As deadline for 421-a expiration nears, activists fear electeds are clearing path for renewal [UPDATED]

Nonprofit groups have said they oppose 421-a renewal.  However, the groups are not united.  That lack of unity may allow elected officials to wait out the clock before renewing the controversial tax breaks.

Governor Andrew Cuomo presents his 2015 Opportunity Agenda in Albany on January 21, 2015.  Activists question whether Governor Cuomo, who receives large campaign contributions from real estate developers, will act to end lucrative 421-a tax breaks that developers depend on for exorbitant profits.  Source :  Official Photograph/New York Governor's Office/Flickr

Governor Andrew Cuomo presents his 2015 Opportunity Agenda in Albany on January 21, 2015.  Activists question whether Governor Cuomo, who receives large campaign contributions from real estate developers, will act to end lucrative 421-a tax breaks that developers depend on for exorbitant profits.  Source :  Official Photograph/New York Governor's Office/Flickr

By LOUIS FLORES

With about three weeks to go before the New York State legislature decides what to do with the 421-a tax breaks for developers, which are set to expire on June 15, government reform activists are waiting to see if an array of nonprofit groups advocating for an end to the scandal-tarnished tax abatement program will stay true to their word.

The 421-a program costs New York City government approximately $1.1 billion, and, as at 2013,  only approximately 13,000 of the 421-a apartments program-wide were considered affordable, according to a report published by the Association for Neighborhood and Housing Development, or ANHD.  The 421-a program has come under fire for being too costly, for being ineffective, for driving gentrification and displacement, and for being tainted by allegations of corruption.

Interests with the means to finance social movements have taken over the push for more affordable housing in New York City.  Consequently, nonprofits, which advocate on behalf of tenants, have the financial resources to hire lobbyists, employ political consultants, and dispatch teams of political operatives, each of whom have established relationships with elected officials.  These nonprofits are nominally leading the fight to eliminate the 421-a tax program.

The relationships between the nonprofits and elected officials are what allow nonprofit groups to have insider access to elected officials.  At the same time, however, those relationships are meant to be nurtured and maintained, and any advocacy for the end to the 421-a tax abatement program cannot cost those political operatives their valuable relationships with elected officials, meaning, that many political operatives will not risk unleashing a full confrontation with elected officials in a campaign to exert the maximum amount of political pressure to see to it that the 421-a tax program is ended once and for all.

Some tenant advocates say that the only way that the nonprofit groups will succeed in eliminating the 421-a tax program is if they remain united.

In respect of a similar deadline to renew rent stabilization laws of New York City, Blair Horner, the legislative director for the New York Public Interest Research Group, or NYPIRG, said that an organized tenant lobby would be key to forcing Governor Andrew Cuomo (D-New York) to deliver the best outcome for tenants this year.  Mr. Horner’s comments were made in a report published by Capital New York.

Without an organized tenant lobby, comprised of the array of nonprofit groups advocating on behalf of tenants to defeat the 421-a tax abatement program, Governor Cuomo and other elected officials will not feel a full exertion of political pressure some activists say is necessary to motivate officials to end the tax breaks.

Besides Governor Cuomo, Assemblymember Keith Wright (D-Harlem) would be a natural target for nonprofit groups to exert political pressure for him to call for an end to the 421a-tax breaks.  Assemblymember Wright is the chair of the Assembly committee on housing. 

A failure to hold officials accountable

Instead of showing leadership on ending the tax abatement program, Assemblymember Wright told The New York Times at the beginning of May that he wanted to see the 421-a tax break program reformed, not ended.

Many nonprofit groups missed an opportunity to force Assemblymember Wright to publicly commit to supporting the end of 421-a tax breaks at the #1MillionHomes rally at Foley Square in Manhattan on May 14.

At the #1MillionHomes rally, Assemblymember Wright and other elected officials, including Assemblymember Richard Gottfried (D-Chelsea) and Comptroller Scott Stringer (D-New York City) spoke to rally attendees, but neither elected official spoke out against the controversial 421-a tax breaks.

