Gov. Andrew Cuomo today voiced support for extending the controversial 421a tax credit for developers for six months, rather than revamping the program or permitting it to expire, as Mayor Bill de Blasio has called for.
Following an unrelated rally, Mr. Cuomo told the Observer that—with just three legislative session days left—he and the leaders of the Assembly and State Senate are “discussing a number of proposals” on the tax credit, which is intended to produce affordable housing but which critics argue incentivizes market-rate development. He ruled out overhauling the program as unfeasible in the limited window of time remaining, and argued that allowing the abatement to simply end this year would mean the end of all low-cost apartment construction in the city.
“The question is ‘what do you do?’ One question, one answer is, well, negotiate a whole new plan now. I think that’s unlikely, because 421a is a very complicated beast, and it just doesn’t lend itself to throwing together another program in several hours,” the governor said. “Then you can either let it expire—which would stop any production of affordable housing—some people support that, I don’t support that, necessarily. Or a short-term extension while people work on a new program.”
Pressed by the Observer on whether he favored the final option, Mr. Cuomo argued that a temporary extension would allow for an eventual overhaul while allowing for development to move forward.
“I would not want to see the program expire, because then you have no construction, so, depending. But on these facts, I would favor a short-term extension, so you still have the pressure on people to get a new agreement done, but you don’t actually stop producing affordable housing,” he said.
The abatement was created in the early 1970s to spur construction during an economic downturn, and was revised in the 1980s to include provisions for below-market housing. Critics note that the current program only requires developers to include affordable units if their buildings are in the “Geographic Exclusion Area” covering less that 17 percent of the five boroughs, and that it costs the city upwards of $1.1 billion in foregone revenues.
Mr. de Blasio unveiled his own proposal for the tax credit, which would end the GEA and require affordable housing in rental buildings in the program citywide, while eliminating the exemption for condominiums. Any condo or co-op unit valued at more than $1.75 million would be subject to a new city “mansion tax,” the revenues of which would be dedicated to further affordable housing construction and preservation.
Developers in the program would choose from a menu of three options that would require them to create apartments for tenants of differing income ranges, particularly targeting low and middle-income earners. The abatement and affordability period under 421a would also be extended from 25 to 35 years.
Yesterday, however, the mayor said he would rather see the program die than continue in its current form.
Mr. Cuomo objected to the de Blasio plan—which the Real Estate Board of New York endorsed—because it did not obligate builders to pay construction workers prevailing wage, even though today he refused to commit to passing a 421a program that would include a provision mandating union-level wages.
“I believe the program should address the needs of workers, and should be attentive to workers,” he said, a remark he would not expand or elaborate upon.
The existing program does not require prevailing wages at projects receiving the abatement.