Crazy leftists may not like it, but if they want more affordable housing, the city is going to have to keep offering developers a half-a-century-old tax break that makes such projects themselves affordable.
The law that permits the break, 421-a, is about to expire, and delusional critics — who think builders have infinite cash they just can’t wait to use to subsidize tenants — are already bashing Gov. Kathy Hochul’s plan to renew it, in effect, under a new name with somewhat different rules.
The root issue: Without some break, city taxes on a new building are so high that no one would start a residential project unless it’s aimed at the super-rich, who can afford to pay through the nose.
The plan, called Affordable Neighborhoods for New Yorkers, creates a new tax rule, 485-w, that would grant the 35-year break to rental projects that offer below-market rates on at least 25% of their units. This basically extends the old tax benefit for developers, but with some changes: For example, tenants who earn as much as 130% of the area median income would no longer be eligible; subsidized units would go to those with far lower average incomes.
Critics may fight over who should qualify for the low-cost units, but some want to simply gut the program entirely. The far-left Legal Aid Society, for one, calls it “a colossal waste of tax dollars.” City Comptroller Brad Lander wants to completely “end” the scheme, which he says offers “obscene” tax giveaways that are “far too large.”
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Yet without the abatement, developers would ditch “affordable housing” altogether and build only luxury units.
Maybe that’s OK in a city with nearly half of its 2.1 million rental apartments subject to rent regulation, another 177,000 subsidized through public housing and countless other tenants benefiting from Section 8 housing vouchers and numerous other government and philanthropic handouts.
But that’s not what the critics have in mind. They want more subsidized units for low- and middle-income tenants and less valuable tax breaks (or none at all) for builders who provide such apartments. Sorry, but that doesn’t compute: The only way to get builders to offer subsidized units is to hand them breaks that offset the subsidies.
Let’s face it, developers face enormous costs in this city — for labor, land and, not least, taxes. Gotham’s endless housing subsidies, meanwhile, have fueled demand (who doesn’t want a below-market-rate apartment?) and kept cheap apartments off the market and in the hands of the lucky few who get them.
All that drives up rent costs for the unlucky many. But developers just won’t build apartments that’ll cost them more than they can make. Those who want more affordable housing will have to pay for it, one way or another.