Five Facts About the Controversial 421-a Tax Break and How It Will Affect Brooklyn

In Albany, state lawmakers are working on tweaks to the expired and controversial 421-a program, which gives a tax break to developers in exchange for putting affordable housing in their developments. Up for debate is whether the tax break is too big or not big enough and whether developers should be required to pay construction workers higher wages on large projects in prime areas in Brooklyn and beyond.

To cut through the tangle of claims, NYU Furman Center Wednesday released a study that looks at the likely impact of higher wages. Here are five takeaways for Brooklyn:

• With the tax break, projects in Downtown Brooklyn would be able to absorb an increase in construction costs of 16 percent.
• Projects could weather an increase in construction costs of up to 11 percent in Bed Stuy.
• The proposed changes could drive up the cost of land.
• Developers may elect to build projects with fewer than 300 units to avoid paying the required worker wages.
• With the wage requirement, the 421-a tax break could cost taxpayers between $2.6 and $5.7 million per 300-unit building that is constructed.

https://www.youtube.com/watch?v=mIrMrQC6vNs

With or without the wage requirement, if the tax break is renewed, it is likely to spur more new development in Brooklyn, including affordable units.

Related Stories

• What Does the New 421-a Deal Mean for Brooklyn Real Estate Development?
• Here’s What You Should Know About 421-a and Its Incredible Impact on Development in NYC (Updated)
• Report: While Developers Exploit Tax Breaks at Tenants’ Expense, City Does Little

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