowed developers of middle-income and high-end developments not to pay taxes either - yesterday, City Council members David Yassky, Annabel Palma and Letitia James had a Daily News opinion piece about getting rid of the abatement that offered a pretty good explanation. The Daily News explains what Quinn's bill, which Mayor Bloomberg supports, offers:
[D]evelopers within a zone that goes from the Battery to 136th St. on the West Side and to 117th St. on the East Side in Manhattan would get tax breaks only by reserving 20% of their units for families with annual incomes of about $50,000. Housing units selling for more than $650,000 would get only a partial tax exemption.The areas would also be reassessed every two years. Quinn said this compromised deal is the "farthest we can push developers without causing them to forgo the tax exemption and yielding no affordable housing." But some members like Palma's bill that would eliminate tax breaks for market-rate housing.Quinn's exclusion zone takes in more of Harlem and East Harlem than Bloomberg's bill. And while the mayor had excluded only waterfront sections of Brooklyn and Queens, Quinn's bill retains those areas and adds all residential areas of Greenpoint and Williamsburg and a slice deep into Bushwick.
Quinn says she has 25 members' support, but she'll need another vote for a majority in the 51-person council. If her bill passes, you'll be seeing even more condo development in Harlem and Brooklyn.
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If there's even ONE market-rate (ie: overpriced) unit in a new development, why does it deserve publicly-funded tax breaks?
And the real kicker is that us regular middle-class people don't even benefit from the affordable housing; you and your partner/spouse/roommate/whoever cannot earn more than a COMBINED $50K, sometimes it's even lower at a COMBINED $20K.
The current law only has a low-income unit requirement from 14th to 96th streets; the argument now is that there is so much construction going on, there's obviously no need for tax breaks to incent market-rate units.
I bet those anti-rent control free-marketers have just been beside themselves that private development has been given government subsidies, and that they will be among the loudest voices backing Quinn's or the Mayor's proposal to restrict that tax break.
In many cases, market rate development in the outer boroughs is already affordable to families earning around $55,000 per year. Don't believe it? Look at the Jackson Development Group's website to see what they are offering in the Bronx. New 3-bedroom condos priced around 300k. And not just in the Bronx either. Brooklyn and Queens have seen a large number of new units priced in the 350k-400k range, easily affordable to a family making the City's median income.
Market rate is by definition NOT over priced. If it were, then it would not sell, and would not be market rate. Yes, there is plenty of market rate development that can easily be categorized as luxury development (let's just say units > $650k), but attach 30 percent affordability requirements to all market rate development citywide, and you'll make damn sure that new market rate housing that IS affordable to middle- and moderate-income folks is not produced at all.
New units priced around three to four hundred thousand will not be built if (1) they are forced to pay full taxes right away or (2)to cross subsidize 1/3 of the units as affordable. You'll dry up new housing for the middle class and for low-income working families.
I hate welfare for developers too, but I like the idea of targeting public money to building housing outside of Manhattan. You really want to screw the working class, then sure, pass the Palma bill.
I actually just found out I'm being thrown out of my apartment that I've been living at for five years so my landlord can fill his apartments with low-income residents before they get rid of the tax abatement. I guess I'm too filthy rich with my $40,000 salary. Stay classy, NYC landlords. Stay classy.