More on the 421-a Tax Abatement Program

I found this on Crain's website. The City Comptroller says the 421-a tax abatement has benefited mostly luxury housing in Manhattan. One suggestion instead of scrapping the whole program is to change the mix of affordable to market rate housing required in order to receive the tax abatement.

Good idea.

We saw a presentation from Forest City Ratner regarding the Atlantic Yards project in Brooklyn. They apparently have 50-50 ratio between market rate housing as well as middle and low income housing. The impression is that this is very progressive for such a huge development in New York City.

Perhaps the 421-a tax abatement program might be revised to require that future housing construction conform to a similar formula.
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May 23, 2006

Luxury buildings gain from tax break: report
by David Jones

A tax incentive program designed in the 1970's to spur new housing development has mainly benefited luxury buildings in Manhattan, said city Comptroller William Thompson Jr.

An analysis of the property tax savings generated under the city's Section 421-a program shows that most of the subsidies went to some of the most expensive housing in the city, according to the comptroller's report, released Tuesday.

The 421 program provides tax exemptions to developers to build new multi-family housing and requires that recipients in the Manhattan "exclusion zone" -- between 14th and 96th streets -- must help finance affordable housing.

The "exclusion zone" was created in the mid-80s in response to critics of the 421 program who said the city was giving away money to developers. In accordance with the "exclusion zone" requirements, developers have to agree to provide a substantial amount of affordable housing if they want to build within the defined area.

The comptroller said that, in fiscal 2005, Manhattan developments got 78% of all 421-a benefits, yet accounted for only 48% of the units that received the benefits. Outside of Manhattan, the pattern was reversed, with the percentage of units receiving the benefits exceeded the percentage that of total value of the exemptions.

Mr. Thompson suggested possibly extending the exclusion zone, reevaluating the affordable housing contribution required in the zone, devising other methods of determining which projects must contribute to affordable housing among other options.