Two activists, who were not affiliated with any nonprofit groups, attended the #1MillionHomes rally in Foley Square, holding up a protest banner with politically-direct messaging, questioning the role of real estate campaign contributions on the official policies of Mayor Bill de Blasio and Governor Andrew Cuomo.  At left is Louis Flores, the author of this article and the publisher of Progress Queens.  Source :  Progress Queens

Two activists, who were not affiliated with any nonprofit groups, attended the #1MillionHomes rally in Foley Square, holding up a protest banner with politically-direct messaging, questioning the role of real estate campaign contributions on the official policies of Mayor Bill de Blasio and Governor Andrew Cuomo.  At left is Louis Flores, the author of this article and the publisher of Progress Queens.  Source :  Progress Queens

Two activists, however, held up a banner at the rally to express their displeasure with the close alignment between each of Mayor Bill de Blasio (D-New York City) and Governor Cuomo with the influential Real Estate Board of New York, or REBNY, a powerful lobbying group for wealthy developers and landlords.  REBNY is lobbying to keep the tax breaks in place.

Assemblymember Wright’s office did not answer a request made by Progress Queens for an interview for this article.

Since elected officials refuse to advocate for the end of the 421-a program, the charge falls on social justice nonprofits, a wary prospect, given their propensity to shy away from political confrontation with elected Democratic Party politicians. 

This phenomenon, where activists or advocacy groups are deliberately forced to deëscalate their calls for reforms, was written about by tenant activists in the fight against the West Side stadium and was written about by Jane Hampshire in Firedoglake and given the appropriated term of veal pen."  It was reviewed during a workshop at the 2014 Left Forum entitled, “How Can NYC Police Reform Activists Break Free from the Veal Pen ?” which examined police reform groups being subjugated by the de Blasio administration, a dynamic that was later confirmed in a report published by Gothamist.

Even though activists and voters know that elected officials can and do exert influence over key nonprofit groups in a manner to eliminate political criticism and dissent, activists and voters are still placing their faith in nonprofit groups to push for an end in the 421-a tax program.  Since elected officials act in deference to their major campaign contributors, the elected officials force nonprofit groups to adopt that obedience, thereby allowing the outcome desired by donors to become, in turn, the de facto policy of supposedly independent nonprofit groups.

One key nonprofit group, Make the Road New York, is calling for an end to the 421-a tax breaks as best it can.

Every Tuesday, representatives from nonprofit groups travel to Albany to lobby state legislators to end the 421-a tax breaks and to renew or improve New York City’s rent stabilization laws.  One such official, Jose Lopez, a lead organizer for Make the Road New York, spoke to Progress Queens on his return trip from Albany last Tuesday.

If New York City just taxed the owners of luxury condominiums, generating the forsaken $1.1 billion in lost property taxes, “then that money could be used in lots of places,” Mr. Lopez told Progress Queens, adding that, “We’d like to see the development of affordable housing for people, who really need it.”

Mr. Lopez told Progress Queens that one coalition in which Make the Road New York was a member, the Alliance for Tenant Power, may plan more actions, but, as of the date of his interview with Progress Queens, no immediate demonstrations had been planned.

The actions Make the Road New York are building upon prior actions the group has undertaken to defeat the tax abatement program.  Make the Road New York was represented at a protest last February outside a notorious luxury condominium tower, One57, which has benefited from the 421-a tax breaks.

That protest received a wide amount of press coverage.  Since then, the anti 421-a protests have apparently yielded to lobbying, since the large, organized tenant group protests have centered around the renewal of rent stabilization laws, such as was the focus of the #1MillionHomes rally, as was a May 6 rally outside Governor Cuomo's office.

The motivations of nonprofit advocacy groups

One key nonprofit group, through, is more encumbered than others.

