En Español Know Your Rights
Source: New York Times
Subject: Housing & Environmental Justice
Type: Media Coverage

Mayor de Blasio’s Plan Aims to Spur More Affordable Housing in New York

Mayor Bill de Blasio is calling for an overhaul of housing programs and tax incentives to spur the construction of tens of thousands of apartments for poor New Yorkers, as well as teachers, firefighters and other workers, who increasingly find themselves priced out of a booming real estate market and rapidly gentrifying neighborhoods.

The proposals, which would require approval by the State Legislature, are central to the mayor’s promise to build or preserve 200,000 units of affordable housing over 10 years.

Mr. de Blasio’s plan would require developers throughout the city to set aside 25 to 30 percent of a project’s apartments for poor and working-class residents in return for city tax breaks, a substantial change from the existing tax abatement program, known as 421-a.

“No more tax breaks without building affordable housing in return,” Mr. de Blasio, a Democrat, said in a statement. “This can’t be a city of just penthouses and luxury condos. We are turning the page, and making sure the same pressures that have pushed New Yorkers out of their neighborhoods are harnessed to build the next generation of affordable housing.”

The administration is also pushing for what it calls a mansion tax on sales of condominiums, co-ops and homes that cost more than $1.7 million. The plan would generate as much as $200 million a year in tax revenue, which would be dedicated to housing programs. The city says its package of housing proposals would create more than 60,000 affordable homes over the coming decade.

Mr. de Blasio’s plan would also target so-called poor doors, separate entrances in the same developments for tenants with lower incomes.

The ambitious plan is the culmination of a year of analysis and meetings with builders, developers, housing activists and urban planners. The mayor has already won the support of the Real Estate Board of New York, the industry’s powerful lobbying arm.

The industry’s support for the tax on high-end sales and for reforming the tax abatement program may give the de Blasio administration leverage with both the Republican-dominated Senate and the governor.

“We’re going to support it, including the mansion tax,” said Steven Spinola, president of the real estate board. “We’re not happy about everything, but we think it will lead to building more affordable housing.”

Mr. de Blasio has also been outspoken on another contentious affordable-housing issue — the need to strengthen rent regulations to preserve the city’s existing affordable-housing stock.

His proposals still face a battle in Albany, which has been thrown into turmoil in recent months by the arrest on corruption-related charges of Sheldon Silver, a Democratic assemblyman and former speaker, and Dean G. Skelos, the Republican majority leader in the Senate.

Both the 44-year-old 421-a housing program and the rent stabilization law, which governs rents for one million apartments in New York City, are set to expire on June 15.

Given the turmoil in the capital, Gov. Andrew M. Cuomo, who has blocked the mayor’s proposals in Albany in the past, recently suggested that it might make sense to extend the existing laws.

“If it was a different time in Albany, frankly, and Albany was a little bit more stable situation, I would normally take these negotiations to Albany and try to work it out among the parties,” Mr. Cuomo said last week at the Association for a Better New York.

But that would be a setback for both Mr. de Blasio and tenant activists who hope to impose restrictions on landlords of rent-stabilized apartments.

“It’s really siding with the real estate industry, rather than New York tenants,” said Katie Goldstein of Tenants and Neighbors, an advocacy group. “It’d be a disaster. Renewal would mean leaving the broken system intact.”

Keith L. T. Wright, a Democrat and the chairman of the Assembly’s housing committee, agreed. “It would be political and governmental malpractice if we do not reform rent regulations and 421-a,” he said.

Mr. de Blasio has also called for the elimination of a provision of the rent-stabilization law that allows landlords to charge market rates once a rent-regulated unit reaches a monthly threshold of $2,500. It accounts for nearly two-thirds of the stabilized apartments lost each year.

He also wants to do away with another rule that allows landlords to raise the rent by 20 percent after an apartment becomes vacant.

Currently, the state has a “mansion tax” of 1 percent on the sales of homes over $1 million. The de Blasio administration is calling for an additional 1 percent tax on the sale of homes in New York City over $1.75 million, which would rise to 1.5 percent tax on sales over $5 million.

State Senator Liz Krueger, a Democrat from Manhattan, said there may be a “window of opportunity” in Albany right now, where no one wants to be seen to be favoring programs that are viewed as giveaways to real estate interests. “Everything is very fluid right now,” she said.

Ms. Krueger supports the de Blasio administration’s push to strengthen rent regulations, but she said the 421-a tax abatement program should be scrapped. “Why not keep the money and spend it on programs that work,” she said.

The program was enacted in the 1970s to stimulate construction when the city was in crisis. Developers who agreed to build housing got a property-tax break for up to 25 years.

But as the city’s economy recovered, legislators tinkered with the regulations, requiring developers in popular neighborhoods to set aside 20 percent of their apartments for low- and moderate-income tenants in order for the building to qualify for the tax break.

Last year, about 150,000 apartments qualified for the tax break, costing $1.06 billion in forgiven taxes. But fewer than 15 percent of the units were considered affordable to low- and moderate-income tenants.

Critics have condemned the program as a giveaway to developers, while builders contend that little rental housing would be built in New York without it because of high taxes and land and construction costs.

The problems with the existing abatement program were highlighted by news reports about a $100 million penthouse in a tower on 57th Street that qualified for a 421-a tax break.

But a union construction coalition, Up4NYC, wants to reform the program so developers pay construction workers middle-class, or union, wages.

Lisa Gomez, chairwoman of the New York State Affordable Housing Association, a builder’s group, argues that union pay scales would torpedo the production of affordable housing. Her group, however, favors the mayor’s proposal. “I’m excited about the potential creation of additional revenue for affordable housing,” she said.

Under the mayor’s plan, condominiums would no longer qualify for the 421-a tax abatement. Developers of rental housing would be required to make 25 to 30 percent of units affordable.

In return, the projects would receive the tax benefits for 35 years, up from 25 years today.

In terms of forgiven taxes, the de Blasio administration estimates that its proposal would cut the subsidy per unit to less than $400,000, from nearly $600,000, and double the number of affordable apartments created under the program to 25,000, from 12,400, over the coming decade. The administration says the mansion tax could produce an additional 37,000 affordable apartments.

Benjamin Dulchin, executive director of the Association for Neighborhood Housing and Development, an advocacy group, said there was a lot to like about the mansion tax and the mayor’s other proposals. But he said that the reforms miss the opportunity to ensure that the most needy, low-income tenants get the affordable apartments. “This still leaves a lot of money on the table,” he said.

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