Spitzer says 421a is “not going to solve the problem”

In its current form, exemption isn’t giving taxpayers a good return on their investment: ex-gov

Eliot Spitzer
Eliot Spitzer

If a new 421a deal looks anything like the old one, New Yorkers shouldn’t look to it as a silver bullet to solve the city’s housing problem, Eliot Spitzer said Tuesday.

“I’m here to tell you that 421a doesn’t work,” Spitzer [TRDataCustom] told the members of the Young Men’s and Women’s Real Estate Association at their monthly luncheon. “421a, in its current incarnation, is not going to solve the problem.”

Spitzer [TRDataCustom] said his real estate firm did a back-of-the-envelope calculation on the program, and found it costs taxpayers $375,000 for each affordable unit. When the city’s mandatory inclusionary housing (MIH) program is factored in, he said, the number jumps to more than $1 million. (He didn’t disclose the methodology.)

“If you look at the number of units we are getting and the cost per unit, it simply isn’t giving us the outcome we need,” he said.

It’s not quite the tune he sang last summer during a panel hosted by TerraCRG after receiving 421a status for his $700 million mixed-use rental complex along the Williamsburg waterfront.

“Without 421a, it is inconceivable that we would have done our project as a rental,” he said at the time. “We could have done it as a condominium without 20 percent inclusionary. We could have done very nicely.”

The head of Spitzer Enterprises said that instead of 421a the city needs to focus on investing in transportation infrastructure and up-zoning farther-flung neighborhoods connected to the central business district.

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But as Mayor Bill de Blasio is finding after the city passed MIH, that’s easier said than done.

“Anybody who’s been in politics and gone to a community board when you’re proposing an upzoning will tell you, it’s one of the worst nights of your life,” Spitzer said. “Everybody wants it in theory, [but] nobody wants it in practicality.”

As for the 2017 mayoral race, Spitzer stayed apolitical, explaining the top issues for him will be crime, education, urban transportation, housing and the healthcare crisis.

“You saw the controversy over [Long Island College Hospital],” he said. “We do in fact have too many full-service hospitals.”

Spitzer spoke to the real estate crowd for about 45 minutes, focusing most of his time on how the growing gap between median annual wages and productivity over the past several decades has fostered a sense of inequality that’s reared its head throughout the election cycle.

He did share his perspective on the difference between the worlds of business and politics.

“In business – many of you in this room are brokers – if you lose one deal there’s another one tomorrow. Consequently, you don’t burn bridges the way people do in politics,” he said.

“Politics is a zero-sum game. When you lose a campaign and you’re out, there are very few second acts in politics.”