Vicki Been, the commissioner of the city’s Housing Preservation and Development department, refrained from subtleties when asked about the demise of the 421-a tax abatement program. She blamed Governor Andrew Cuomo for the expiration of the tax break, and she expected him to come up with a solution for the “mess” that he helped create.
“We achieved very significant reforms in 421a last year. The governor chose to tie it to this MOU that was totally unworkable. The governor put the MOU requirement on top of it and then the whole thing went down. We’re waiting to see what the governor comes up with to rescue this mess,” she said, referring to the memorandum of understanding that gave labor and real estate industry representatives the power to forge a deal on wage protection for construction workers.
That provision led to the expiration of the tax break last January, when the two sides failed to agree on a deal. Now, Been is calling for the revival of the city’s version of the program, saying that their plan lowered costs significantly.
“We passed a very good 421a program. It had more affordability. It had a wider range of income. It cost a third less than the prior program had cost per affordable unit. It took out luxury condos that we weren’t unnecessarily subsidizing luxury condos. It had the reforms that we wanted to see. We’d like to see what we passed, what we, working with the Legislature, passed last June. We’d like to see that in effect. ”
While 421-a remains suspended in the ether, the city has other tools to meet the mayor’s goal of creating 200,000. Been pointed to the Zoning for Quality and Affordability, or ZQA, which was approved by the City Council last March. The provision, which allows affordable and senior housing buildings to grow taller, is said to have immediate effects.
ZQA is changing the way people are designing their buildings. It’s changing the way our projects are being designed. There are projects on the board right now that can provide more affordable housing because of the changes made in ZQA. So that’s going to have an immediate effect. Buildings that are going into the ground, you will see changes and improvements based on ZQA immediately that will show up in buildings a year and a half from now,” she said.
“For example, senior buildings and affordable buildings that were within the so-called transit area. Now can choose whether or not to provide parking based on the needs of their residents. They don’t have to provide parking as they did before. So I would expect to see- I know, because I’m already hearing- buildings that would have been required to have parking but they didn’t think they needed that was sitting empty. Now they can put affordable units rather than parking.”
The effects of the loss of 421-a hit rental developers rapidly. In an earlier report, Josh Schuster, the principal at DHA Capital, said that the program’s expiration added $13 to $15 per s/f in operating expenses, prompting him to adjust his business plan to building rentals with joint ventures and groundlease structures.
