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Know Your Rights
Source: Capital New York
Subject: Housing & Environmental Justice
Type: Media Coverage

Tenant groups seeking an end to tax abatement program

A coalition of tenant advocates plan to call for the end of a major tax abatement program that is both coveted by developers and seen as an important piece of Mayor Bill de Blasio’s affordable housing plan.

The groups do not want the program, known as 421-a, to be renewed after its expiration in June because they believe it is an old and inefficient way to provide affordable housing. It made sense when it was created in the 1970s, the groups said, because New York City’s population was shrinking and needed all the new construction that could be mustered. Today, they claim, it’s just a perk for moguls building apartments for millionaires and billionaires.

“This luxury housing produced through 421-a fuels gentrification and displacement,” the groups say in an attack piece that will be circulated next week. “It inflates real-estate prices and creates market pressure that leads to higher rents and pushes out residents in neighborhoods like downtown Brooklyn, western Queens and Harlem, where many new luxury condos have been built.”

That isn’t to say the program doesn’t subsidize any affordable housing. In many neighborhoods, developers who accept the abatements are required to set aside at least 20 percent of the housing they create and make it affordable to some New Yorkers. As part of any new deal in Albany to extend the program, those boundaries are likely to be expanded—possibly across the entire city.

The de Blasio admiration, which hopes to build 80,000 affordable housing units over a decade, also intends to require most new developments to include affordable apartments or condos. Still, 421-a and other programs would remain important to the initiative, proponents say, because developers will not be interested in taking on projects in some outer borough neighborhoods without the benefit of subsidy.

In other words, the profit from luxury apartments can easily pay for the addition of affordable units in most of Manhattan. The same cannot be said of a place like East New York, one of the 15 neighborhoods the city if targeting for new development. There, the lack of a super-competitive real estate market and rising cost of land make it less attractive to developers who would be required to build affordable units.

“If one is serious about advocating for more, rather than less, affordable housing, the discussion should center on refining 421-a so that a robust … program would be available to anyone who is willing to invest and build affordable housing,” Steven Spinola, the president of the Real Estate Board of New York, said in a statement. “Our housing crisis is serious, so should our solutions be.”

De Blasio’s plan also calls for requiring deeper affordability in cases where developers “layer” different types of subsidy, especially in hot real estate markets. The mayor would like to simplify the program and “harmonize” it with the goals of his plan.

“We need to maximize affordable housing and make sure we are only providing subsidies where they are necessary,” said Wiley Norvell, a spokesman for the mayor.

There are several dozen groups among those who plan to call for the expiration of 421-a next week. Organizers are planning a rally for Tuesday at City Hall. They are organized into two coalitions, the Alliance for Tenant Power and Real Affordability for All.

Their overarching argument is that the money foregone by having these abatements in place—more than $1 billion per year, they said—would be better spent on more direct subsidy. For example, they said that amount of money could cover the cost of about 100,000 Section 8 vouchers, which pay landlords some rent to reduce the burden on tenants. One voucher costs about $10,000 per year.

“It’s just not a sensible use of tax dollars, and with those tax dollars we could do a lot more,” said Judith Goldiner, an attorney with the Legal Aid Society.

Of course there’s another program that the groups do support—rent regulation—that is also going to sunset in June. It’s another program that’s key to de Blasio’s plan, which seeks to preserve 120,000 already affordable units in a decade.

The two programs are also linked because of the politics in Albany. The 421-a program is supported by many pro-business Republicans, the party that now controls the Senate, and rent regulation is supported by Democrats, which control the Assembly. In 2012, tenant groups used the renewal of another tax break, J-51, in their fight to seek changes to rent regulation laws .

Jose Lopez, the leader organizer for Make The Road New York, said renewing and strengthening rent laws are important to his members. “That’s going to be our big push,” he said.

Asked about the interplay between the two programs, Tom Waters, housing analyst at the Community Service Society, said it was clear rent regulation would be part of their discussion to end 421-a.

“Rent regulation does more for tenants than the affordability component of 421-a, and they expire on the same day, so they are linked politically,” Waters said.

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