City Council Gives Tax Break to Buyers of Boerum Hill Brownstones

The City Council is giving a 25-year tax break worth at least half a million dollars to buyers of half-priced property in Brooklyn's hot Boerum Hill neighborhood, where brownstones sell for $1.5 million and up.

The move comes after the City Council recently discontinued a similar program offering tax breaks to developers of luxury housing in good neighborhoods.

The buildings are a legacy of a scandal-plagued program of the federal Department of Housing and Urban Development. Critics say the tax breaks are unnecessary to make them desirable to potential buyers, because the structures are already set to be sold in a lottery for substantially less than their market value.

"The bottom line is, these are two very valuable properties in Brooklyn, Boerum Hill, one of the hot neighborhoods in the city, that the federal government just gave away," said Council Member David Yassky of Brooklyn, one of the three members of the City Council who voted against giving a 25-year tax abatement to whoever buys 381 and 381A Baltic Street.

Yesterday, 39 of Mr. Yassky's colleagues voted for the tax break.

Defenders of the tax-break say that it is part of an arrangement, made between the city and federal housing officials in 2001 that allows otherwise abandoned properties that can scar neighborhoods to be restored. Part of that agreement gave the city almost $140 million in exchange for the 25-year exemption from city property taxes.

City and federal housing officials defended the Baltic Street deal, noting that the properties involved are only two of some 500 that are part of the program — most of which aren't in upscale neighborhoods.

The dilapidated buildings were the vestiges of a major Clinton-era HUD scandal, in which corrupt mortgage lenders, real estate brokers, and other housing contractors never completed promised repairs and left parts of Harlem and Brooklyn pockmarked. Several opponents of the new state attorney general, Andrew Cuomo, used the scandal against him during last year's election because it occurred under his watch as President Clinton's housing secretary.

The Boerum Hill property is now being revitalized by developer Sam Wu, who got it free from the city on the condition that he pay to have the work done. A lottery will be held this spring, said a spokesman for the city's Department of Housing Preservation and Development, Neill Coleman. The buildings will sell for $550,000 and $440,000. There is no income restriction on who can enter the lottery — except that potential buyers have the wherewithal to pay for the purchase — and the winners will have to hold onto the buildings for at least six years before they can sell them.

"Anybody can enter the lottery," Mr. Yassky said shortly after the vote to approve the tax break. "So you can enter it, I can enter it, Donald Trump can enter it, the head of Goldman Sachs can enter the lottery."

Mr. Coleman said the agreement the city reached with the federal Department of Housing and Urban Development requires the tax break.

Mr. Coleman called the Boerum Hill properties "exceptional in the context of this program overall."