New York Communities for Change is the successor organization to the Association of Community Organizations for Reform Now, or ACORN.  When the developer Bruce Ratner was seeking approval for his zone-busting development project over Atlantic Yards in Brooklyn, ACORN helped the developer to placate protracted community resistance to the plan by agreeing to a community benefits agreement that promised, yet later failed, to deliver affordable housing.  In apparent appreciation by Mr. Ratner for ACORN’s support of his development project, ACORN received from Mr. Ratner a grant and loan package worth approximately $1.5 million.

It would have meant one thing to government reform activists if ACORN had acted with the honorable intention to make certain that Mr. Ratner delivered on his promises to construct affordable housing.  However, there was no mechanism to force Mr. Ratner to comply with his promises to construct affordable housing, an issue that was raised by the Atlantic Yards Report blog in the lead-up to the 2013 mayoral election. 

The fact that tenant activists don’t know whether they can trust New York Communities for Change in the current fight to end 421-a tax breaks, given their predecessor’s actions to enable Mr. Ratner to move his zone-busting project forward without a compliance mechanism to honor the promises made in the community benefits agreements, strikes some activists as creating confusion about the array of nonprofit groups currently saying they oppose 421-a.

John Fisher, the founder of TenentNet, a prominent Web site dedicated to sharing knowledge and resources for tenants in New York City, said he had doubts about New York Communities for Change’s motivations.

“They took the money,” Mr. Fisher said, referring to the combined $1.5 million that ACORN accepted from Mr. Ratner, adding that transparency about the role of New York Communities for Change was essential, asking, “The question is :  What’s going on now ?”

A representative from New York Communities for Change was unable to be interviewed for this article.

As reported by The New York Times, over 11 years passed before the developer of Atlantic Yards would refocus its attention on its unfulfilled promises to construct affordable housing on the site of the development.

Limited vision to confront the housing crisis

The first such building, touted by Mayor de Blasio as 100 per cent. affordable, was expected to set aside half of its units to families, who earned approximately $138,000 per year.  The other half of the building was expected to be set aside for tenants earning less than $50,000.

To some activists, families earning six figure salaries were not the tenants, who had been being squeezed the hardest by the gentrification and resulting high prices of rents causing New York City’s housing crisis. 

“This is a group effort to create affordable housing, to create jobs, to ensure that this can be a place where New Yorkers can afford to live,” Mayor de Blasio said at the time, according to a report published by WNYC.

If no nonprofit group challenges Mayor de Blasio about how his administration includes housing for families earning six figure incomes amongst his “affordable” tally, then tenant advocates find themselves in a political landscape where the social movement for housing may have no basis in reality, forcing some reform activists to believe that it may be necessary to reassess Mayor de Blasio’s self-anointment as a “progressive” leader.  Also overlooked is that, as Mayor de Blasio relies on 421-a tax breaks to finance the construction of affordable housing, the resulting building boom will lead to further gentrification, forcing long-term tenants from their neighborhoods on account of the steady creep of luxury buildings encroaching into more and more neighborhoods, Mr. Fisher, the tenant advocate, said.  Mr. Fisher views gentrification as the biggest problem with the 421-a tax breaks.

Reform activists say that modifying the 421-a tax abatement program to help Mayor de Blasio achieve his goal of constructing 80,000 new units of affordable housing is not a solution to New York City’s housing crisis.

Mayor de Blasio’s plan includes a second element, to preserve 120,000 units of affordable housing.  Combined, his plan views creating or preserving 200,000 units over a span of a decade, even though he will only be in office for seven on those ten years. 

As reported by The New York Times, there exists a great unmet need for affordable housing in New York City.  In 2014, 1.5 million applications were submitted in 41 lotteries to win the right to move into only 2,500 new affordable apartments.

The specter of corruption

Before the corruption fighting panel known as the Moreland Commission was prematurely closed as a consequence of backroom budget negotiations between Governor Cuomo and the New York State legislature, the commissioners had issued subpoenas to some of New York’s prominent real estate developers, probing the possible role of campaign contributions on official legislation. 

