FOR IMMEDIATE RELEASE
October 11, 2006
MAYOR BLOOMBERG ENDORSES TASK FORCE RECOMMENDATIONS TO CREATE MORE AFFORDABLE HOUSING AND CONTINUE STRONG HOUSING CONSTRUCTION
421-a Program Reforms Would Generate Increased Revenue for Affordable Housing
Mayor Michael R. Bloomberg today accepted and endorsed recommendations to reform the 421-a property tax program. The changes would modernize the program to foster the creation of housing for low- and middle-income families. The reforms are designed to create the maximum amount of affordable housing for the City while also ensuring that construction of new housing will continue at a strong pace.
The 421-a tax incentive program was created in 1971 to spur housing development at a time when housing market conditions were dire. Under the program, housing developers within designated areas are given tax incentives to develop housing. The program has helped fuel the construction of over 110,000 apartments in the City. However, the City's real estate market has changed dramatically since that time. In recognition of the need for reform of the program, the Mayor convened a 26-member task force in February 2006 to examine 421-a and suggest changes that would better align it with the current real estate environment. The task force was led by Housing Commissioner Shaun Donovan and included members of the real estate, community development, and advocacy communities, as well as representatives from City agencies and the City Council.
"I think these innovative recommendations strike the right balance to maintain a strong housing market while also providing funding for our aggressive plan to create affordable housing for 500,000 New Yorkers," said Mayor Bloomberg. "The task force's recommendations, which I endorse today, will ensure that the property tax programs the City has developed to spur housing production are working in the most efficient way. Last year the City authorized housing permits for 31,599 new units, the largest number of permits since 1972. So far this year we are on target to beat that number again."
"The task force is proposing solutions that will shape the City's housing market for the future," said Commissioner Donovan. "The strength of the current market provides a historic opportunity to place greater emphasis on encouraging the development of affordable housing throughout the city. These recommendations will both encourage new construction throughout the five boroughs and advance the Mayor's $7.5 billion New Housing Marketplace Plan, the largest municipal affordable housing plan in the nation's history. I want to thank all the members of the 421-a task force who shared their expertise and creativity."
"As a developer of affordable housing I am delighted to see a strong set of recommendations that seek to provide long lasting incentives and financing for affordable housing," said L&M Equity principal and task force member Ron Moelis.
"The task force brought together a diverse group of housing professionals with many different viewpoints but we reached consensus through a shared commitment to supporting affordable housing and leveraging the strength of the housing market to do so."
"The task force included members from all corners of the City's housing community and gained a surprising amount of consensus as to conclusions," said Adam Weinstein, president of Phipps Houses and task force member. "I think more affordable housing, including middle income housing, will get produced in a shorter period of time as a result of the recommendations. As an affordable housing developer and proponent, it is easy to forget that the 421-a programs were really borne of a different era, when the market environment was nowhere near as robust. We live in a very different time, and the mechanisms by which the City thinks about subsidizing affordable housing -- including real estate tax policy -- necessarily needed to be re-thought and re-purposed."
"The Task Force undertook a thorough analysis of the 421-a property tax program. The aim was to come up with a set of recommendations that would help to ensure that the program isn't overly generous to developers on the one hand and continues to stimulate the development of much-needed new housing on the other," said Ingrid Gould Ellen, Co-Director of NYU's Furman Center for Real Estate and Urban Policy and task force member. "Judging the right amount of subsidy to stimulate housing development is hard to do but given the existing evidence, the Task Force came up with a framework that I think strikes an appropriate balance."
The task force recommendations include:
In addition to the dedicated affordable housing fund, the extra tax revenue generated by the proposed changes would provide at least $200 million to fund the Mayor's New Housing Marketplace Plan. The changes proposed will require City legislation. The City Council was represented on the task force and the administration will work with the Council as they consider legislation this fall. The administration will also work with the State Legislature as they consider renewal of the 421-a program, which otherwise will sunset on December 31, 2007.
Stu Loeser/ Jason Post (212) 788-2958
Neill Coleman (Housing)