In lieu of 421-a replacement, Keith Wright’s bill an intriguing option
With so much focus on the depths of affordability in Mayor Bill de Blasio’s housing plan, the expiration of the 421-a tax abatement has been relegated to the back burner in New York’s political news cycle.
The tax credit, which expired in January after Gov. Andrew Cuomo left its fate in the hands of the Real Estate Board of New York and the Building and Construction Trades Council, was considered a vital tool for the development of affordable housing in New York City, and could significantly jeopardize de Blasio’s goal of creating or preserving 200,000 affordable units over 10 years.
Neither the state Senate nor the Assembly included a renewal of 421-a in their respective one-house budget proposals. However, Assemblyman Keith Wright, chairman of the Assembly’s Housing Committee and a candidate to replace outgoing U.S. Rep. Charles Rangel, put forth a bill described as a “replacement” for 421-a, which in reality is a bit of a misnomer.
Despite its utilization as a tool to develop affordable housing, 421-a was originally designed as a market-rate program. In fact, one of the widespread criticisms of 421-a was that for the billions of dollars in revenue it gives away to developers, it yielded very little affordable housing. The New York Times reported that, per data from fiscal year 2013, the abatement was used for 150,000 apartments in the city, of which only 12,748 were for low- to moderate-income tenants.
Wright’s bill is entirely different from 421-a, in that it is a statewide program (for cities with 95,000 people or more – New York, Albany, Rochester, Buffalo and Syracuse) designed as a housing subsidy – not a tax credit – that would primarily serve low-income residents.
It would establish an emergency housing development fund providing up to $100,000 in capital subsidies per unit for eligible projects. The criteria for such projects are those where 100 percent of the units are designated for persons or families earning at or below 70 percent of the Area Median Income (about $55,000 for a family of four), with one-third of units reserved for residents earning at or below 40 percent of AMI (about $29,900 for a family of four). It’s worth noting that, even with changes imposed by the City Council, de Blasio’s plan would give developers a choice of creating only 20 percent of housing for people making 40 percent of AMI in neighborhood-wide rezonings.
The bill also includes a job training program, a senior housing component and an $8 million state-funded rental subsidy program similar to Section 8, but it’s the depths of affordability the program would reach that make it a much more intriguing development tool than 421-a. And it wouldn’t be superseded by de Blasio’s Mandatory Inclusionary Housing policy, which can be paired with other city, state and federal housing programs.
“(The bill) is an amalgamation of a lot of different pieces because it was a process of saying, ‘How can we get to serving the senior population, how can we get to serving a large chunk of housing that is below 40 percent AMI?’ These real crisis points for the city and our neighborhoods that’s often very difficult to serve for any (developers),” said Barika Williams, the deputy director of the Association for Neighborhood and Housing Development.
The one potential sticking point for the bill, which does not yet have a co-sponsor in the Assembly or Senate, is the funding mechanism – a $14 billion “unclaimed funds” pot controlled by state Comptroller Tom DiNapoli. Wright’s bill would put a small dent in that fund, to the tune of $200 million per year, to fund the housing subsidy, but it’s unclear how much leeway DiNapoli has in designating the fund for the purpose of creating housing. A call placed to the comptroller’s office went unreturned.
So while it’s inaccurate to say that Wright’s bill would replace 421-a, if it passes muster in the Senate and gains the support of the governor – who, it should be noted, plans to invest in a statewide affordable housing program – the legislation would do what 421-a never did for New York City: Create real affordable housing for those that need it most.