Affordable new york is not living up to its name real estate weekly electricity invented timeline

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New York’s 421-a program, starting in 1971, is a housing development incentive program which gives real estate developers tax abatements for building new multi-family residential buildings. Since its inception, it has included provisions which mandate the creation of affordable (income restricted) units in order to qualify for real estate tax abatements.

When the New Program took effect in April 2017, it aimed to make up for lost time by working retroactively for any new development that commenced construction on or after January 1, 2016 (projects looking to apply for the expired program must have commenced before December 31, 2015).

It has been a little over a year since the New Program retroactively went into effect, and the results are in — with over two years of development activity eligible for the program, the Department of Finance has confirmed receiving only three certificates of eligibility for the tax abatements.

That translates to 96 affordable units delivered to help New York City take on its affordability problem, out of a total of 461 total units completed within the projects. By the numbers, that 21 percent of units actually turning out “affordable”, with almost 80 percent of units being subject to mercy of the supply-constricted free market.

1) There is not a whole lot of new development being spurred under the New Program, as developers are either struggling to pencil out returns on projects even with the tax incentives, and/or are not comfortable with risks they face with the New Program’s more complicated guidelines.

2) When looking at the few completed developments taking advantage of the New Program, the projects were built along minimum requirements and nothing more. The program has not incentivized any meaningful affordable development, but rather to build just enough for a tax break.

We need less legislative solutions and more market based solutions, loosening the reigns on development of free-market supply. Rents will come down if developers are allowed to develop more, bringing new, affordable places to live for New Yorkers.

One of the more obvious solutions is to allow developers to build vertically providing more as-of-right air. The City’s glass ceiling needs to be raised on the fundamental building rights of residential parcels throughout every borough. We can start in places where rental housing can and will be built, such as transit orientated outer-borough neighborhoods.

Developers can take advantage of air which will not be utilized for commercial or manufacturing developments, as well as convert existing office or other commercial square footage into apartments. This could be very effective with today’s shrinking need for office and retail space.

Last, we need to reconsider onerous landmark and historic designations. For example, gas stations shouldn’t be protected as a landmark; they have no historic value whatsoever, and are not a logical use of the designation in any way, shape, or form. Far too many developable properties are frozen by these improper designations. The same goes for preserving outdated, run-down tenement housing.