The legislature is poised to renew a tax break to New York's real estate industry that shortchanges affordable housing. The tax abatement on new multifamily residential real estate development known as 421-a cost New York City nearly $755 million last year in foregone taxes, or two-and-a-half times the level of property taxes forgiven under the program just five years earlier. The abatement, prized by the Real Estate Board of New York, expired last December. Now, the state legislature is poised to revive the tax break in exchange for the renewal of rent regulation, which expires June 15. As Albany trades 421-a renewal for the rent laws that protect the access to affordable housing of more than 1 million tenants in New York City alone, it is critical to understand the actual value of the tax abatement to developers and the ways in which the program as currently constructed gives out its benefits indiscriminately, in most cases without leveraging anything in exchange.
This issue brief from the Pratt Center details the cost of the 421-a abatement to New York City and recommends measures to better target the benefit to generate affordable housing and transit-oriented development.