State Raises Affordable Housing Bar for 421-a Bill
In a move not likely to boost fundraising efforts with developers, state lawmakers yesterday agreed on a tougher version of the 421-a bill than the city had proposed last December; it is expected to pass when it is brought to the floor on Thursday. The 421-a program, originally enacted in 1971 to spur development in…
In a move not likely to boost fundraising efforts with developers, state lawmakers yesterday agreed on a tougher version of the 421-a bill than the city had proposed last December; it is expected to pass when it is brought to the floor on Thursday. The 421-a program, originally enacted in 1971 to spur development in a weak market and set to expire at the end of this year, gives builders significant tax breaks over anywhere from 10 to 25 years. In recent years, even luxury projects in the ritziest neighborhoods have benefited from the law, sparking criticism that the tax breaks are nothing but give-aways in a booming market that would support the creation of new housing on its own. When the City Council proposed extending the bill for another four years back in December, it did so with the proviso that projects in certain upscale neighborhoods be required to set aside 20 percent of its units for people making less than $56,000 a year. (A map from The New York Times of the City’s plan is at right.) The State version not only expands the affordable housing zone (called the “exclusion area”) by 12 neighborhoods but it also brings the income hurdle down to $42,000. (Additionally, it calls for developers to pay workers a “prevailing wage” on participating projects.) While stiffening the affordable housing requirements, the State bill does throw developers one bone: It pushes back the start-date for the new rules to July 2008 which should lead to a wave of projects looking to get grandfathered under the existing rules.
Albany Likely to OK Affordable Housing Bill [NY Sun]
State Revises 421-a “Corporate Welfare” Subsidy [AY Report]
Legislators Agree on 421-a Reform Bill [Crain’s]
Just to show how corrupt the system is and why 421-a should be totally abolished look at the fact that Ratners Atlantic Yard fiasco has been carved out to be eligible for continued Government subsidies (under the old 421-a regulations), despite the fact that it is no were near having any foundations in and that everything else around it will now be part of the new regulations.
All this shows is the city wants to push development in new areas: Bronx, East Brooklyn and Queens. Its not an end to the system.
/\ Halt. No.
Market come crashing, yes. Both here and on Curbed, people have this arrogance like “My house will never devalue becuase i live in NY”. Bullshit, wait till the era of 1,000+ homcidies come back. Or if Wall St tanks. Both, as well as other scenairos, can happen.
I’m all for affordable housing, but then we slap them with insane taxes and downzonings, which slice profit margins very thin. Trust me, most of the heavy hitters in real estate in this city got their money either in hedge funds or they’re overseas investors scamming condo buyers. It’s hard to make money building in NY outright. Nevermind trying to price it for the middle class.
I can assure you, ActionJackson, you will see a complete halt to most private investment in NYC if we continue to make it less profitable to build here. Then the only housing being built would be Michell-Llama or even worse………..NYCHA(read: projects).
Trust me, that’s not what you want….
I agree in reference to the city as a whole but in areas where sellouts average below $800 psf it is going to be devestating to the development market.
“With land selling at $150-$225 per buildable square foot and hard and soft construction costs at $350 psf (and rising) it just makes no sense anymore. Units in W’burg for example are selling at roughly $700 psf”
Jonz, that’s a valid point and a major part of the problem. Since buyers are paying more, land owners are selling at higher prices, developers must spend more to build, buyers then are spending more! And so on. Circular and downright damaging to the market as a whole if you ask me.
Time will tell, ultimately. But I honestly do not agree that all building in the City will suddenly halt if 421a goes by the wayside.
ActionJackson,
With land selling at $150-$225 per buildable square foot and hard and soft construction costs at $350 psf (and rising) it just makes no sense anymore. Units in W’burg for example are selling at roughly $700 psf with the abatement. Without the abatement units are worth closer to $550 psf which is right around where the land and construction prices amount to. Developers won’t build in NYC if they are just going to break even. The only way it will work is if land prices are halved and that will never happen overnight.
And PS, most are not hiring non-union workers. Unless there’s a new undocumented immigrant labor union I don’t know of.
Folks must be dying to join.
CommonSense:
B.S., they may not build affordable housing, but they will build. As much as there are 421a developments, there are certainly enough which are not. Demand is high, though where the $$ for the units is coming from (a flush year at Wall St.?), I don’t know.
They will be built, for a profit, with or without 421a.
Let us try without for a while.
/\ NY isn’t the center of the world. If it isn’t profitable to build/do buisness/grow here, they’ll do it elsewhere. All these post about “greedy developers” neglects the fact NYC has the highest taxes than anywhere else in America. Without 421a, developers will do one or more of the following:
-Hire non-union
-Stop buidling in NYC