New Report: Mend It, Don't End It; NYC’s 421-a Affordable Housing Tax Exemption
New York, NY — A new study by the Manhattan Institute finds that the de Blasio administration’s approach to providing support for affordable housing could cost the city up to three times as much in lost tax revenue as an approach that was in place during the Bloomberg Administration but is not included in the current administration’s housing plan.
Authored by Howard Husock and Alex Armlovich, the study finds that subsidies provided by the controversial 421a tax abatement plan cost the city up to three times the amount in lost property taxes per affordable unit when applied to so-called “inclusionary” units in high-cost, high rent Manhattan neighborhoods than when developers in Queens or the Bronx build all-affordable developments and sell a tax abatement to developers in higher-cost parts of the city. That so-called 421a certificate program helped support the construction of nearly 8,000 affordable units when it was in place between 2000 and 2008. The Manhattan Institute study calls for the “negotiable certificate program” to be restored by state lawmakers currently facing the decision as to whether to renew the 421a law.
421a has been under fire because of abatements it has granted to luxury developments such as 1 W. 57th Street, in exchange for support of affordable housing elsewhere in the city. The Institute study finds that, by limiting 421a to support affordable units located in the same buildings as market-rate units, city policy will significantly increase the cost in lost property taxes. The city currently forgoes some $1.2 billion annually for the 421a program.
The study finds that, in effect, the de Blasio approach provides a rent subsidy to low-income “inclusionary” tenants worth up to $3800 a month when their unit is located in a high cost neighborhood, as compared to just $1600 per month in a lower-cost development that does not include market-rate tenants.
The study goes on to call for a bipartisan state commission to consider reforms to the city’s property tax and rent stabilization laws, so as to reduce the need for programs such as 421a.
Click here to read the full report.
Are you interested in supporting the Manhattan Institute’s public-interest research and journalism? As a 501(c)(3) nonprofit, donations in support of MI and its scholars’ work are fully tax-deductible as provided by law (EIN #13-2912529).