One of the firms, which was subpoenaed, was Extell Development Company, the developer of the $2 billion luxury condominium tower in Midtown Manhattan known as One57.  The skyscraper is so tall that it casts long shadows over Central Park, even though the tower is situated on West 57th Street.

Extell, related entities, or associated invidividuals, were responsible for making approximately $300,000 in contributions to campaign committees controlled by Governor Cuomo during the time when the state government was lobbied to sign, and eventually signed into law, a bill that granted 421-a tax abatement qualification for the One57 project.

That tax transaction is reportedly being probed by the office of U.S. Attorney Preet Bharara, the nation’s top federal prosecutor in New York’s southern district, according to a report published by The New York Post.

In corruption cases against Assemblymember Sheldon Silver (D-Lower East Side) and State Senator Dean Skelos (R-Rockville Centre), another prominent developer, Glenwood Management, has figured in the backdrop of actors seeking favorable legislative treatment, including 421-a designation for its buildings. 

Leonard Litwin, the owner of Glenwood Management, has been shown to be one of the state’s largest campaign contributors, according to a report published by Crain’s New York Business.

Mr. Litwin makes the large campaign contributions by exploiting an interpretation of the law that allows limited liability companies to make separate campaign donations even though they may all roll up to one ultimate beneficial owner.  The exeption that allows this is referred to as the “LLC loophole,” and Mr. Litwin’s giving was documented in a report published by ProPublica.

Government reform activists look at the 421-a tax abatement program, and they see that some large real estate developers are able to afford to make hundreds of thousands of dollars in campaign contributions, given that the 421-a tax abatement program can generate tens of millions of dollars in property tax savings, perhaps inducing some politicians to seek to monetize their public office in the process.

As a possible point of origin for government corruption, some government reform activists say that it is imperative to end the 421a-tax breaks, in order to end its corruptive influence on campaign contributions and official legislation.   

930 HALSEY STREET, Brooklyn, SEEN HERE IN SEPTEMBER 2014, WITH A SCAFFOLDING ERECTED IN FRONT OF THE BUILDING AND WORKMEN SUSPENDED IN FRONT OF THE façade.  This project-based, Section 8 building, formerly owned by the New York City Housing Authority, or NYCHA, was sold three months later.  NYCHA justified the sale, saying that this and other buildings were too dilapidated for the cash-strapped agency to maintain.  No investigative authority has publicly acknowledged to be probing the contradiction in facts that allowed the de Blasio administration to privatize NYCHA's Section 8 housing, a move which represents a win for influential real estate developers seeking to maximize profits from distressed properties.  Source :  Google Street View

930 HALSEY STREET, Brooklyn, SEEN HERE IN SEPTEMBER 2014, WITH A SCAFFOLDING ERECTED IN FRONT OF THE BUILDING AND WORKMEN SUSPENDED IN FRONT OF THE façade.  This project-based, Section 8 building, formerly owned by the New York City Housing Authority, or NYCHA, was sold three months later.  NYCHA justified the sale, saying that this and other buildings were too dilapidated for the cash-strapped agency to maintain.  No investigative authority has publicly acknowledged to be probing the contradiction in facts that allowed the de Blasio administration to privatize NYCHA's Section 8 housing, a move which represents a win for influential real estate developers seeking to maximize profits from distressed properties.  Source :  Google Street View

“Three men in a room”

Mr. Fisher, the founder of the resourcful TenantNet Web site, said he believed that political pressure should be focused on the three elected officials with the most influence over whether 421-a will be renewed or allowed to expire :  the “three men in a room.”

Mr. Fisher was referring to Governor Cuomo, Assembly Speaker Carl Heastie (D-The Bronx), and State Senate Majority Leader John Flanagan (R-Smithtown).

Mr. Fisher noted that Assembly Speaker Heastie had not said much about his intentions in respect of the 421-a tax abatement program.

Indeed, a report by Nick Reisman published on New York State of Politics noted that no legislative leader would comment about the controversial tax abatement program following a closed-door meeting with Governor Cuomo.

