The Real Deal New York

End of 421a could reduce land prices, freeze development

Tenant advocates have been calling for the termination of the 40-year-old tax break program

March 02, 2015 08:05AM

Tenant advocates rallied on Wednesday afternoon

Tenant advocates rallied outside One57 last month (Credit: Claire Moses/The Real Deal)

Eliminating the 421a tax program altogether — which is what tenant advocates are trying to accomplish — could result in a freeze of development and could lower the prices that developers are willing to pay for land.

Developers take subsidies into consideration when they buy land, Capital New York reported. Without 421a, they may not be willing to pay as much as before. As a result, the website reported, land owners may temporarily take their properties off the market.

Mark Willis, the executive director of New York University’s Furman Center, told the website that a “possible decrease in land values might affect the new development pipeline in the short run. The city must carefully consider this possible impact, especially in light of the need for more housing affordable to middle- and lower-income New Yorkers.”

Mayor Bill de Blasio, caught between tenant advocates and developers, has been hesitant to take a firm stance on the program’s future.

The Real Estate Board of New York has been a proponent of the program and recently lobbied for its continuation in Albany.

“A robust 421a program is one element in a menu of options that will be needed to make Mayor de Blasio’s affordable housing plan a reality,” REBNY President Steven Spinola told Capital. “Without this critical tax incentive, the city would see a sharp drop off in the production of new housing units, a further skewing of the residential market toward condominium rather than rental production, and an accelerated tightening of housing costs for renters and buyers alike.” [Capital NY] — Claire Moses

  • analyst

    who benefits from termination of 421a??

    • Brian O’Flanagan

      taxpayers

      • analyst

        w/out 421a taxpayers are liable for higher tax based on A.V of the building, no?

      • comment flagged

        A 421-a building built on land formerly occupied by a bunch of 1-4 unit buildings (ie, most things built in Queens and Brooklyn) will bring in more tax revenue to the city and state from its tenants’ income taxes than the previous properties were paying in property taxes.

        • Guest


          you mean , the “tenants” who never come to NYC , and just use their apartments as tax dodges

          .

          • BarryD

            What tax dodge would have anyone live in the city?After the city and state take their piece we have one of highest effective tax rates in the country.

          • comment flagged

            yes, those tenants wind up paying millions of dollars in sales taxes at their favorite luxury retailers.

  • Realest Minority

    after everyone got rich pushed the middle class and now that the city got expensive funny how they wanna get ride of it lol

  • Realest Minority

    after everyone got rich while pushing the middle class OUT now that the got more expensive they wanna get ride of it how funny

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