At first, the New York state troopers weren’t taking the bait.
Progressive activists this week pitched a handful of tents just outside of Gov. Kathy Hochul’s office, practically daring police to arrest them. They upped the ante after an hour or so, linking arms and blocking a busy entryway to the Capitol’s ground floor as they chanted and sang.
That did the trick. Troopers arrested nine protestors and charged them with disorderly conduct and, in one case, harassment.
The act of civil disobedience was meant to draw attention to their opposition to some of Hochul’s major budget proposals, including her plan to tweak and extend a tax break with the most bureaucratic of names – 421-a.
New York lawmakers are pushing back against Hochul’s plan to rebrand the decades-old, soon-to-expire tax break for developers that build affordable housing units in New York City. Each year, the city foregoes more than $1 billion in taxes through the incentive, including $1.77 billion this fiscal year, according to city Comptroller Brad Lander. But opponents argue the break has never produced the level of affordable housing the city needs as it faces a persistent housing crisis.
Since January, Hochul has urged legislative leaders to support a measure that would alter the 421-a tax abatement program as part of a final state budget, giving it a new name (the Affordable Neighborhoods for New Yorkers tax incentive) and section of law (485-w). She’s been buoyed by support from New York City Mayor Eric Adams and major labor leaders.
But left-leaning lawmakers and advocates have opposed the plan since Hochul first proposed it, having long criticized 421-a as a giveaway to wealthy real-estate developers. And with the budget due by Friday, the Legislature’s Democratic majorities haven’t warmed to the proposal at all – with many lawmakers preferring to allow 421-a to lapse as scheduled June 15.
In separate, closed-door conferences on Sunday and Monday, Senate and Assembly Democrats voiced their opposition, citing a desire for it to be removed from the budget altogether, according to lawmakers who took part.
If I see (a budget) at the end of the negotiations that includes 485-w or any other thing that looks like its evil sister, then that means that it’s not from this house.
Assemblymember Phara Souffrant Forrest, D-Brooklyn, said her conference’s reaction was “very, very negative.”
“If I see (a budget) at the end of the negotiations that includes 485-w or any other thing that looks like its evil sister, then that means that it’s not from this house,” she said, referring to the lawmakers’ adopted nickname for the two tax break measures.
The 421-a tax break has generally been in effect in some form since the early 1970s, save for much of 2016 when it lapsed and was later revived.
The incentive is hugely popular with developers, who benefit from a reduced property-tax bill. Of the 171,905 new residential units built in the city over the last decade, 117,042 – about 68% of the total – were part of the 421-a program, according to the NYU Furman Center.
But the measure has long been a political hot potato in Albany, coming up for renewal every so often and pitting real-estate interests – many of whom are generous political donors – against critics who claim the program doesn’t show enough of a return, despite its cost.
Developers say the program is necessary to spur affordable housing units in a city that is in the midst of a housing crisis and desperately needs them. Those who build new, multi-family housing facilities have to commit to making 25-30% of units available to income-restricted tenants in order to receive the 421-a tax exemption, which cuts their property-tax bill for a period of up to 35 years depending on the size and particulars of the building.
Basha Gerhards, senior vice president of planning for the Real Estate Board of New York, the industry lobbying group, said a tax abatement program is necessary for developers to build affordable housing in a city as expensive as New York. The math for developers just doesn’t work without it, she said.
“Regardless of how one feels about a developer or the private sector or any of that, at the end of the day city and state subsidies can't replace what happens when you leverage an abatement tool with the private sector and the capital that comes from the private market,” she said in an interview.
Hochul seems to agree.
Her plan, which she included in her $216 billion budget proposal in January, would replace 421-a with the new 485-w program, which is largely similar to the existing incentive. But it would make several key changes, including an effort to make the affordable units available to people with lower incomes.
As it stands, certain 421-a options allow some affordable units to be made available to tenants that make as much of 130% of the average median income. Hochul’s plan would generally lower that maximum income threshold to 90%, or about $96,000 for a family of 3, according to the Furman Center. A percentage of units also reserved for those making 40% to 80%.
In a statement Tuesday, Hochul spokesperson Avi Small didn’t address the tax break proposal specifically, but said Hochul looks forward “to continuing to work with the legislature to finalize a budget that serves all New Yorkers.”
Critics of 421-a have long argued the program doesn’t result in enough affordable units for people with significantly lower-than-median incomes, pointing to data that shows the majority of advertised affordable units cater to the above-the-median crowd. While Hochul’s proposal takes some steps to address that, they say it doesn’t go far enough and instead would like to see the state invest money in direct housing vouchers for tenants.
Lawmakers, however, say Hochul’s team has continued pushing her 485-w plan despite the legislative opposition, prompting the closed-door conferences in recent days.
Assemblymember Emily Gallagher, D-Brooklyn, said there has been “very hard pushback” against Hochul’s tax-break plan in the Assembly.
“I believe that this is a program that exploits neighborhoods and actually displaces the people that it supposedly is meant to keep in the communities,” she said.
Assemblymember Latrice Walker, D-Brooklyn, said she and her colleagues believe the pending expiration of the tax break allows for an opportunity to seek a “pragmatic housing policy.”
“But we don't believe they're trying to rush this thing through right now is the right answer,” she said.
As the protesters blocked the Capitol entryway on Tuesday, they sang in unison to clarify their message: “Oh the rent, oh the rent, oh the rent is too damn high.”
Correction: A previous version of this story misstated the number of residential units built over the last decade, and did not include the correct job title for Basha Gerhards. The story has been updated.