New York’s tax abatement extension is well under way. The new bill allows for large project developers (300 units or more) to apply the abatement for 35 years (up from 25) if they set aside 25 to 35 percent of units for low-moderate income tenants. The extension will also require “fair wage” to construction workers with an average of $45/hr for projects within a mile of the East River and $60/hr for properties below 96th Street in Manhattan.
Mayor de Blasio has expressed concern that the earlier version of the 421-a was a “giveaway to developers”. It is estimated that the new proposal will cost the city $8.4 billion in foregone property taxes over the next ten years. This estimate assumes developments will generate the equivalent revenue should they be built without this abatement, however this profit is argued to be unlikely
The program is not necessarily designed to create a level of affordability for residents to actually benefit from the program. Rent stabilization only applies to rentals that stay below $2,700. Once initial tenants move out, the property owners are not required to keep the rent stabilized. Is it really beneficial to the “affordable” market? Or is this abatement another way for developers to maintain optimism for profitability on their upcoming endeavors? Governor Cuomo claims in a press conference that the program will release $2.5 billion government dollars to create 100,000 affordable housing and 6,000 units of supportive housing. The program will run until 2022 with the possibility of modifications to how the rules are implemented.