Report says luxury developers benefit from tax program
By Tequila Minsky
Members of 10 housing organizations gathered at 88 Leonard St. off Broadway a week ago to draw attention to the release of a report that addresses the question: Do developers in Tribeca need tax subsidies to build in a neighborhood so trendy it even has a car named after it?
This is one of the questions a mayoral task force will examine as it begins reassessing the citys 421-a property tax abatement program for residential development, according to a group of housing advocates that released an April 11 report on the issue.
Co-authored by Habitat for HumanityNew York City and the Pratt Center for Community Development, the report was released in front of the Tribeca building under-construction a 21-story, 352-unit, market-rental apartment building, which received 421-a tax abatement worth $16.8 million, according to the study. It was financed with $112.5 million in tax-free Liberty Bonds.
The [421-a] programwhich cost the city $320 million this yearis creating few of the affordable homes that average New Yorkers desperately need, the report states.
The city started the program during the fiscal crisis three decades ago in order to spur residential development. The program, however, has remained almost unchanged, despite changes in the housing market. Now it largely subsidizes high-priced homes in high-income communities, according to the report.
During the rally, Roland Lewis, executive director of Habitat-NYC said, Were not faulting developers who use this program they are simply playing by the rules. But thousands of hardworking New Yorkers are playing by the rules, too, and they cant afford decent homes. Its time to change the rules.
Brad Lander, director of the Pratt Center, said, Weve got to get affordable housing when we give a tax break, adding, We need to solve the growing affordable housing crisis in every borough, not to pay for ever more luxury housing in ever more expensive neighborhoods.
Five buildings in Tribeca and Hudson Square are among the 10 buildings throughout the city cited in the report that received 421-a tax breaks. They are 336 Broadway, 147 Chambers St. and 124 Hudson St., 88 Leonard and 491 Greenwich St.
Margaret Chin, deputy executive director of Asian Americans for Equality, pointed out that 88 Leonard is only a short walk from Chinatown where 31 percent of the residents are living in overcrowded conditions and 22 percent are paying more than half their income on rent, she said, adding, Our community pays taxes too, and we do not want our tax money to subsidize luxury housing only.
Kevin Doyle, executive vice president of Local 32BJ, which represents doormen and other building workers, was among the speakers. The Union Local and Pratt also released a report showing that many residential buildings with 421-a tax breaks pay their workers 30 percent less than the prevailing wage.
Among the findings in the report are:
421-a has subsidized more than 100,000 housing units since it began but only about eight percent are affordable to moderate- or low-income people
Manhattan developments received less than a quarter of all 421-a exemptions, but because of the strong housing market and land costs, Manhattan developers accrued more than three-quarters of the value of these tax breaks
Only about 36 percent of new residential buildings take advantage of the 421-a program, an indication that tax breaks are not necessary to encourage new market-rate construction.
The job of government is to set the policythe market will adjust, said Lewis. As the task force begins looking at the 421-a program, they should start from square one. This is $320 million in tax dollars every year. The task force should be asking: Whats the best use of that money.