FOR IMMEDIATE RELEASE
December 5, 2006
MAYOR BLOOMBERG BACKS NEW REFORMS FOR THE 421-A PROGRAM TO CREATE MORE AFFORDABLE HOUSING
421-a Program Reforms Would Continue Strong Housing Construction
Mayor Michael R. Bloomberg today backed the compromise reforms of the 421-a property tax program that his Administration negotiated with Council Speaker Christine Quinn and which the Speaker will introduce as legislation tomorrow. The proposed legislation builds on the reform framework laid out by the Mayor's 421-a task force and comes after days of discussions between senior aides to the Mayor, the Council Speaker, Housing and Buildings Chairman Eric Martin Dilan and other members of the City Council, and Council staff.
"The Speaker's compromise legislation strikes the right balance towards maintaining a strong housing market while also providing increased funding for affordable housing," said Mayor Bloomberg. "This legislation encourages new construction throughout the five boroughs and advances our $7.5 billion New Housing Marketplace Plan, the largest municipal affordable housing plan in the nation's history."
"These proposals will allow us to continue with unprecedented growth in the housing market and to ensure that affordable housing is built in the future," said Deputy Mayor Dan Doctoroff. "Because we are eliminating unnecessary incentives on market rate housing, we can shift incentives towards affordable housing. Not only will these reforms maintain the strength of the current market, they are really just smarter use of resources."
"This legislation will shape the City's housing market for the future," said Housing Preservation and Development Commissioner Shaun Donovan. "The changes to 421-a will remove unnecessary tax breaks for luxury developments and better use that money to build affordable housing and support the strong middle-class housing market in the areas outside the exclusion zone. The reformed 421-a program will further advance the aims of the Mayor's $7.5 billion New Housing Marketplace Plan, the largest municipal affordable housing plan in the nation's history."
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 issued recommendations in October.
The proposed legislation would:
The administration and council 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 Preservation and Development)