Bill Aims to Spur Housing for New York’s Poor
Oscar Hidalgo/New York Times
Mayor Michael R. Bloomberg issued a statement that praised the accord.
By JANNY SCOTT
Published: August 8, 2007
New York City officials and state legislators have reached an agreement to overhaul a popular tax break for apartment building developers. The aim of the revision is to encourage the construction of tens of thousands of apartments for New Yorkers of limited means.
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The deal now goes to Gov. Eliot Spitzer. If he agrees to it, it will significantly expand the number of neighborhoods where developers are required to include apartments for low- and moderate-income tenants in new buildings in order to receive tax breaks.
The revamping of the tax-break program, known as 421-a, seemed to be in jeopardy earlier this summer after the Legislature passed a version of the city’s overhaul plan that city officials said was so far from what they had intended that they would ask Governor Spitzer to veto it if the Legislature did not agree to modifications.
Yesterday, Assemblyman Vito J. Lopez, chairman of the Housing Committee, and city housing officials said they had reached a compromise under which Mr. Spitzer would be asked to sign the bill based on the promise that the Legislature will modify it when it reconvenes this fall.
The planned change reflects a compromise between city officials’ desire to encourage the construction of some moderate-income as well as low-income housing and Mr. Lopez’s insistence that it be used exclusively to help low-income people and not to subsidize gentrification.
“I understand the art of compromise,” Mr. Lopez, a Brooklyn Democrat, said yesterday. “This bill is different from what was originally intended to be, but still I believe it meets at least some of my commitment to building more affordable housing for families making $40,000 and $50,000.”
A spokeswoman for Governor Spitzer said his policy is not to comment on bills until they reach him for a decision.
Bertha Lewis, executive director of New York Acorn, an advocacy group for low-income people, said: “This deal means fewer developers will get fewer dollars to build luxury high rises in gentrifying neighborhoods. Not only that but hundreds of millions of dollars will be set aside to build affordable housing.”
Under the 421-a program, begun in the 1970s to spur housing development of any kind, developers have received a 10- to 25-year exemption from the increase in property taxes that results from their work. When the real estate market in Manhattan revived in the 1980’s, the program was modified to require developers in central Manhattan to build not just market-rate apartments but some lower-priced units to obtain the tax break.
In early 2006, Mayor Michael R. Bloomberg appointed a task force of developers, low-income housing advocates, bankers and others to look into whether the program should be revamped to better encourage construction of badly needed low-priced housing. The administration then proposed limiting the benefit for market-rate apartments, expanding the area in which some lower-income units would be required, and setting up a trust fund to subsidize housing development in poor neighborhoods.
Late last year, the City Council passed a version of that plan, further expanding the area in which developers would have to build low-cost housing to get the tax break. Under the Council’s bill, the lower-income units in those neighborhoods were to be affordable to New Yorkers making no more than 80 percent of the median household income, or $56,720 for a family of four.
The version of the plan passed by the Legislature in late June included still more neighborhoods where developers would be required to build lower-priced units to get the tax break, including some untouched by gentrification. It also required that the lower-priced units be affordable to people with incomes even lower than those required under the City Council’s bill.
In addition, the Legislature’s bill gave a new break to the Forest City Ratner Companies, the developer of the Atlantic Yards project in Brooklyn. City officials estimated that the bill gave Forest City Ratner an additional $300 million worth of 421-a benefits than what it would otherwise have received.
Under the agreement announced by Mr. Lopez and confirmed by other state and city officials yesterday, the neighborhoods in which developers must include lower-priced housing in return for the tax break will be those specified in Mr. Lopez’s bill. But city officials and legislators agreed that they would reconvene in the fall to re-examine the neighborhoods.
Also under the agreement, 20 percent of the units in most rental buildings receiving the tax break would have to be affordable to people making on average no more than 90 percent of median income for the area, or $64,000 for a family of four. That could include some apartments for households making as much as 120 percent of the median income and some making as little as 60 percent or less, as long as the average for the lower-priced units was 90 percent.
In co-ops and condominiums, 20 percent of all units would have to be affordable to people making no more than 125 percent of median income, or just under $90,000 for a family of four.
City officials have contended that some neighborhoods, like the South Bronx, that already have a lot of low-income housing now want and need moderate- and middle-income housing and that such projects should be eligible.
As for Atlantic Yards, city officials said the new agreement represents a fair compromise. To receive the maximum tax break, 20 percent of the units in any building will have to meet the new affordability guidelines, which are more stringent than those that originally applied. And the lower-priced units will have to be built at the same time as the market-rate units, to insure that they are not put off until the end of construction or never completed.
If signed into law, the new affordability guidelines would go into effect next summer; other provisions would go into effect early next year. (The City Council’s bill also established a $400 million housing trust fund to subsidize low-income housing development in neighborhoods where the 421-a rules do not require it; that provision did not require the State Legislature’s approval.)
In a statement, Mayor Bloomberg said, “The amendments we’ve agreed to today will continue to encourage the construction of thousands of low-income homes while also allowing the city the flexibility to provide 421-a benefits to most of the middle-income homes in our New Housing Marketplace Plan," the administration’s program aimed at creating and preserving 165,000 lower-cost homes by 2013.
Senator Martin J. Golden, a Brooklyn Republican who sponsored the 421-a bill that passed the Senate, said, “This is a workable plan.” Scott Reif, a spokesman for the Senate majority leader, Joseph L. Bruno, said Senator Bruno was comfortable with the changes.
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