Quinn’s proposed exclusion zone is outlined in green.
Bruce Ratner’s so-called friends are about to cost him tens of millions of dollars in lost tax breaks because of a bill pending in the City Council.
The stormy debate over the 421-a multifamily housing tax incentive still has a few days to play out (and another year in the state Legislature), but the version backed by Speaker Christine Quinn and a majority of City Council members would revoke a 15- to 25-year tax abatement that Ratner’s condos would have received had they been built under current rules.
More after the jump…
– Matthew Schuerman
Right now, the city awards developers (and their condo customers) a 15-year tax abatement for the trouble of building market-rate housing in the outer boroughs. Those abatements are worth an average $19,385 per unit over the lifetime of the provision, according to a 2003 Independent Budget Office report (PDF).
Some–it’s hard to say how many–of Ratner’s towers would have qualified for 25-year tax breaks (worth an average $31,271 per unit), since they would fall south of Pacific Street, in an area the city considers distressed and therefore worthy of more financial encouragement. Multiply those figures by the number of condos Ratner is planning to build (1,930), and you end up in the $37.1 million to $60.4 million range.
All of that would be done away with under Quinn’s bill, which would expand the so-called “exclusion zone” (the area in which developers do not qualify for automatic tax breaks) to encompass the Atlantic Yards footprint in Prospect Heights–all the way to Classon Avenue, in fact. (See map above.)
The 4,500 rental apartments that Ratner is planning would be treated the same under Quinn’s bill as they would be today, qualifying for 25-year abatements as long as at least 20 percent of the units in each building are reserved for low-income tenants. Those breaks are worth an estimated $140.7 million total, based on IBO per-unit figures. (Hey, there are plenty other perks out there for Ratner, no question.)
Quinn is nominally an Atlantic Yards backer: She let the city’s $100 million capital commitment go through. And even more ironically, the coalition that has been pushing for 421-a reform, and which has proposed an even stricter set of rules, is made up of housing groups that include ACORN, Ratner’s partner on Atlantic Yards. (Of course, one of Ratner’s enemies, Councilwoman Letitia James, is also in that camp, as is the more centrist David Yassky.)
Jonathan Rosen, a spokesman for that coalition, Housing Here & Now, said that member organizations received no pressure from Forest City Ratner on how to draw the boundaries, and that Atlantic Yards played no role in the 421-a campaign one way or the other.
Joe DePlasco, a spokesman for Ratner, e-mailed this to The Real Estate: “FCRC needs to review the legislation to see what impact it has on current and upcoming projects. We cannot comment until we have done a thorough review and until the legislation is passed.”
There may be ways, by finessing the final legislation, for example, that Ratner will still get tax breaks on the condos. One of the surest ways would be to get steel in the ground on as many of the condo buildings as possible by the end of 2007.
– Matthew Schuerman