If you need more proof that there are some serious flaws with the 421-a program, once again, look no further than One57. As reported by the Journal, the super-luxe tower was the beneficiary of a whopping $65.6 million tax cut, an abatement granted in exchange for a paltry $5.9 million contribution to help cover the cost of 66 affordable apartments in the Bronx. That means your tax dollars subsidized apartments at nearly $1 million per unit—the highest known subsidy under the program—when affordable units on average cost a mere $179,000 apiece. It’s estimated that the generous cut could have provided for 367 affordable apartments. The findings came from the latest review by the city’s Independent Budget Office (IBO).
According to the Journal, “The budget office said it looked at One57 because many opponents of the tax program had used the building as a prime example of why 421-a should be eliminated.”
In response to the IBO’s decision to single out the building, John Banks, the president of the Real Estate Board of New York, took defense, saying: “This building started construction during the depths of the recession in 2009 and required enormous risk. Since then, the economy has improved and the 421-a program has been revised to require much more affordable housing.”
However, opponents of the program stand strong with their argument that for the amount of tax dollars foregone, too little is received in return. Moreover, the IBO says that even if One57 didn’t receive an abatement, the taxes paid in still would have been unusually low thanks to the city’s haphazard system for assessing market values of condos and co-ops as rentals which lowers their billable-assessed value. If homes were appropriately evaluated upon their actual sales value as family homes, their tax bills would more than double.
As we reported previously, the owner of the city’s most expensive apartment, the $100 million glass penthouse atop One57, paid just $17,268 in property taxes last year, or 0.017 percent of its sale price, as if it were worth only $6.5 million.
Last month, the state legislature voted to extend the 421-a program with modification slated for January that would exclude luxury condos from receiving any tax cuts, while requiring all rental buildings to include affordable housing.
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