It’s no secret that developers are pining for the return of the 421a tax abatement, which expired at the start of this year and is seen as a crucial tool for the new development of multifamily housing – particularly rental units – in New York City.
But a survey of 121 audience members at a real estate conference this week found a bit more flexibility on the issue than perhaps expected; 36 percent of respondents surveyed in the crowd, which was packed with developers and those who work for them, said 421a should return – but without the tax break being applicable to condominium projects, as was previously the case.
Both the de Blasio and Cuomo administrations were in support of a 421a renewal that restricted the benefit to only new rental buildings – though it was Cuomo’s stance on a “prevailing wage” provision for construction workers on projects receiving 421a that ultimately proved an unworkable compromise.
Still, those who believed 421a should not apply to condos were outnumbered by the 44 percent who said the program should return intact for both condos and rentals, according to Crain’s, while only 8 percent were of the opinion that 421a should not return at all. The survey was conducted by advisory firm Margolin, Winer and Evens at a real estate conference held by Crain’s on Monday.
MWE also asked real estate executives at the conference whether they were looking to use “nontraditional” financing sources in the next 12 months, in lieu of 421a’s absence. Of those who said yes, 77 percent said they would look to private equity funding, while 34 percent anticipated using the federal EB-5 visa program and nearly 19 percent said they would give crowdfunding a shot.
Asked about their biggest worries for the development business, 42 percent pointed to the cost of land and construction and 37 percent cited a “lack of government tax breaks and investment programs” like 421a. Twelve percent noted overdevelopment as their greatest concern, while 9 percent said tightened lending standards as their biggest worry.
And as for who would be the best president for the New York real estate market? Hillary Clinton got 57 percent of the vote, trouncing Donald Trump by 25 points, according to the survey. [Crain’s] – Rey Mashayekhi