News
08.01.2007
Tax Breaks?
Albany makes 421-a changes

Williamsburg assemblyman Vito Lopez considers himself a crusader for affordable housing, driven largely by his front row seat to the vagaries of gentrification. To further this mission, Lopez helped pass a new version of the 421-a residential tax abatement program in the Legislature on June 21, where it drew votes from all but two senators.

City officials, however, including Mayor Michael R. Bloomberg and City Council speaker Christine Quinn, are galled by what they see as last-minute changes Lopez wrote into the bill. Both have called on Governor Eliot Spitzer to veto it, though Neill Coleman, a spokesman for the city’s Department of Housing Preservation and Development (HPD), said the city hopes to negotiate instead. “What we’re looking to do is try and get changes made before it goes to the governor’s desk,” he said.

421-a refers to a section of the real property tax code created in the 1970s to encourage large-scale residential construction in the city by abating taxes for up to 20 years. In 1985, an exclusion zone was created in central Manhattan that required developers to include 20 percent affordable housing to secure tax breaks, resulting in 10,000 affordable units over 20 years.

Last year, the mayor convened a task force to reconsider the plan. As once-downtrodden neighborhoods succumbed to gentrification, developers were able to use 421-a to fund luxury housing, and this has cost the city hundreds of millions of dollars in taxes. A version of the mayor’s plan, which greatly expanded the exclusion zone, passed City Council on December 28 (“City Revises Property Tax Program,” AN 01_01.17.2007).

Coleman said three things are at issue in Lopez’s bill, the most prominent of which is a clause that includes Atlantic Yards in the program. The deal could net Forest City Ratner $300 million, according to HPD numbers. “It’s $300 million they don’t need,” Coleman said.

Expansion of the exclusion zone to cover additional neighborhoods also drew fire from the city. The task force determined that many areas in the city still need to increase the amount of available market-rate housing, otherwise development could be stifled, and that 421-a is a crucial financing tool. Lopez said he canvassed his colleagues, and those interested in joining the exclusion zone were included. “If it means less development, so be it,” Lopez told AN. “In these neighborhoods, we want affordable development.”

Finally, HPD objects to a provision that prevents projects with “significant government assistance” from receiving 421-a benefits, arguing that it could hamper the city’s plans for middle-income projects such as Queens West, from receiving tax abatements. Coleman said it could stall 10,000 units currently underway.

This final dispute underscores Lopez’s position on 421-a. “I’m in support of many, many middle-income areas, but if I had to choose, I’d choose affordable housing,” he said. In short, middle-income housing is not the same as affordable housing. Jonathon Rosen, a spokesman for ACORN, points to many of Lopez’s under-publicized achievements in the bill: the extension of units’ affordability from 20 to 40 years, requiring unionized labor, and lowering the income threshold to benefit the poor. “This is public money,” Rosen said. “It should serve a true public purpose.”

Matt Chaban