New tax may force lot owners to build or sell

November 24, 2013 11:00AM

 A new tax hike on vacant land could soon force owners to make a decision: build or sell. As Public Advocate, Bill de Blasio pushed for the tax, which would affect some 10,500 lots throughout the city, but as mayor, de Blasio has pledged to see his plan through.

De Blasio’s plan calls for a hike in yearly tax rates on vacant land by an average of $15,300, following a five-year phase-in period, according to estimates by the Independent Budget Office, cited by Crain’s. The idea is that by placing such an economic burden on unused lots, owners will choose to develop much-needed housing. However, some are less hopeful that the plan will have the intended effect.

“It would drive the price of land down and increase development, to the extent the tax increases are significant,” Robert Knakal, chairman of Massey Knakal Realty Services, told Crain’s. “The more expensive [vacant land becomes to hold], the less of it you will get—that’s Economics 101.”

But regardless of how the plot plays out on the ground, it would most certainly generate revenue for the city. The city estimates that the tax would generate $162 million annually, which could in turn fund the construction of approximately 4,000 new units. [Crian’s]Christopher Cameron