Image courtesy of STUDIO V Architecture
A 2.2 million-square-foot mixed-use development site known as Astoria Cove, on nearly nine acres along the East River in Astoria, is seeking a buyer, asking $350 million, Crain’s reports. The site hit the market in mid-March in anticipation of the reinstatement of the 421-a affordable housing tax credit program that had languished since its expiration over a year ago amid debates between the Real Estate Board of New York (REBNY) and unions on whether to require higher wages in certain cases. Alma Realty Corp. hired Cushman & Wakefield investment company to market the site; according to sales executive Bob Knakal, “We wouldn’t have hit the market with Astoria Cove in the past 16 months because of the uncertainty around 421-a, but there’s been a sense of optimism in recent weeks that 421-a will be back and with it, the land market will strengthen.”
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To set qualification guidelines for its affordable housing lotteries, the city turns to the set area median income (AMI), basing annual household income and rents off this figure. However, as The Real Deal explains, “the U.S. Department of Housing and Urban Development calculates AMI regionally, “using a formula that lumps the five boroughs together with Putnam, Westchester, and Rockland counties.” For 2016, this equated to $65,200 for a single person and $90,600 for a family of four, but a new bill proposed by Democratic State Senator Michael Gianaris and Assemblymember Brian Barnwell would require developers of new 421-a projects to calculate AMI based on the specific zip code in which the building is going up.
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Governor Cuomo recently announced that his revised version of the city’s 421-a tax exemption program would officially be moving forward. He said the initiative, dubbed “Affordable New York,” would create 2,500 new affordable housing units per year, but a new study from the city’s Department of Housing Preservation and Development says this will come at a cost. As Politico reports, Cuomo’s changes to the program would cost NYC an additional $820 million over 10 years if approved by the state Legislature, $82 million a year more than Mayor de Blasio’s proposed 421-a overhaul in 2015.
A year after the city’s 421-a tax exemption program expired, a new version of the affordable housing incentive is officially moving forward. In August, Governor Cuomo released a new version of the plan that which include wage subsidies for construction workers and extended terms for the tax breaks, and after the Building and Construction Trades Council of Greater New York and the Real Estate Board of New York (REBNY) reached an agreement in November to move ahead with this version, the Governor’s office now reports that they’ll be advancing new legislation to move ahead the program that’s now been re-named “Affordable New York.” Cuomo says this will create 2,500 new affordable housing units per year.
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A recent report detailed how nearly two thirds of the city’s 6,400 rental buildings where landlords received 421-a tax breaks didn’t file properly as rent stabilized, meaning they could raise the rents as much as they chose. Now, 178 of these buildings may lose the coveted exemptions if they don’t start complying with the regulations. The Post reports that the Department of Housing Preservation and Development sent out warning letters to these landlords, who altogether represent 1,400 apartments, telling them if they don’t comply within 90 days their benefits will be “revoked retroactively.”
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Ever since the city’s 421-a tax exemption program expired in January, the Building and Construction Trades Council of Greater New York and the Real Estate Board of New York (REBNY) have been negotiating under what terms to extend and/or modify the program. Both groups took part in what the city believes were “secret talks” with Governor Cuomo over the summer, after which he released his proposal to revise 421-a with wage subsidies for construction workers. REBNY was concerned about this stipulation, claiming it would increase construction costs by up to 30 percent, but a press release sent yesterday evening reports that they’ve reached an agreement with the Trades Council to move ahead with Cuomo’s version of the plan, which, in addition to setting a $60 hourly wage for qualifying projects in Manhattan and $45 in Brooklyn and Queens, extends the tax breaks up to 35 years (up from de Blasio’s proposed 25 years) and mandates newly created affordable units be kept in place for 40 years.
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555Ten, an Extell building that would be affected by the 421-a changes
As 6sqft reported last week, Governor Cuomo, developers, and unions have been engaging in closed-door talks to bring forth his revision of the city’s 421-a program that includes wage subsidies and an extension of the previous 25-year tax break up to 45 years. Glaringly (but not surprisingly) absent from the negotiations is Mayor de Blasio, but he’s now taking matters into his own hands, at least when it comes to those under-construction buildings that got in to the program before it expired in January. According to the Times, the de Blasio administration introduced a new policy that says these projects must include housing for some of the 60,000 New Yorkers currently living in homeless shelters, but developers, particularly Extell’s Gary Barnett, are not happy about the changes.
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The city’s hotly debated 421-a tax abatement program expired in January after a 44-year run. CityRealty reports that the NYC Department of Housing Preservation & Development has seen the number of applications for tax exemption decrease by 45 percent from that time to September 2016, costing the city $1.2 billion this fiscal year. Over the summer, the Governor presented a revised version of the program that would offer wage subsidies to construction workers, but this drew concern from the Real Estate Board of New York, who say the proposal would cause construction costs to rise by up to 30 percent. Now, Politico reports that Cuomo, developers, and unions have been engaging in closed-door negotiations to bring his plan forward and extend the previous 25-year tax break up to 45 years (REBNY and the Mayor had presented a 35-year extension last summer).
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On this past January 1, the 421-a tax abatement program expired after 44 years in existence. Any new construction permitted before January will still benefit from the program, but many want to know what the expiration of this program mean for new construction? And how will the projects still under the 421-a umbrella use their reduced tax status to promote their buildings? While some experts feel that shutting down the abatement was an action long overdue, many others believe that the program’s end has prompted “a self-created recession.”
READ THE FULL STORY AT CITYREALTY…
View the map from ProPublica in its interactive form here >>
The city’s 421-a program, which expired in January, provides tax breaks of up to 25 years to new residential buildings that reserve at least 20 percent of units as affordable. Proponents of the program feel it offers a much-needed incentive to build low- and moderate-income housing, but those not in favor think it gives unfair tax breaks to the wealthiest developers. The latter camp may be gaining steam, as a new report from ProPublica, outlined in Gothamist, says that nearly two thirds of the 6,400 rental buildings where landlords received tax reductions through 421-a didn’t have required rent stabilization paperwork on file, meaning they could raise rents as much as they chose. ProPublica compiled this data in both an interactive map and searchable database.
Is your landlord cheating the system?