The state Legislature is expected on Thursday to approve a sweeping, if also haphazard, reform of the 421a tax incentive—a program that gives developers 10- to 25-year abatements off property taxes for creating new apartment buildings. It goes far beyond the City Council’s version passed in December by requiring builders in 14 more communities to include low-income housing in their buildings in order to qualify for the tax breaks.
The one exception, however, is laid out in Section 6, paragraph 13, which refers to “a multi-phase project” with “at least 2,500 dwelling units” that has been “approved by the Public Authorities Control Board”—which, to people who have been following the project in central Brooklyn, can mean only one thing: Atlantic Yards.
The 22-acre complex, now in its preparatory phase, will consist of 16 buildings and a basketball arena. Some of those buildings are expected to consist entirely of market-rate condominiums—for a total of 1,900 for-sale units–while others will consist of rentals of varying levels of affordability, with about 2,250 of them market-rate, about 1,125 of them for low-income families, and the remaining 1,125 for families in between.
In such “multi-phase projects,” according to the state bill, the whole development can qualify for the tax abatement so long as one-fifth of the apartments in the entire complex are affordable to people who make 80 percent of the area median income. (The AMI is roughly $70,000 for a family of four.) Under the City Council version, only those buildings that had affordable units in them would qualify, while developer Forest City Ratner would have had to pay full taxes on their condominium towers.
Therefore, Forest City may be able to qualify some of its market-rate buildings for the tax break and save itself millions of dollars.
“I don’t think there should be special side deals for developers,” said Brad Lander, the director of the Pratt Center for Community Development who has been critical of other aspects of the Atlantic Yards project as well. “If the point is to use tax policy to encourage the production of affordable housing, then the rules ought to be clear and common.”
Steven Spinola, the president of the Real Estate Board of New York, the leading industry trade group, told The Observer that he lobbied legislators for the special exception.
“It is similar treatment to what would happen in Greenpoint-Williamsburg,” said Mr. Spinola, referring to the the 2005 rezoning of those Brooklyn neighborhoods. “I had no problem advocating for it.”
But while Greenpoint-Williamsburg developers have used the zoning rules to build two adjoining buildings, one with market-rate condos and the other with low-income rentals, the state bill does not appear to be a means to enable economic segregation. Forest City Ratner spokesman Loren Riegelhaupt, while not commenting on the legislation itself, said that the developer intends to “have a mix of market-rate and affordable units in all of the rental buildings.” A spokesman for Acorn, Jonathan Rosen, similarly said that the law would not change the housing organization’s agreement with Forest City, which stipulated that low-income and market-rate apartments co-exist in the same buildings.
Assembly Member Vito Lopez, a Bushwick Democrat who sponsored the bill, was not available to comment on the Atlantic Yards provision. He told The Observer earlier, “My objective is not maximizing profits of individuals who do development. I support developers and their interests but it has to coincide with the interests of affordability.”
Assembly Member Hakeem Jeffries, a first-term Democrat who represents the Atlantic Yards site and surrounding neighborhoods, said that he was not aware of the special provision but that it would not keep him from voting in favor of the bill.
“I have fought hard to make sure all of the neighborhoods in my district were included in it,” he said. “But I have concerns that are going to need to be addressed about the way in which Atlantic Yards is treated in this legislation.”