State Workaround for Expired Tax Break Will Let Thousands of Pricey Units Proceed in Gowanus

By Gabriele Holtermann, Brooklyn Paper

As New York City faces the worst housing crisis in over 50 years, Governor Kathy Hochul on Friday announced that 18 new housing developments in recently rezoned Gowanus will move forward thanks to a state tax break called the Gowanus Neighborhood Mixed Income Housing Development Program.

The Gowanus-specific workaround for the expired 421-a tax break will allow private for-profit development of 5,300 housing units in the rezoned area, of which 1,400 will be rent-stabilized and income restricted, which the city defines as “affordable housing.” Because the developments take advantage of the 2021 Gowanus rezoning, the affordable units will conform to the city’s Mandatory Inclusionary Housing program, which offers a deeper level of affordability than required by the 421-a tax break.

Hochul made the announcement on February 8 at a ceremonial groundbreaking of 320 and 340 Nevins Street, located in the former industrial zone around the Gowanus Canal. The development is a mixed-use 505,000-square-foot complex featuring two residential towers with 654 rental units, including 154 income-restricted units and ground-floor retail. It is one of the first projects to move forward under the program.

Addressing the crowd — which included elected officials Deputy Mayor Maria Torres-Springer, Assembly Member Jo Anne Simon, and Comptroller Brad Lander as well as developers and 32 BJ SEIU union members — Hochul described the housing shortage as a “crisis on steroids” and the number one reason why New Yorkers were leaving the state in droves.

“[New Yorkers] are only going to other places because there’s not a place to live [in New York City],” Hochul said. “We’re hemorrhaging families, black and brown families in particular, who always thought that they’d be able to raise their kids around the grandparents [and] get the free babysitting.”

Gowanus was rezoned in 2021, but real estate development in the neighborhood hit a brick wall when the state legislature allowed the 421-a tax abatement to expire. Since the expiration of 421-a, the total unit filing has dropped 78 percent in two years.

“The plans were stopped in their tracks when the legislature let 421-a expire and again expire the following year, never renewing it,” Hochul pointed out. “That left nearly 40,000 possible new homes sitting in limbo.”

In an effort to offset the housing crisis, Hochul in July announced the Gowanus Neighborhood Mixed Income Housing Development Program. The program, overseen by Empire State Development, allows a tax break similar to 421-a for projects that would have qualified for it anyway, that started construction by June 15, 2022, and that are in the area of the 2021 Gowanus rezoning allowing residential towers over 82 blocks.

How it works is that ownership of the properties is transferred to New York State for the duration of the site’s tax break, and the state then rents the properties to the developers via a ground lease. The developers then pay what is in essence reduced property taxes to the state, called payments in lieu of taxes or PILOTs.

“After years of stalled construction, we’re putting more than 5,300 new homes back on track and unlocking Gowanus’ housing potential,” Hochul said. “New Yorkers are facing the lowest vacancy rates in six decades while costs continue to rise — they can’t afford to wait for solutions to the housing crisis. The only way to fix this crisis is to build our way out, and until we have a statewide solution, I will keep working to give Mayor Adams and leaders across our state the tools they need to let them build.”

Only 1.4 percent of the city’s rentals were available in 2023, according to a recent survey by the New York City Department of Housing Preservation and Development (HDP).

Deputy Mayor Torres-Springer described the HDP’s survey as “staggeringly heartbreaking.”

“There is a functional zero vacancy rate for units less than $2,500,” she said. “And for our lowest income households, those making less than 25,000, 86 percent of them are severely rent burdened, which means that they pay more than 50 percent of their income on rent.”

The build at 320 and 340 Nevins Street is expected to be finished in June 2026 and is being developed by Tavros Holdings in partnership with Charney Companies.

Charney Companies Principal Sam Charney told Brooklyn Paper that he is honored the governor attended the groundbreaking.

“We are really looking forward to just alleviating the housing crisis in New York City by doing our part,” Charney said.

Addressing the crowd, Charney pointed out that the project “was not just about erecting buildings.”

“It’s a testament to the Gowanus rezoning, a dynamic synergy between public and private sectors, creating a model for responsible and inclusive urban development,” he said.

Tavros Holdings Founding Partner Nicholas Silvers echoed Charney’s remarks.

“As born and raised New Yorkers, we are deeply appreciative of Governor Hochul’s support as we try to make this city that we love a little better every day with the work that we are doing here,” Silvers said. “We are all shepherds of the governor’s agenda; her leadership and vision has been unbreakable and foundational to building more housing to guarantee that New York stays affordable, accessible, and the greatest city in the world.”

Vladimir Sterlin, comanaging partner of Le Roi Capital — a full-service government relations and economic development firm — said his group was honored to represent Charney Companies, and that the groundbreaking should be seen as a staple of excellence to come.

“We live in an ecosystem in which everything is interconnected,” Sterlin said. “Since the expiration of 421-a, real estate developers have stalled building, which has strained housing for New Yorkers as a whole. This morning’s announcement by Governor Hochul outlining the initiative of introducing 5,300 new homes into the market is welcomed relief news.”

— Additional reporting by Cate Corcoran

Editor’s note: A version of this story originally ran in Brooklyn Paper. Click here to see the original story.

Related Stories

• What Is Affordable Housing?
• Will the Mayor’s Affordable Housing Plans Save New York City or Destroy It?
• Mayor Adams Cites Need for 421-a Tax Break Replacement to Create Affordable Housing

Email tips@brownstoner.com with further comments, questions or tips. Follow Brownstoner on Twitter and Instagram, and like us on Facebook.