By Dan Orlando
421a’s nearly five-decade run in New York City is being threatened as the measure is set to sunset next summer.
The uncertainty surrounding the tax abatement’s future has caused unrest among developers and investors who are staring at bottom lines that hinge in no small part on the status of the tax incentives that the measure provides.
This disconcert inspired the audience at Herrick’s Real Estate Development Forum to ask the panel about the program’s chances of garnering an extension.
“We need it to be extended,” said David Schectman, an executive managing director at Eastern Consolidated who was among the audience at the event.
Schectman told the meeting he is representing a non-profit looking to sell its HQ to a developer who would ultimately build rental properties on the site.
Any deal hinges on the developer being able to win 421a approval for a his project, however the non-profit can’t vacate until February, leaving the builder uneasy about breaking ground too close to a potential end of the tax abatement.
“The issue of housing is something that everyone thinks they know something about, but it’s such a voluminous, vast subject matter,” said Assemblyman Keith L.T. Wright who spoke at length on the benefits of 421a and his confidence that the measure would be extended after the early summer deadline.
“You have got to remember that the Mayor of the City of New York has basically put his signature on the aspect of affordable housing. He wants to preserve or build over 200,000 units. So it’s an absolutely, big, big deal.”
421a offers significant tax breaks for those that produce affordable housing and thus, obviously strengthens Mayor de Blasio’s quest. Wright labeled it an “absolutely wonderful programˮ in terms of building affordable housing.
“I can’t think of any reasons whatsoever why the 421a tax incentive program should not be renewed,” said Wright. “It will be renewed.”
Wright has publicly championed the incentive program in the past, even when he’s received heat for providing tax breaks to “rich, rich, rich developers.”
Despite his confidence and affinity for the program, and the current Republican-minded Senate, the reality is that the Assemblyman simply cannot yet guarantee that the tax incentive for developers will continue after the spring of 2015.
Wright was joined on the panel by Herrick Partner and former congressman Michael E. McMahon and Herrick senior planning and development specialist, Jennifer Dickson.
Dickson said that while she shares Wright’s belief that the program is a benefit for New York’s developers and working–class residents alike, she admitted that even an eventual extension could be too late to save the market from short-term damage.
“I think it’s a very important program, it is something that’s been used historically with much of the new residential development that occurred in the city, so I think it’s important to continue,” Dickson said.
“If the program is not continued it is certainly possible that there will be at least a pause in development where people have to take stock of the situation.”
Even if the measure is extended, changes and modifications are always possible. “People are unsure what form it will take when it is renewed,” Dickson added.