Changes Sought in Tax Break Program for Developers
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In a push to expand “affordable” housing in the city, a number of elected officials today will announce a plan to alter a 30-year-old program that gives lucrative tax breaks to residential developers. The proposals are likely to collide with Mayor Bloomberg’s interests.
The declaration comes on the same day that a commission appointed by Mr. Bloomberg to study possible reforms to the 421-a tax exemption is expected to adjourn. When the mayor formed the committee in February, many observers assumed it would bring an end to the controversial program, but sources close to the committee have said it is poised to suggest a continuation of the tax break, according to a report in Crain’s New York Business.
A coalition of city leaders headed by Manhattan’s president, Scott Stringer, wants to drastically reform the 421-a tax exemption, which opponents believe promotes subsidized gentrification and costs the city bundles in lost taxes.
At present, the program renders huge tax abatements to residential developers in most areas of New York City. The breaks are calculated by using the market-rate value of the property before construction to account for taxes over the next 15 to 25 years. According to estimates by the Independent Budget Office, the city missed out on as much as $400 million in tax revenues during the last fiscal year because of the exemptions.
Members of the coalition are expected to call for changes that would include forcing developers who benefit from the tax exemptions to build affordable housing throughout the entire city — not just in designated neighborhoods, as the program now requires — and that all benefits should be contingent upon affordability.
In an effort to promote economic diversity, the coalition also wants to squash a certificate program tied to the exemptions that allows developers in Manhattan to build affordable housing in other boroughs, according to a spokesman for the group.