Days after outlining a spate of reforms designed to preserve the city's 1 million rent-stabilized apartments, the mayor has announced a new plan that aims to increase the amount of affordable housing being built in the city while preserving lucrative tax breaks to developers.
De Blasio's push for reform anticipates the expiration of two major housing laws on June 15th: The rent stabilization law, and the '70s-era tax abatement program known as 421-a, which gives developers temporary freezes on their real estate taxes in exchange for building affordable housing.
As developers have increasingly turned to 421-a to fund construction for market-rate apartments (the program cost taxpayers $1.1 billion last year) it seems clear that the tax breaks have failed to provide an adequate amount of affordable housing.
Currently, developers must make 20% of their apartments affordable in order to use 421-a in upmarket neighborhoods like North Brooklyn, Lower Manhattan, and Long Island City; developers don't have to construct any affordable housing if they build further out where demand is lower. De Blasio wants to change those figures to 25% and 30%, depending on the neighborhood. A release from the Mayor's Office claims this will double the number of affordable units that 421-a produces over the next decade, from 12,400 to a little more than 25,000.
The mayor also wants to lower the 421-a subsidy itself by a third, and shift the income restrictions for what "affordable" means, so families making considerably less than the city's median income of $50,000 can live in the affordable apartments.
Under de Blasio's plan, "poor doors," or placing affordable units offsite from the market-rate units (as was the case in the luxury skyscraper One57, which received $35 million in 421-a abatements and used $6 million of it to build 66 affordable units in the Bronx) would be banished from 421-a, as would the use of 421-a to build condos.
To compliment these changes, the mayor has also proposed a mansion tax on the sale of houses, condominiums, and co-ops that cost more than $1.7 million. (The current mansion tax is 1% on homes over $1 million.) The Mayor's Office claims that this would generate $200 million in tax revenue, all of which would go to housing programs. By the city's estimation, this will translate into 60,000 affordable homes in the next ten years.
Of course, Albany still has to accept de Blasio's new proposals. Perhaps tellingly, the Real Estate Board Of New York, one of the state's most powerful lobbying groups, supports the mayor's plan.
"We're going to support it, including the mansion tax," REBNY president Steve Spinola told the Times. "We’re not happy about everything, but we think it will lead to building more affordable housing.”
REBNY's support likely has less to do with affordable housing than the fact that many progressive organizations support eliminating the 421-a tax breaks altogether.
And de Blasio's support for reforming, not eliminating, 421-a is significant given that two of the state's top lawmakers have been hit with federal indictments stemming from shady deals with real estate developers.
The Senate Majority Leader, Republican Dean Skelos, has been charged with unfairly favoring development company Glenwood Management. Capital reports that Glenwood has residential housing all over the city, and "according to prosecutors has a vested interest in rent regulations and 421-a."
The pressure is creating a "window of opportunity" where lawmakers don't want to be seen as being favorable to real estate, Democratic State Senator Liz Krueger told the Times. “Everything is very fluid right now,” she said.
Governor Cuomo has made it clear that he's in favor of extending both the rent stabilization law, and 421-a. He's even cited the current upheaval in Albany as an excuse to keep the status quo, telling the Times, “If it was a different time in Albany, frankly, and Albany was a little bit more stable situation, I would normally take these negotiations to Albany and try to work it out among the parties."
In a statement, Benjamin Dulchin, the executive director of the Association for Neighborhood and Housing Development, acknowledged the mayor's good intentions, but suggested that "the Mayor's 421a proposal still leaves communities asking whether this program will serve their needs. The City is projecting 60,000 units of affordable housing from 421-a, but affordable to whom?"
Delsenia Glover of the Alliance for Tenant Power, who has been vocal in recent months about eliminating 421-a, paired her praise with a caveat: “We applaud Mayor de Blasio’s effort to champion a mansion tax and to prioritize the creation of more affordable housing through a citywide affordability requirement. We are also very glad that he is committed to taking condos out of the 421-a program and eliminating discriminatory poor doors. But 421-a is still a failed and wasteful program that should be ended, not amended."
With Emma Whitford