Gov. Kathy Hochul on Tuesday acknowledged that one of the state’s largest and most controversial affordable housing programs is likely to expire next month, potentially wreaking havoc on new construction in the Big Apple as rents soar across the city.
The program, known as 421-a, offers homebuilders nearly $1.8 billion in property tax breaks in exchange for including a portion of new homes in rent stabilization and capping rents based on tenant income levels.
“This is not resolved yet and if it doesn’t lead to this session then I would say we will definitely do it again early next year,” Hochul said during an independent news conference in Albany.
“I make no assumptions about what lawmakers will do. Let them do their job and then I’ll continue my behind-the-scenes conversation,” she added. “But I would say beforehand that this is an important goal, but I don’t know at this point if there is any interest from the legislature to achieve it this year.”
The Big Apple has been under-constructing new housing for decades: just 407,000 new housing units were approved between 2001 and 2018, while employers in the five boroughs added an additional 770,000 jobs, city data shows.
In fact, New York City admitted fewer new housing units between 2009 and 2018 than it did between 2001 and 2008, according to the Department of City Planning.
“I keep saying that — my job is to take my case to Albany, I don’t control Albany,” Mayor Eric Adams said when asked what his government would do if the program expires. “We will continue to promote building in the city.”
Sources in Albany say Democratic lawmakers are concerned they may run afoul of left-wing critics with the primary just weeks away, making a mistake likely.
“Many people have major problems with 421a – including people who want more living space and, above all, affordable living space. For myself, I think 421-a is an expensive program and we’re just not getting our money’s worth,” Rep. Jeffrey Dinowitz (D-The Bronx) said in a recent interview with The Post.
The dysfunction of Adams’ Albany operation came under intense scrutiny as it struggled in the final weeks of the legislature to garner state lawmakers’ support for key city programs like the tax break.
Progressives have lobbied for years against extending or renewing the program, claiming it’s a freebie for developers and that lawmakers should focus on overhauling the Big Apple’s broken property tax system.
Attempts to fix New York City’s property tax system have failed for decades, in large part because it heavily favors politically powerful homeowners in rapidly gentrifying neighborhoods at the expense of rental housing.
Housing experts say the tax incentives are building units for working and middle-income families in affluent neighborhoods that are normally excluded from affordable housing programs because of the cost of land and construction.
And developers and housing experts warn that if the program were to be permanently phased out, it would be virtually impossible to build apartments in New York City, as current rates mean property taxes can amount to a third of a building’s operating budget.
The mitigation temporarily expired for several months in 2016 without affecting overall construction as developers rushed through projects to capture the disruptions if 421-a was not subsequently renewed.
https://nypost.com/2022/05/24/gov-kathy-hochul-warns-housing-subsidy-set-to-expire/ Governor Kathy Hochul warns that the housing subsidy will expire