Cuomo Strikes Deal for Possible Revival of 421-a Program
Governor Andrew M. Cuomo has reached a deal with developers and union construction officials to revive the 421-a program. The program expired in January. It grants cuts in property taxes to developers who set aside subsidized apartments for low-, moderate-, and middle-income families or individuals in their otherwise luxury projects. It is a city program governed by state legislation.
The 421-a program was designed to encourage developers to build rental housing, as well as subsidized units, in a city where the costs of land, construction, and materials are high. Before it expired, developers received a 20-year tax abatement for setting aside 20 percent of the apartments in a project for poor and moderate-income families. In 2014, about 150,000 apartments qualified for 421-a benefits, resulting in $1.06 billion in forgiven taxes.
Under the new deal, builders would get the special tax benefits for a longer period--a 100 percent tax abatement for 35 years to those projects that participate in the wage and benefit agreement. A plan embraced by the mayor had called for a 25-year abatement followed by a phased-in return to full taxes over an additional 10 years.
In the proposed version of the program, subsidized apartments would have to remain affordable for 40 years. The deal sets a pay schedule for developers who get the tax breaks in prime areas. In Manhattan below 96th Street, they would have to pay an average $60 an hour in wages and benefits for workers on buildings of 300 or more units. And on the fast-growing waterfront in Brooklyn and Queens, the average would have to be $45 an hour on buildings of 300 or more units. The Brooklyn and Queens projects would have to be within a mile of the East River waterfront.
This deal could still fall apart because it requires legislative approval.