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421-a Affordable Housing Tax Break

Map last updated May 6, 2009

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421-a: Still Subsidizing Luxury Development

Report last updated December 8, 2006

This report highlights 54 condo buildings - built in the last few years or currently under construction - that would still be eligible for 421-a tax relief, even if they would have been built after the reforms proposed by the Speaker and the Mayor. These buildings contain more than 6,100 high-priced condominiums, far beyond the reach of average New Yorkers.

Even with the proposed reforms, New York City will be providing substantial tax subsidies to luxury developers and building owners who do no provide affordable housing, and who pay substandard wages.

PrattCenter-421a-Still_subsidizing_luxury_development.pdf

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A Luxury Housing Subsidy New Yorkers Can't Afford

Issue Brief last updated June 6, 2011

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.

prattcenter421a.pdf

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Testimony to HPD in Opposition to 421-a Real Estate Tax Abatement Rule Change

Testimony last updated February 9, 2011

The Pratt Center is here to testify today in opposition to HPD’s proposed extension of 421-a eligibility from 36 months to 72 months for projects initiated prior to the 2007-08 extension of the 421-a exclusion zone.

By expanding the exclusion zone, in which affordable housing is required as a condition of the tax abatement, the City Council and State Legislature clearly intended to spur the creation of affordable housing alongside market-rate development in neighborhoods that had become -- and remain -- highly attractive for real estate development. The legislature passed its measure in mid -2007 and proceeded to give developers until mid-2008 to get foundations in the ground without having to include affordable housing as a condition of receiving the tax abatement within the expanded exclusion zone. Since then, projects begun prior to June 2008 have had three years to come to completion and claim the tax benefit under the old rules. Now HPD is talking about changing the rules at the very end of the game, and calling it halftime.

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