The Real Deal New York

Speyer’s LIC megaproject strikes a nerve with de Blasio

Developer eligible for large 421a tax break without being required to build affordable units
March 06, 2015 08:40AM

Tishman Speyer’s residential megaproject in Long Island City is eligible for a $200 million 421a tax abatement without having to build a single low-cost unit, something that is creating friction with leadership at City Hall.

Speyer is looking to build a three-building residential project on Jackson Avenue in Long Island City, which will include roughly 1,800 apartments and will cost $875 million, according to the New York Times. Speyer is looking to start construction soon — before June 15 when the tax law is set to expire — to qualify for a 421a tax abatement that would be worth about $200 million. Under the current 421a rules, Speyer won’t be required to add any affordable units to the project due to the location of his new development.

At least 30 developers — among them Extell Development’s Gary Barnett, Related Companies’ Stephen Ross and Forest City Ratner’s Bruce Ratner — are also looking to start construction before June 15 and take advantage of the 421a tax break. Some of those developers, however, will be required to set aside 20 percent of their units for below market housing. Speyer is one of six developers who will not have to include any affordable units in their new projects if they lay a foundation before June 15, according to the newspaper.

“This isn’t our vision for the city,” Deputy Mayor Alicia Glen told the New York Times. “This is, in fact, a great example of why we need to change the status quo. In many ways, it’s the most overt example of the need to think through the public benefits we get when the city and the state offer tax breaks.”

Steven Rubenstein, a spokesperson for Tishman Speyer, said: “We believe this project will greatly add to the Long Island City community.”

Tenant advocates have been fighting to abolish the tax break, while developers have supported the initiative. [NYT] — Claire Moses

  • FreeMarkets

    “This isn’t our vision for the city,” Deputy Mayor Alicia Glen – – – – This is the problem when politics interferes with the free market. A small group of people who have taken no risk and bear no cost – create “visions” for an economy or business or city. What about the visions of the people who have saved resources, developed skills, and determined that they are willing to put those resources at risk? Why do people think this country thrived when others didn’t? We thrived because small, elitist groups of “visionaries” were marginalized and free market actors were able to express their “visions” through free exchange and competitive markets. Why do I care what Alicia Glen’s “vision” is? I don’t. And neither should anybody else.

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    • manorborn

      Your argument is actually funnier than you know apparently: “Why do people think this country thrived when others didn’t?” Exactly! The ones who didn’t are the very ones who need the affordable housing and the misnamed “elites” in municipal government are the ones trying to make sure those who need it, get some. It’s not “visionary,” it’s just common sense…can’t have a workforce slleping in the streets.

      • Edward Johnson

        “Can’t have a workforce sleeping in the streets”
        your comment is such nonsense and has a complete disregard of simple economic principles.

        • Manorborn

          In case your pocket dictionary is lost somewhere in your library of economic texts:
          sarcasm |ˈsärˌkazəm| noun
          the use of irony to mock or convey contempt.

          • Brian J. Lockner

            If your comment was meant as sarcasm – there are ways to convey this in text form – your comment does not do so, and is very easy to misunderstand. That said – if you’re being contemptuous of the mayor and his idiotic ‘visionary’ deputy mayor, than bravo, and I couldn’t agree more. No sarcasm btw.

          • FreeMarkets

            I know people that commute to Manhattan 4 1/2 hours a day because they can’t afford to live there. They don’t go running to government for free stuff, so why should anybody else. You make due with what you have and strive to be better. That’s how a free society works. It’s not the thuggery we see today.

          • Manorborn

            Sorry for the confusion, Brian. I was being contemptuous toward the same illogic that prompted your well reasoned response, viz., “The trade-off is quite simple – much MUCH lower taxes in exchange for producing something the city feels it needs (and does) apartments for workers who are not rich. That said – if the developer decides he doesn’t want a tax break, he doesn’t need to build affordable.”

            And I also agree, that it’s troubesome that some here find the need to splutter “Communist!” with the chaotic abandon of Homer Simpson at the controls of a nuclear power plant, every time a reference to fair play is presented in a discussion.

    • Marc

      Your statement creates a lot of anger because little turds want to be able to tell people what to do with their money and then after all the B.S. you endure and make money in spite of them……………there they are again to tax it as much as possible and create more and more regulations. Urban Libs know nothing about free markets and how it works best for EVERYONE. They are communists and nothing else.

      • Brian J. Lockner

        Marc, there are ways for everyone to get some benefit to their own self-interest without the need for calling people communists. The use of the 421a tax abatement system to create affordable units is a very useful free-market application – the way it works is very simple, though our idiot mayor wants to break a system that works great for all involved. Under the current system if you want to get a full tax abatement on the property you build (both the affordable and free market units), then you need to build 20% of your building as affordable. The trade-off is quite simple – much MUCH lower taxes in exchange for producing something the city feels it needs (and does) apartments for workers who are not rich. That said – if the developer decides he doesn’t want a tax break, he doesn’t need to build affordable. There’s no cause to give a developer (and I am one) a huge tax break for nothing, that’s just a gift with no strings and no city benefits. However, if you want the break, you build the units. It’s a win/win for those who choose to produce the units. I’m not sure how this is ‘communist’ in any way. HOWEVER – what Mayor Moron is now trying to do is to break this system, which has worked well for many many years, by trying to FORCE the creation of affordable units without tax break assistance – this is bound to fail.

        • FreeMarkets

          I appreciate your comments – however – there is NOTHING free-market about NYC real estate. It’s so wildly distorted it would be impossible to know what it would look like if the city got out of the way. I can’t tell you how many rent stabilized/rent controlled apartments I have walked into where there was a 75 year old man living in a 3 bedroom apartment all by himself for less than a $1,000. It’s not fairness – and maybe it’s not Communist – but it is certainly not a free-market.

          • Brian J. Lockner

            I’m not arguing that it’s a free market – it’s not. And frankly, despite being a true-blue capitalist, and I very happily build super-luxury condos and townhomes for wealthy folks who want to live in them, and thereby take a profit, I must say that it’s not altogether a bad thing for the system NOT TO be purely ‘free’. The simple fact is – lots of people with money want to live in NYC, or simply park their money here in real estate which is viewed as an appreciating safe-haven asset. This in and of itself is as distortionary to the system as the rent stabilization laws. The challenge that our safe-haven status creates for city planners is – the ‘normal folks’ need to live here to – and we WANT THEM TO, or see NYC lose it’s vibrancy, creativity and special energy. Without the firemen and cops, the school teachers and doctors, and the hundreds of thousands of recent college grads and artists who live in our city – what would it be? A gilded island playground with no ‘grit’ no authenticity and no soul. This may be what the market dictates – but at the end of the day it would be the undoing of this great city. As such there is a value in rent regulations, but there does need to be a balance.

          • FreeMarkets

            I appreciate your thoughts. I don’t however agree with your hypothesis of what this city would look like with limited government intervention. I don’t know of any city that has ever evolved that was lined in gold with candy canes hanging from the rooftops. In a free market, supply of units would keep up with demand and rents would COME DOWN and condo prices would COME DOWN – as does everything else in a free market over time. Poor people thrive in free markets because products and services become more affordable. Developers would build higher or build on swaths of land that should not belong to the government. Zoning restrictions would be far less detrimental. Government is not in place to make life more fair for people. There would be no end to their “charity” if that was the case and in many instances there really isn’t. Look at what government overreach has done to our economy on the whole. I do respect your opinion though.