Building Permits Decline by 90 Percent Following Changes to the 421-a Program
Early last month, we reported that building permits were soaring to levels not seen since the 1960s. Now Crain’s tells us that the trend has taken a sharp decline with permits plunging a whopping 90 percent from June. The numbers, which were pulled from the latest stats released by the U.S. Census Bureau, point to changes in the very generous tax breaks provided by the 421-a tax abatement program as the culprit.
The terms of the tax break expired in mid June before any alternative or updated plan was unveiled. Because the fate of the 421-a program was still up in the air, developers rushed to break ground on their projects in order to lock in tax benefits. The law has since been extended with a revised version underway. Under the new program, all 421-a developments would require 25 percent to 30 percent of affordable housing. The update is pending the outcome of negotiations between the Real Estate Board of New York and the Building and Construction Trades Council of Greater New York and is slated to take effect in 2016.
All in all, about 1,800 permits were issued in July versus 18,000 in June, down 90 percent. The fall-off was especially steep in Queens, at 98 percent, and Brooklyn, 97 percent, where the total permits were dipped from 3,824 to just 72. Although July’s drop was notable, the total permits seen over the year is still a record breaker in the making. Over 43,000 permits have been issued since January; higher than any full year’s permit tally since 1963 which counted roughly 50,000.
[Via Crain’s]
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