Neither office of Governor Cuomo, Speaker Heastie, nor State Senator Flanagan answered requests made by Progress Queens for an interview for this article. 

Just as some activists are questioning the true progressive commitment of Mayor de Blasio, some question Governor Cuomo’s machinations. 

Mr. Fisher told Progress Queens that he wanted to know who would challenge Governor Cuomo to end the 421-a tax abatement program, now that Governor Cuomo had dangled before politically-sensitive activists the prospect of raising the minimum wage for employees in the fast food industry by way of a wage board he has empaneled.  The Working Families Party, which exerts great influence on left-of-center politics in New York City, is rehabilitating its relationship with the neoliberal governor, according to a report published by The New York Observer, precisely because of Governor Cuomo’s creation of the wage board.

Privately, one reform activist told Progress Queens that he expressed doubt whether Governor Cuomo would make good on activists’ expectations for a $15 per hour minimum wage for employees in the fast food industry, given Governor Cuomo’s big business leanings.  Some activists are catching on to how elected officials act duplicitously on reform issues.

Some see the fact that the Working Families Party is already spinning the creation of the wage board as a political win as indication that the Working Families Party will not fully challenge Governor Cuomo on the fight to end the 421-a tax breaks, undermining any possibility of an organized tenant lobby, as Mr. Horner of NYPIRG had said would be required, to force Governor Cuomo to follow-through to achieve the best outcome for tenants this year.

For his part, Governor Cuomo, who has been shown to receive very large campaign contributions from the real estate industry even in times leading up to when he has signed special 421-a legislation in their favor, telegraphed his aversion to ending the 421-a tax breaks when he said at a power breakfast meeting hosted by the real estate front group known as the Association for a Better New York that state government had been made unstable by a spree of corruption cases.  Given the proliferation of corruption cases, Governor Cuomo said that state government officials were unable to carry-out complicated government business, like debating whether to end tax breaks for wealthy developers.

The arrests and probes of state legislators have caused changes in leadership in the state legislature, removing from power officials whom the real estate industry had succeeded in winning over with large campaign contributions. 

“Albany has a lot going on right now, let’s say,” Governor Cuomo said at the power breakfast meeting, as an excuse for not willing to debate the need to end the tax breaks, according to a report published by The New York Post.

Failed tax policies that benefit the wealthy

Whilst fast food workers may soon see a substantial wage increase of some, as-of-yet undetermined amount, a 40-hour work week at $15 per hour (if that is what Governor Cuomo’s panel eventually sets) will yield an annual salary of $31,200. 

In contrast, as noted in a report published by The New York Times, the owner of the $100 million penthouse at the luxury condominium tower known as One57 will save approximately $360,000 in their property taxes this year alone, representing a savings of approximately 95 per cent. of the annual assessment, according to calculations made by The New York Times.

How people at the lower end of the economic ladder have to fight to receive so little, yet those fortunate to be at the top can reap such outsized gains from government programs reveals how tax programs favor the wealthy, creating a moral imperative to end the 421-a tax breaks.  However, elected officials are avoiding the unjust economic aspect of the tax abatement program, and, instead, focusing on waiting out the clock to, in all likelihood, extend the tax abatement program at the last minute. 

On a segment of the news program Inside City Hall broadcast Thursday evening on NY1 News, Maritza Silva-Farrell, a campaign director at the Alliance for a Greater New York, or ALIGN, plainly spoke out against 421-a renewal.  ALIGN is a member group in the tenant advocacy coalition known as the Real Affordability for All campaign, or RAFA. 

On Inside City Hall, Ms. Silva-Farrell rhetorically asked of supporters of the 421-a tax abatement program :  If the 421-a program really worked, why was New York City still facing a housing crisis ?

Notwithstanding Ms. Silva-Farrell's position, another group within the Real Affordability for All campaign, namely, ANHD, which is headed by Benjamin Dulchin, has proposed renewing an amended 421-a tax abatement program, upending a united front needed by the organized tenant lobby, if they are to succeed at defeating the 421-a tax breaks this year.

