Administered by the city's Department of Housing, Preservation and Development (HPD), 421-a is a tax incentive program begun in the 1970s to spur housing development at a time when developers needed encouragement to build in New York City. Over the past two years the city began a move to reform the program, acknowledging today's radically changed housing market in which it's affordable housing development in particular that can use the incentive.
The bills passed in Albany on Thursday, sponsored by Assemblyman Vito Lopez, a Brooklyn Democrat, and Senator Martin Golden, a Brooklyn Republican, include a number of new mechanisms to promote housing affordability while retaining tax benefits for developers. The measures have the support of the Real Estate Board of New York (REBNY) and building services workers' union SEIU Local 32BJ, but garnered mixed reviews at best from NYC officials and affordable housing advocates.
One major change in the new legislation is the expansion of the so-called "exclusionary zones," or areas in which developers must include affordable housing in their plans to qualify for the tax breaks. Originally, there had been just one exclusionary zone, covering a large swath of central Manhattan, but now there will be 12 more geographic areas, in addition to eight added by the city in December. Almost all of Manhattan is now covered, plus exclusionary zones in each borough.
The new areas covered include considerable sections roughly of Crown Heights/Prospect Heights and East New York in Brooklyn; Elmhurst/Jackson Heights and the Astoria/Long Island City waterfronts in Queens; a portion of the north shore of Staten Island (the only area in the entire borough); and East Tremont/West Farms and Grand Concourse/Crotona Park West in the Bronx.
Some healthy real estate markets around the city are notably absent: Riverdale in the Bronx, and downtown Flushing and Forest Hills in Queens. Affordable housing activists say that's significant because those are precisely the areas that need the mandatory affordable housing requirements so that existing lower-income residents don’t get pushed out.
One attention-getting feature of the legislation gives the already controversial Atlantic Yards project in Brooklyn additional tax breaks. It also allows potential tenants who earn up to 70 percent of the Area Median Income (AMI) of $70,900 to apply for "affordable" units there (up from a proposed 60 percent); setting that rate also raises the rent amount that qualifies as “affordable." But Lopez said Monday that the Senate has yet to vote on this aspect.
Other aspects of the legislation include:
• A reduction in the AMI income threshold to 60 percent from the city’s 80 percent to qualify for affordable units (for every place other than Atlantic Yards);
• Reserving 50 percent of affordable units for "community preference," meaning for existing residents within the community board district;
• Building all affordable housing on the actual site where a building is being developed, thus eliminating the "certificates" granted to developers allowing them to build their required affordable component offsite;
• An extension of the certificate program for six months before ending;
• Rent stabilization of such units for 40 years; and
• Bolstering the city and state’s monitoring and enforcement practices.
