After months of anticipation, Mayor Bill de Blasio has revealed details about his affordable housing policy moving forward, including his stance on reforms to 421a.
Under the mayor’s proposal, the tax abatement would no longer apply to condo projects. In rental projects, developers receiving the tax break would be required to set aside 25 to 30 percent of the units as affordable, and the abatement would extend 35 years rather than the current 25, the New York Times reported. However, de Blasio now estimates the subsidy per unit at less than $400,000, from almost $600,000 today.
Additionally, the proposal calls for the establishment of a “mansion tax” on home sales over $1.75 million. This would be an additional 1 percent tax on top of the 1 percent already taxed on home sales over $1 million. For sales of over $5 million, there would be a 1.5 percent tax charged. De Blasio estimates the revenue generated from the new taxes would be $200 million a year, which would be set aside for housing programs.
The proposals would have to be approved by the State Legislature before going into effect. The current 421a program, along with a package of rent-stabilization laws, expire June 15. In terms of rent-stabilization, de Blasio has voiced his support for scaling back vacancy decontrol, which allows landlords to hike rents when tenants leave.
“No more tax breaks without building affordable housing in return,” the mayor said in a statement. “This can’t be a city of just penthouses and luxury condos. We are turning the page, and making sure the same pressures that have pushed New Yorkers out of their neighborhoods are harnessed to build the next generation of affordable housing.”
The Real Estate Board of New York gave its support for the plan.
“We’re going to support it, including the mansion tax,” said Steven Spinola, REBNY president. “We’re not happy about everything, but we think it will lead to building more affordable housing.”