A budget proposal from the New York State Senate would greatly increase the number of tax exempt condominium projects in the outer boroughs, confirming the fears of Mayor Bill de Blasio and other city officials that such developments could creep back into a renewed 421a developer tax break.
In the Senate Republicans’ latest version of the bill, condo projects outside Manhattan with as many as 80 units could qualify for 421a tax exemptions, up from 35 units in Gov. Andrew Cuomo’s proposal released in January. A cap on the average tax assessment value for benefitting condo units is also raised in the new proposal from $65,000 to $85,000, a change that was first reported by Politico.
Since the 421a program’s expiration in January of 2016, developers have filed offering plans for 15 new outerborough projects consisting of between 35 and 80 condo units, a TRD analysis of data from the New York State Attorney General shows. If 421a became available to developers of this section of the market, there could be many more of these condo projects on the horizon.
Two key Senators in the 421a negotiations have previously expressed an interest in increasing outer-borough condo benefits, prior to Cuomo releasing his own plan. Republican-caucusing Democrat Simcha Felder and Republican Marty Golden, both of Brooklyn, told reporters in December they were looking to expand the tax break for more property owners, but haven’t provided further details.
Calls and emails directed to Golden and Felder were not immediately returned on Wednesday.
Shortly after Cuomo introduced his replacement to 421a — now dubbed “Affordable New York” — de Blasio voiced concern over rumblings in Albany suggesting many more condo projects were set to qualify for the tax cut.
In a report released last week, the city’s Independent Budget Office found that the governor’s proposed program could cost the city $8.4 billion in property taxes over the next 10 years. The governor’s office has repeatedly argued that the extra costs are largely due to the revisions suggested by the mayor in 2015, and that the added expenses are “minimal, 26 years out, and worth it.”
City officials, meanwhile, argue that the Senate’s proposed changes unravel the strides made in the legislation approved in June 2015, saying that it will further increase the cumulative costs of 421a to the city to the tune of $1 billion each year. By the city’s math, the cost per affordable unit would be $592,000 under the Senate’s program compared to $507,000 under the 2015 law.
“This is an affordable housing program, not a giveaway for condos. We can’t accept the Senate’s proposal,” Melissa Grace, a spokesperson for the mayor, said in a statement to The Real Deal. “There is no justifying more and more costs piled on New York City taxpayers, without a single affordable apartment to show for it.”
Representatives for the the governor and the Real Estate Board of New York didn’t immediately respond to requests seeking comment on the latest proposed changes.
The 421a tax exemption expired at the end of 2015 following a failure of labor and real estate trade associations to agree on wage provisions for construction workers, negotiations that were requested by Governor Cuomo. In November, the two key groups, REBNY and the Building and Construction Trades Council of Greater New York, announced they had reached an agreement on wages, prompting Governor Cuomo to ask the legislature to pass an updated version on the bill.