State Senator Liz Krueger, the Upper East Side Democrat and ranking member of the Senate housing committee who had sponsored her own legislation, criticized several aspects, including: that only 20 percent of created units were required to be affordable instead of the 30 percent included in the original legislation; that they'll remain affordable for 40 years rather than in perpetuity; the special terms for Atlantic Yards; and that the certificate extension “allows the real estate industry to continue to operate under old, flawed rules during that time.”
And Phil dePaolo, president of the New York Community Council, expressed concern about who exactly would be covered by the community preference provision. A long-time resident of Williamsburg, dePaolo worried that people who have already been displaced by gentrification and been forced to move away would not be considered for the affordable units.
"This bill is better than what we had, but is it reform?" asked dePaolo, who thinks the whole program should have simply sunset at year's end, which would have happened if the state legislature didn't act by Dec. 31.
Julie Miles, executive director of the affordable housing group Housing Here and Now, said 421-a wasn’t going to be allowed to sunset anytime soon because developers got very accustomed to having the tax breaks available to them and the real estate lobby wasn’t about to let them disappear. “It’s like a drug,” Miles said.
The 421-A program is considered controversial because of its use of property tax exemptions to subsidize market rate or luxury housing development, often without the creation of any affordable units at all, and especially now when the real estate market is so strong. It was created as a temporary way to foster economic development at a time when there was little. The affordability requirement was included in the 1980’s, and only applied to a limited area in Manhattan. Recently, the Greenpoint and Williamsburg waterfronts were added.
Last year, the Pratt Center for Community Development issued a report, in part based on data from the city’s Independent Budget Office, revealing that though the city had granted hundreds of millions in tax breaks over the program’s life, little public benefit had resulted. According to the report, through 421-a the city lost $130 million in tax revenue in 2002 and $320 million in 2006, while generating relatively little affordable housing for those who need it the most.
Mayor Bloomberg formed a task force to examine 421-a and the abuses opponents pointed to. The task force offered modest changes, prompting councilmembers to beef up the mayor’s bill. Although Bloomberg and the Council agreed to a version of reform late last year, because 421-A is a state program, the city didn’t technically have legal jurisdiction. However, it is widely believed that no reform at all would have taken place on the state level had the city’s debate and subsequent legislative action not occurred. Gov. Eliot Spitzer's office has been noncommittal about whether the governor will sign the bill.
