Brooklyn Boro

Cuomo revives affordable housing tax break

January 17, 2017 By Mary Frost Brooklyn Daily Eagle
Gov. Andrew Cuomo said on Sunday he will be introducing a program to replace the expired 421-a tax break for developers. AP Photo/Seth Wenig
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Gov. Andrew Cuomo said on Sunday that he plans to introduce legislation to create a new real estate tax exemption program to replace the expired 421-a program.

Cuomo said the new “Affordable New York” program would create 2,500 units per year of affordable housing and extend real estate tax incentives for 40 years.

“This agreement will help fulfill the real need for more affordable housing in New York City while recognizing the work of the employees who build them,” he said in a statement.

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The announcement came after the Real Estate Board of New York and the Building and Construction Trades Council of Greater New York signed off on a deal to replace 421-a, which expired in January 2016. Cuomo said the new program would retroactively apply to all the otherwise-eligible projects that started without it last year.

The 421-a program, established in 1971 to encourage affordable residential construction, gave developers a tax exemption for ten years for building multiunit residential projects. The savings were supposed to be passed down to tenants in the form of stabilized rents, though this aspect has at times been overlooked by developers.

In a radio interview on The Cats Roundtable with John Catsimatidis on Sunday, Cuomo said that Affordable New York would give eligible developers full property tax abatement for 35 years, a better deal than the 421-a exemption, which gradually decreased over the ten year period.

The exemption would apply to developers of new residential projects with 300 units or more in certain areas of Manhattan, Brooklyn and Queens.

To be eligible, projects must create a specific number of rental units to remain affordable for 40 years, and pay construction workers an “enhanced” average wage and benefits.  

Pay would average $60 per hour for projects in Manhattan south of 96th Street and $45 per hour for projects one mile from the East River in Community Boards 1 and 2 in Brooklyn and Queens (called “Enhanced Affordability Areas”).

For all other affordable developments in New York City, the period of affordability and abatement eligibility would be tied to the number of affordable units.

The cost-effectiveness of the 421-a program, embraced by developers, has been debated for years. An analysis by the Community Service Society, provided by City and State’s Slant website, indicated that the new program could be less cost-effective than other possibilities and would cost New York $2.4 billion annually, doubling the previous 421-a’s cost of $1.2 billion.


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