Developers need to stop misleading the public about 421-a

Ever since the 421-a program came to an end earlier this year, numerous housing developers have misled New Yorkers by arguing that new affordable housing – and even new housing construction, period – would cease to exist in the five boroughs without the tax abatement.

The truth is that the massive tax break was responsible for padding the pockets of developers who built rental and condo units that were overwhelmingly unaffordable to local communities.

The developer behind the Astoria Cove project, for example, was the latest to make the claim that the housing development stalled due to the expiration of 421-a. Subsequent media reports have uncovered that financial issues, and not the lack of 421-a abatement, are in fact responsible for paralyzing the massive luxury development in Queens. A Politico report found that developers had not even received 421-a before its expiration and that Astoria Cove would not have qualified for the subsidy because the income thresholds it includes would be too high to qualify for the program. Only 5 percent of the units in the proposed project would be affordable to a family of three earning $58,000 a year or less, when the median income of Astoria is just $56,000 a year.

The fact that this development, which would have accelerated gentrification in the area, is no longer going forward is a good thing for New York City. But like their fellow developer Donald Trump, the Real Estate Board of New York is not letting facts get in the way of peddling a story that leads to them benefitting richly.

In an April report, REBNY claimed that the 421-a tax abatement program resulted in the creation of nearly half of the affordable housing built in New York City. Not only is this inaccurate, but this claim must be exposed for what it is: the real estate industry’s advocacy for a lucrative tax abatement that is a billion-dollar giveaway to the wealthiest developers in New York.

All affordable housing get tax exemptions. In fact, when the 421-a tax abatement is not available, developers building affordable housing can apply for a different tax exemption to build the project.

But we have not forgotten how 421-a was also used as a tool for corruption.

Billionaire developers – like Leonard Litwin of Glenwood Management – greatly benefited from the subsidy and used it as part of a pay-to-play scandal that put former Senate Majority Leader Dean Skelos and former Assembly Speaker Sheldon Silver behind bars. In the words of investigative journalist Wayne Barrett, Glenwood’s luxury towers “have benefited from up to $100 million in 421-a tax subsidies approved every four years in Albany.”

In fact, Glenwood continues to assert its political influence by donating money through various channels to entities like the Rent Stabilization Association, in hopes of reviving the lucrative tax giveaway.

When it was created in the 1970s, 421-a wasn’t meant to be an incentive for affordable housing, but as a method of stimulating the economy to encourage development. We have gone from a period of predatory disinvestment to a period of speculative hyper-investment, and the tax abatement has only made the problem worse. Many have agreed that is an archaic and ineffective tax incentive and we are among those who celebrated its demise.

The housing development known as Colony 1209 in Bushwick is a perfect example of how luxury developers are receiving significant financial benefits from the state to gentrify communities while tenants with roots in the neighborhood live in fear of displacement. The project has received $8 million through 421-a to house what they refer to as a “group of like-minded settlers,” implying that Bushwick – once primarily a black and Latino neighborhood – is a frontier that must be settled by new residents.

There is no question about what would make the difference for neighborhoods like Bushwick as long-term tenants resist gentrification: the elimination of the 20 percent rent increase landlords can demand upon vacancy, or what we call the “eviction bonus.”

We are long-time housing activists who have organized for strengthened rent laws not only because it benefits our members, but also because stronger rent laws are a much saner and efficient policy to preserve affordable housing, and the best way to ensure that low- and moderate-income tenants are able to stay in their homes.

Katie Goldstein is the executive director of Tenants & Neighbors, and a leader of the Alliance for Tenant Power, a diverse coalition of tenant advocates.