Report: 421a tax exemptions will cost NYC $1.4 billion
New York City is projected to forgo $1.4 billion in tax revenue for fiscal year 2017 as a result of the now-defunct 421a tax exemption, which continues to apply to projects that qualified for the program prior to its expiration at the end of 2015. That’s up $100 million from 2016, according to a report from the city’s Independent Budget Office. The reason is because as the value of older properties developed under the program has risen, so has the potential tax bill for the city. “Just because the tax break is suspended doesn’t mean we’re still not paying for it,” Doug Turetsky, an IBO spokesman, told Crain’s New York. The 421a program was designed to spur construction — in particular, affordable housing. Landlords get the tax break for periods ranging from 10 to 25 years. The IBO estimated that some of the properties that received tax exemptions under 421a are not expected to fully return to the property tax roll until 2044.
New head of Governors Island envisions work hub
Michael Samuelian, who as vice president of Related spearheaded the planning and design of Hudson Yards, officially took the helm last month as the head of the Trust for Governors Island, the New York Times reported. The organization, which is charged with overseeing development, has over the years led the transformation of Governors Island from a dilapidated former military base in New York Harbor to a summer playground that boasts 40 acres of new parkland. The Trust is now looking to make the island an employment source by opening it to the public year-round, as opposed to only in the summer. “We have a beautiful island with fantastic views and amazing open space,” said Samuelian, who also worked as a city planning official. “That open space is where innovation can occur, where people can think creatively.”
City seeks bigger cut of air rights deals in Theater District
The Department of City Planning is seeking to increase fees theater owners pay the city when they sell their air rights, Politico reported. Theater owners are currently required to pay $17.60 per square foot into the Theater Subdistrict Fund. Under the city’s new formula, owners could wind up paying up to $100 per square foot, depending on the deal. The proposal calls for a payment that is either 20 percent of the transaction value or 20 percent of a “floor price” of $347 a square foot, with the fund receiving whichever amount is higher. The fund, which makes grants to theater organizations, was created as part of a city deal with theater owners: In exchange for more flexibility than other landlords in selling air rights, they had to pay a fee. Paimaan Lodhi, a vice president with the Real Estate Board of New York, called the increase “onerous, excessive and unfair.”
Airbnb unveils ad barrage to defeat state bill
Airbnb has launched a full-court-press advertising offensive to pressure Governor Andrew Cuomo to veto a bill that would punish Airbnb hosts with up to $7,500 in fines if they rent their homes illegally. The home-sharing giant is rolling out commercials on television and the internet, as well as in New York City taxis. The company said the campaign will cost less than a million dollars, or “just south of seven figures,” Politico reported. Assemblywoman Linda Rosenthal, the bill’s sponsor, said of the media blitz, “If Airbnb is willing to spend millions to protect illegal hosts who steal affordable housing from NY tenants, it just shows what an integral part of their business the advertising of illegal units is.” Meanwhile, Fortune reported that Airbnb sent a letter to Governor Cuomo threatening to sue the state. The company argued that the bill would subject parties to “draconian” fines and would violate federal law and the U.S. Constitution.