New York, NY – March 16, 2015 – (RealEstateRama) — According to an analysis released today by the Real Estate Board of New York (REBNY), if the 421-a partial tax exemption program were eliminated, the immediate consequences would be a loss of more than 5,484 affordable rental units. The loss of these units would cause a significant setback to the City’s affordable housing program.
The 421-a program is set to expire in June 2015. While some have called for the termination of the program, the negative effect on housing production would be significant if the 421-a program were not renewed. New York City would likely experience a sharp drop off in the production of new housing units, a major loss of middle income and other affordable housing construction, a continued skewing of the market toward condominium units rather than rental production, and a further increase in housing costs.
Industry, labor, and academic leaders addressed the importance of this report and its findings.
“The renewal of 421-a is one critical element of the City’s plan to address our housing shortage,” said Steven Spinola, President of the Real Estate Board of New York. “As our analysis demonstrates, without this important program, 5,484 units of affordable housing would immediately be sent back to the drawing board. Some of the units would end up as high-end luxury condominiums and some of the middle- and low-income housing now in the works would be lost forever. Without 421-a, our housing crisis will take an immediate turn for the worse.”
“This report shows that 421-a is an important program that could be made even better. This year we have an opportunity through the reauthorization to do just that. With the federal government no longer financing affordable housing development as it once did, 421-a can be a tool for the creation of even more affordable housing and good jobs in New York City,” said 32BJ SEIU President Hector Figueroa. “With expanded requirements for housing that working New Yorkers can afford and the expansion and enforcement of the requirements for good, permanent jobs that pay the industry standard in these buildings, 421-a can play a key role in making our city more inclusive and affordable for all its residents.”
“There is little doubt that the 421-a regulatory regime needs to be revised to reflect greater efficiency standards in the production of mixed-income housing in mixed-income neighborhoods,” said Jesse M. Keenan, Research Director at Columbia University’s Center for Urban Real Estate. “However, an outright repeal of 421-a will set back not just the affordable housing industry, but those small infill developers that we are critically reliant upon for developing greater densities of affordable housing, which are contextually sensitive to neighborhoods and communities.”
“New York City needs every tool in its tool box to meet Mayor de Blasio’s ambitious housing agenda and 421-a has a proven track record of producing affordable housing across the five boroughs,” said Richard T. Anderson, President of the New York Building Congress.
To demonstrate the importance of the 421-a program to the creation of multi-family rental housing—and particularly to the affordable units that many of these projects include—REBNY performed a sampling of some of the larger projects furthest along in the development pipeline. While it is not intended as a comprehensive look at all of the projects that are relying on the renewal of 421-a, this survey begins to tally some of the market-rate and affordable rental units that would likely not be created if the 421-a program were not renewed this June—a full accounting of the units in jeopardy would likely be considerably higher. These preliminary findings indicate that over 5,484 affordable rental units would likely never be built, along with the 15,269 market rate rental units associated with the same projects.
