Grinding Sausage Late at Night: Albany Reforms 421a Program

Vito Lopez, the head of the State Assembly’s Housing Committee, went into this legislative session breathing fire down the back of a 36-year-old tax incentive for new apartment buildings that he said was gentrifying working-class neighborhoods like his dear old Bushwick.

He wanted to do away with the program altogether unless real-estate developers turned almost a third of their units into low-income housing, and proposed a number of other impositions that would raise costs and lower revenues.

Finally, four days before the Assembly adjourned on June 22, he submitted a compromise bill. It had grown from two pages to 19, and outlined a dizzying array of mind-twisters.

Real-estate developers of the future will find it cheaper to build market-rate housing in Riverdale, for example, than in East New York. A middle-class village that the Mayor envisioned for Queens West will get no help from the taxman, while full-amenity condominiums in Tribeca will, as long as they get into the ground in the next 12 months.

And yet Mr. Lopez’s bill got the type of praise any writer would be proud of: It passed unanimously in the State Assembly and with just two dissenting votes in the Senate (perhaps because people there had a little more time to look it over).

The rich labyrinth of trade-offs that the bill proposes for the so-called 421a program, which is probably the most widely used incentive to build multifamily housing in the city, did not please everybody. City Council Speaker Christine Quinn has called on the Governor to veto it and the Bloomberg administration is pushing for amendments, while affordable housing developers and advocates are saying it is bad policy.

“In many ways, the outcome of the state legislation is bad for affordable housing if it remains the way it was written,” said Rafael Cestero, the former city housing administrator who staffed a Mayoral taskforce on 421a before leaving for the private sector earlier this year. “Unfortunately, it seems to be the way that politics happens in Albany.”

What the apparent contradictions in the bill represent are a series of horse trades that Mr. Lopez, a loping giant of a man who carries power like a running back headed to the end zone, brokered with fellow legislators. He proffered to his Brooklyn Democratic colleagues a type of buffer against gentrification in their districts, while giving to the Real Estate Board of New York, the main trade group representing landlords and developers, a few items on the top of its list. REBNY supports the bill, although the New York State Association for Affordable Housing, a trade group for developers of subsidized housing, opposes it.

“The bill did not do everything we wanted it to, but we got seven out of eight things,” Mr. Lopez told The Observer. “If we didn’t do 421a this session, it would be a major catastrophe. Then there would be no housing built at all [with 421a], and I agree with that.”

Grinding Sausage Late at Night: Albany Reforms 421a Program