NEW YORK, March 12, 2015 /PRNewswire-USNewswire/ -- The Municipal Art Society of New York (MAS) released a first-ever interactive tool [MAS.org/421a] mapping the impact of one of New York City's most expensive housing incentive programs. Spread across three city agencies, the data required to evaluate the affordable housing output of 421-a has never been publicly compiled until now.
In total, the city forfeited more than $1.1 billion in tax revenue in 2014 alone through the 421-a program, 60% of which (nearly $670 million) subsidized buildings in Manhattan, a borough currently undergoing a historic building boom that renders a building subsidy unnecessary. The annual exemption recurs for 10-20 years in the city's most expensive neighborhoods.
Creating the maps required MAS to track down and merge data—some of it in PDF form—from the Department of Finance, the Department of Housing Preservation and Development, and the Department of City Planning. The City's Independent Budget Office assisted MAS in this effort by compiling the data from the Department of Finance.
"It's not the 1970s anymore. In these booming Manhattan neighborhoods, the only value of a 421-a program is to spur affordable housing, yet the data on 421-a's affordable housing impact is largely unavailable. And what information we do have is scattered across three city agencies," said Margaret Newman, Executive Director of MAS. "It's long past time that Albany provides a transparent public accounting of this four-decade-old, $1 billion/year program."
The 421-a program, created in 1971 to spur residential development, was amended in 1985 in response to the rebounding real estate market. After 1985, new development projects seeking 421-a tax exemptions in flourishing Manhattan neighborhoods—defined by the so-called Geographic Exclusionary Area (GEA)—were required to dedicate 20% of total units to affordable housing. However, in 2008 legislators expanded the boundaries of the GEA to include all of Manhattan, but also neighborhoods in the Bronx, Brooklyn, Queens, and Staten Island.
"Reimagining 421-a as an engine for affordable housing was a well-intentioned but doomed idea," said Ms. Newman. "We've amended it again and again over four decades, trying to mold a program that was designed during a construction drought into one that makes sense during a construction boom. The geographic exclusionary area should do just that—exclude luxury neighborhoods from cashing in on 421-a."
The 421-a program is up for renewal by the New York State legislature in June 2015. Based on the findings revealed in the maps, MAS urges that the program cannot be renewed as is.
- Rationalize 421-a's cost-benefit equation either by strengthening the affordability requirements or by decreasing the financial incentives;
- Redraw the lines of the GEA to reflect actual market conditions, based on data and statistics, rather than politics; and
- Dramatically increase the program's public transparency and use this data to monitor the program's successes and failures.
535 West End Avenue
City forfeited $3.3 million in tax revenue in 2014 subsidizing 6 affordable units built in 2013; this annual exemption continues through 2023
150 East 86 Street
City forfeited $5.8 million in tax revenue in 2014 subsidizing 24 affordable units built in 2011; this annual exemption continues through 2021
505 West 37 Street
City forfeited $12.1 million in tax revenue in 2014 subsidizing 167 affordable units built in 2012; this annual exemption continues through 2032
To view the details on any property currently receiving 421-a benefits, visit our mapping tool at MAS.org/421a
421-a Program Description
The 421a-a property tax exemption program was created in 1971 to encourage residential construction on vacant lots in New York City. After the real estate market recovered in the 1980s, the program was revised to create a "Geographic Exclusionary Zone" for neighborhoods where development was booming, specifically, Manhattan between 14th Street and 96th Street. Within this new area, any new construction seeking the 421-a tax exemption had to dedicate 20% of its overall units to affordable housing in order to qualify. In 2008, the GEA was significantly expanded to include all of Manhattan, but also neighborhoods in the Bronx, Brooklyn, Queens, and Staten Island.
The tax break exempts the increase in property tax that results from new construction on the property for 10, 15, 20, or 25 years depending on the location and affordability of the project. For example, if a vacant lot is worth $1 million before construction and worth $10 million after the construction of a new building, the owner continues to pay taxes on the original value, just $1 million, while the tax break is in effect. The exemptions phase out over time, so that by the end of the benefit period, owners are paying the full taxes on the improved property.
For more information on the 421-a program and how it has changed over the last four decades, visit MAS's 421-a information center
About the Municipal Art Society of New York
Founded in 1893, the Municipal Art Society is five years older than the consolidated City of New York itself. Over more than 120 years of history, MAS has made New York a more livable city by advocating for excellence in urban planning and design, a commitment to historic preservation and the arts, and the empowerment of local communities to affect change in their neighborhoods. From saving Grand Central Terminal and the lights of Times Square, to establishing groundbreaking land-use and preservation laws that have become national models, MAS is at the forefront of New York's most important campaigns to promote our city's economic vitality, cultural vibrancy, resiliency, and social diversity. For more information, visit mas.org.
SOURCE Municipal Art Society of New York