FOR IMMEDIATE RELEASE
December 20, 2006
MAYOR BLOOMBERG WILL SIGN COMPROMISE BILL TO REFORM 421-A TAX INCENTIVE PROGRAM INTO LAW
Legislation Passed by Council Builds on Framework Laid Out by Mayor’s Task Force; Ensures 20,000 New Affordable Housing Units Citywide
Mayor Michael R. Bloomberg today announced that he will sign into law the amended bill that reforms the City's 421-a property tax program that was passed by the City Council by a vote of 44-5. The final legislation, which will create an estimated 20,000 new units of affordable housing, was negotiated by the Administration with Council Speaker Christine Quinn and council members, and fulfills a promise made by Mayor Bloomberg in February when he made reform of 421-a central to the expansion of the New Housing Marketplace Plan. Earlier this year the Mayor established the 421-a Task Force to recommend changes to the program. The legislation passed today by the City Council builds on the reform framework established by the Task Force in October and will provide $300 million in additional funding for the New Housing Marketplace Plan.
"The passage of today's bill advances our $7.5 billion New Housing Marketplace Plan, which will provide affordable housing for 500,000 New Yorkers, more than the entire population of Atlanta," said Mayor Bloomberg. "We are pleased that a broad coalition of City Council members voted in favor of this amended bill introduced by City Council Speaker Christine Quinn. I want to thank Speaker Quinn and her staff as well as Housing and Buildings committee Chair Erik Martin Dilan for working closely with the Administration to develop sound changes to this important program that will eliminate unnecessary tax breaks for luxury developments."
"The City is using every tool at our disposal to build and preserve 165,000 units of affordable housing by 2013 as part of our ten-year New Housing Marketplace Plan," said Deputy Mayor Dan Doctoroff. "Our success has drawn people from around the world to New York, creating a shortage of housing that drove up prices. With this bill, the Administration and the Council struck a balance between maximizing affordable housing for low-income New Yorkers while also continuing our recent housing boom for the middle class that is closing the housing gap."
"As our housing challenge shifted from abandonment to affordability, our New Housing Marketplace Plan responded with innovative new strategies to create much-needed housing for working New Yorkers," said New York City Department of Housing Preservation and Development Commissioner Shaun Donovan. "By expanding on the key program changes proposed by the members of the Mayor's 421a Task Force, today's legislation is a perfect example of how we can harness our strong housing market to create new incentives and new resources for affordable housing."
The 421-a tax incentive program was created in 1971 to spur housing development at a time when housing market conditions were weak. 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 legislation passed today by the Council adopted the Task Force's changes with a number of important modifications. The primary elements of the legislation will:
The Mayor is expected to sign the bill into law on December 28, 2006. As required by State law, the changes will go into effect one year from the effective date of the legislation, thereby creating an orderly transition to the new 421-a requirements that will help to keep the housing market strong. Following the enactment of this bill, the Administration and Council will work with the State Legislature to ensure renewal of the State 421-a legislation, which expires on December 31, 2007. The Administration and Council are also committed to working with the State Legislature during the upcoming session to seek passage and implementation of a tax exemption program to spur the construction of affordable Class 1 owner occupied properties.
Stu Loeser/Jason Post (212) 788-2958
Neill Coleman (Housing Preservation and Development)