Intended as a spur to affordable housing but widely derided as welfare for developers, the latest version of the 421-a tax break being pushed by Republicans in the New York State Senate would greatly increase the number of tax-exempt condo projects in the outer boroughs. Chalk one up for the “welfare-for-developers” camp.
In the Senate Republicans’ latest version of the bill, the Real Deal reports, condo projects outside Manhattan with as many as 80 units could qualify for 421-a tax exemptions, up from 35 units in Gov. Andrew Cuomo’s proposal released in January, known as the “Affordable New York” plan. A cap on the average tax assessment value for benefitting condo units is also raised in the new proposal from $65,000 to $85,000.
“This is an affordable housing program, not a giveaway for condos,” Melissa Grace, a spokesperson for the mayor, said in a statement. “We can’t accept the Senate’s proposal. There is no justifying more and more costs piled on New York City taxpayers, without a single affordable apartment to show for it.”
In a report released last week, the city’s Independent Budget Office found that the governor’s proposed program could cost the city $8.4 billion in property taxes over the next 10 years. City officials also contend that the new Republican proposal will further increase the cumulative costs of 421-a to the city to the tune of $1 billion each year. By the city’s math, the cost per affordable unit would be $592,000 under the Senate’s program compared to $507,000 under the 2015 law.
The 42-a tax exemption expired at the end of 2015 following a failure of labor and real estate trade associations to agree on wage provisions for construction workers, negotiations that were requested by Governor Cuomo. In November, the two key groups, the Real Estate Board of New York and the Building and Construction Trades Council of Greater New York, announced they had reached an agreement on wages, prompting Governor Cuomo to ask the legislature to pass an updated version of the bill.
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