About a dozen real-estate developers are trying to get projects underway before changes to a housing program take effect in December, costing them millions of dollars in tax breaks for new apartment buildings.
The Real Estate Board of New York recently sent a letter to the city Department of Housing Preservation and Development asking for clarification on how far along in construction the projects would have to be to qualify under the current, more generous rules governing the 421-a tax abatement program.
The letter said that the projects, slated for various places around New York City, required approvals from various city agencies before going ahead, which might delay their groundbreakings.
“The projects may be waiting for discretionary approval that is not even in the hands or the control of the developer,” said REBNY president Steven Spinola. “We aren’t complaining about it, but when you get so many applications all at the same time, there are doubtlessly going to be delays.”’
Ross Moskowitz, a real-estate lawyer at Stroock & Stroock & Lavan, said that the crunch will only get worse as the year wears on.
“Projects may also get caught up in government review as the number of applications and filings increase exponentially to meet the deadline,” he said.
The projects are also the focus of REBNY lobbying efforts in Albany to somehow extend provisions of the existing program. Last December, the City Council made the 421-a program much more rigorous, requiring that builders in lower Manhattan, parts of Harlem, brownstone Brooklyn and along the Queens waterfront would receive tax abatements only if they devoted at least one-fifth of their units to low-income housing. Previously, affordable housing was a requirement to qualify for tax breaks only for new buildings between, roughly, Houston and 96th streets in Manhattan.
Affordable-housing advocates made great strides in reforming the program, named after the number of its section in the state’s real-estate law, by arguing that it was a way of subsidizing gentrification, since it previously applied to even million-dollar condos in East Harlem.
They are likely to gain more ground in Albany, however, which must approve the city’s legislation and renew the program. That is because the State Assembly Housing Committee is headed by Vito Lopez, a Democrat from Bushwick whose district is threatened by gentrification on its western borders, and who has made affordable housing his signature issue.
Mr. Lopez, who didn’t respond to an interview request, submitted a bill in February that would apply the tax abatement—which is worth as much as $200,000 per unit for its duration—only to buildings with 30 percent low-income housing, no matter where in the city it was built. However, more conservative legislators, especially in the Senate, are pushing back with the aid of the Bloomberg administration and the real-estate industry, arguing that such onerous conditions will force developers to invest only in market-rate housing in no-risk, expensive neighborhoods.
“We could have a great bill, but at the end of the day, if no one will build affordable housing, what do we do?” said State Senator Martin Golden, a Republican who represents southern Brooklyn and who is expected to submit an alternative to Mr. Lopez’s bill in the coming days. “We will hopefully come up with the bill that is acceptable to the city and all the parties.”
The end result, which would have to come before the Legislature adjourns June 21, may well enlarge the so-called exclusion zone—the area where affordable housing is required in order to receive the tax break—beyond the boundaries drawn by the City Council in December, but not to the edges of the city, as Mr. Lopez would prefer.
“I spoke with Vito this morning, and I can tell you that much is in negotiation,” said State Senator Serphin Maltese, a Democrat from central Queens and the sponsor of Mr. Lopez’s bill in the Senate. “The Mayor, I know, has his point of view, but we feel we should spread it out more.”