Finding a residential developer who isn’t a staunch defender of the 421a tax program is a bit like spotting a snow leopard in the wild, which is what made Raymond Chan’s comments at today’s Building Brooklyn forum interesting.
“421a is definitely a good thing to have. But the only thing is, after 421a what will happen?” said Chan, an architect and co-developer of a Sunset Park mixed-use megaproject on Eighth Avenue. “The developers aren’t benefiting from 421a, it’s really the occupants. But at the end when the cycle is over, the tax has to go back up.”
Chan essentially argued that he’d gladly exchange the 421a abatement for lower property taxes, which he said would benefit occupants more while also stimulating the economy. His lukewarm take on 421a, set to expire in 10 days, stood out at the event hosted by Baruch College’s Steven L. Newman Real Estate Institute, Kasirer Consulting and Zetlin & De Chiara LLP. The other panelists were less reserved.
“(421a) makes all the sense in the world,” said Karl Frey, executive vice president of real estate investment trust iStar Financial. “We have to have all these programs continued or you’re not going to achieve the affordable housing goals that everybody desires.”
Toby Moskovits, CEO of Heritage Equity Partners, argued that small developers tapping into the 421a program have been an important factor in Brooklyn’s economic revival. “Because of the bad name tax programs have gotten from some of the luxury developments, the economic stability it helped create even in a bad economy has truly been ignored,” she said.
And while Douglas Steiner, CEO of Steiner Studios, added that developers need certainty over future policy in order to plan ahead, Andrew Kimball, CEO of Industry City, has his eyes on the more immediate future: “I’m looking forward to that debate being over so we can refocus on industrial policy,” he said.