New Law Will Encourage Construction of Affordable Housing
Governor Eliot Spitzer announced (Aug. 24) that he has signed bills that will encourage housing construction throughout New York City, with an emphasis on the construction of affordable housing. The package of bills reform New York’s outdated 421-a law to better target limited resources to neighborhoods in need of affordable housing.
“This legislation will allow New York City to target its limited tax abatement resources to more effectively promote the construction of affordable housing in the neighborhoods that need it most,” Governor Spitzer said. “This reformed law will build on our efforts to solve the housing crisis that has pushed too many working New Yorkers out of the middle class and prevented those struggling New Yorkers from climbing up into economic security.”
The 421-a program was initially established 36 years ago to promote the construction of multiple dwelling housing units in New York City during a housing market downturn. The law has provided property tax exemptions to housing developers, particularly developers of desperately needed affordable housing, and has produced more than 110,000 apartments in New York City.
Given the dramatically changed real estate market in New York City since the program’s inception, tax breaks are no longer necessary as incentives for pure market-rate housing projects in many booming areas of the city. Thus, reform of the program was necessary to direct more of these tax dollars toward the production of affordable housing.
The three bills signed into law amend the 421-a program to significantly expand the areas within which affordable housing is required for tax abatements; require that these units meet more stringent affordability standards; give community residents priority for the affordable units; assure that these units will remain affordable over a long period of time; and require projects receiving City tax subsidies to pay prevailing wages to their building service employees. Moreover, a grandfather provision is included that prevents the disruption of projects already in the development pipeline by exempting them from these new regulations.
The Legislature has also agreed to swiftly pass further reforms that address some outstanding concerns. Among other provisions, these promised amendments will assure New York City’s continued ability to provide tax abatements to moderate and middle income housing projects for which it is providing substantial government assistance. They will also assure that the buildings that make up the Atlantic Yards project will receive enhanced abatements only if they meet on-site affordability requirements during each phase of project construction.
“I am pleased that all sides were able to come together to produce this important reform, which is critical to the future development of affordable housing in New York City,” Governor Spitzer said.
New York City Mayor Michael Bloomberg said: “I want to thank Governor Spitzer and our partners in State government, along with the City Council and the Department of Housing Preservation and Development, for coming to a landmark agreement on 421-a reform. Through inventive rezonings and the largest municipal affordable housing plan in the nation’s history, we have already built tens of thousand of affordable units, and today’s signing – along with the additional amendments that the Legislature has agreed to swiftly pass – will ensure that we have the tools to spur even more affordable housing construction for years to come.”
Assemblyman Vito Lopez, Assembly sponsor of the legislation, said: “I commend Governor Eliot Spitzer for signing the 421-a Reform Bill into law. This groundbreaking reform will for the first time require the production of on-site affordable housing for working class families in many of the City’s up-and-coming neighborhoods. In an unprecedented effort to offset gentrification, our reform also mandates that 50% of the affordable units built using 421-a will be set aside for community residents, and that all the affordable units will remain affordable for at least 35 years. In addition all building services workers in buildings over 50 units will receive a prevailing wage for their services. This is a major victory for low-income and middle-income New Yorkers.”
Senator Marty Golden, Senate sponsor of the Legislation, said, “After a great deal of work from all the stakeholders in the process–governmental, private, and consumer–we have a bill that will not only preserve but will expand and target affordable housing in New York City, and help preserve the vitality of the housing market generally. This measure comes just in time, as the national housing market undergoes tremendous pressure, brought on at first by the collapse of some sub-prime mortgage investors, but with troubles now expanding to some of the more blue-chip lenders. It is no surprise that the first sector to be affected by problems will be affordable housing. This is the right time for government to provide the help needed to stabilize and expand the market.”
