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By: Benyamin Davidsons
Gov. Kathy Hochul’s proposed budget would allow housing projects to reap benefits of the 42a tax abatement program until 2030 – rather requiring them to finish work by 2026 as per the existing law, so long as the work was started by last June.
As reported by the NY Post, in her State of the State speech in January, Gov. Hochul vowed to do her part to breathe life back into the 421a, which gives incentive to developers building new housing projects to set aside units for affordable housing. The tax-break expired in June, with progressive lawmakers opposing the subsidy, saying the roughly$1.8 billion in tax abatements is a way to enrich real estate developers. For its part, the 421-a either partially or completely funded 4,030 (over 90%) of the 4,279 newly rent-stabilized apartments in NYC in 2020, data from the Rent Guidelines Board shows. Proponents of the tax abatement plan say now with the city grappling with a housing shortage, we need to do everything to encourage the creation of more affordable housing.
So far, no other plan has been enacted to replace the expired plan, despite Hochul’s efforts to create an alternative which would boost the required share of affordable units for new approved housing projects. The governor has not included a proposed replacement for the expired 421a subsidy for new projects in the new budget, though she said she is open to working with lawmakers to create a new plan.
Hochul’s current effort to extend the allowed time frame, by four years, for projects already underway, however, is garnering criticism. Opponents say the governor should be more careful to steer clear of green lighting projects that would benefit so many of her major campaign contributors. Last year, real-estate bigwigs had poured hundreds of thousands of dollars into her campaign for a full term as governor.
As per the Post, this proposed extension, unveiled Feb 1st ahead of the April 1 state budget deadline, would seemingly benefit at least a dozen developers who donated a total of $564,000 to her campaign. “The Governor should be distancing herself from any appearances of pay-to-play, especially considering recent controversies with donors and state contracts,” Assembly Minority Leader William Barclay (R-Fulton) told The Post. “As the state budget takes shape, it will be obvious if the tax dollars going out have been influenced by the donations coming in. This is the business-as-usual approach that Albany has become notorious for.”
“This tax money that we’re not collecting, could be used for all sorts of purposes. It could be used for education. It could be used to expand healthcare. It could be used to build affordable housing,” said Michael McKee, treasurer of the left-leaning TenantsPAC,regarding the proposed extension. “So we oppose it. We oppose this extension entirely.” “It’s a huge waste of money,” he added.
Of course, the plan still has its backers, including The Real Estate Board of New York, which represents developers in New York City. “The Governor’s call for extending the 421a completion deadline is critical for ensuring that tens of thousands of badly needed rental apartments, including thousands of below market-rate units, get built,” said Basha Gerhards, senior vice president of planning at the Real Estate Board of New York.
Gov. Hochul’s spokeswoman, Hazel Crampton-Hays said, the proposed extension of the 421a deadline for existing projects is a “common-sense solution” that would help bring to fruition 32,000 out of the 800,000 new housing units aimed for over the next 10 years.