Some members of the Real Rent Reform campaign, another alliance of tenant groups, have intimated that they are willing to use 421-a opposition as a "bargaining chip in negotiations with Republicans in the State Senate," according to a report in Capital New York.  Michael McKee, the long-time treasurer of Tenants PAC, a member group in the Real Rent Reform campaign, was not above using opposition to 421-a as a way to bargain for the elimination of vacancy decontrol, a controversial provision in the state's tenant laws that permits landlords to end the application of rent control laws on apartments once the apartments become vacant at a time when their regulated rents exceed $2,500 per month.  On many fronts, the organized tenant lobby lacks unity and discipline. 

What worries some grassroots tenant activists is that some nonprofit groups are diverting resources away from the fight to eliminate the 421-a tax breaks for the renewal of rent stabilization laws, a fight that the tenant advocate Mr. Fischer said he sees as a red herring.  

"Some groups could be using the 'Sky is falling,' if rent stabilization laws are not extended.  'You will be evicted,' " Mr. Fisher told Progress Queens, citing examples of the kind of rhetoric we would be witnessing if rent stabilization laws were really at risk, but Mr. Fisher does not believe they are.  "This year, there is no threat."

If the nonprofit groups are aware that there is no threat to ditch rent stabilization laws, as Mr. Fisher said that there were in 1997, Mr. Fisher told Progress Queens that he did not understand why some leaders of nonprofit groups would be willing to scale back their opposition to defeat the 421-a tax breaks.

Construction unions favor keeping the 421-a tax breaks

On Inside City Hall, Ms. Silva-Farrell was joined by Gary LaBarbera, president of the Building and Construction Trades Council of Greater New York, an umbrella group for several construction and trade unions.  Mr. LaBarbera expressed support for renewing the 421-a tax breaks, however,  he demanded that developers pay prevailing wages to union employees on constructions projects of affordable housing where the scale would allow such.

Another union-backed coalition, UP4NYC, is lobbying for an amended 421-a tax program.

If unions are willing to accept an extension of 421-a tax breaks, that further undercuts any efforts by an organized tenant lobby, as Mr. Horner of NYPIRG, had said would be required, to force Governor Cuomo to follow-through to achieve the best outcome for tenants this year. 

Also appearing on that segment of Inside City Hall was Councilmember Jumaane Williams (D-Flatbush), who said he did not want to keep the 421-a program as it exists, alluding to the possibility that he might accept it, if it were changed.

Mr. Fisher, the founder of the resourceful TenantNet Web site, said it was a nonstarter for any elected official to propose a modified form of the 421-a tax breaks, since any modification would still allow developers to build luxury condominium towers, invading low-rise neighborhoods in the process, leading to gentrification and higher rents.

Councilmember Williams said Governor Cuomo should be blamed if the 421-a tax breaks remained in place, ignoring the fact that Mayor de Blasio is advocating for a modified renewal of the controversial tax abatement program, as well.

Rounding out the panel discussion was a right wing intellectual, Howard Husock, representing the conservative think tank, the Manhattan Institute, and advocating economic segregation of New Yorkers who needed affordable housing.  More than once, Mr. Husock mentioned the possibility of moving the requirement for building affordable housing for low-income residents from Midtown Manhattan to other parts of New York City, like Astoria, Queens. 

Has Mayor de Blasio sold out, or has he just worn out his welcome in Albany ?

Some activists have complained that Mayor de Blasio has sold out to real estate developers. 

In the left-of-center magazine, Jacobin, Mayor de Blasio was resoundingly criticized by the journalist Sandy Boyer.

Ms. Boyer wrote a report, evaluating Mayor de Blasio’s affordable housing plan, saying of him that, “The mayor has come down firmly on the side of the real estate millionaires.”

Other activists worry whether Mayor de Blasio has lost his goodwill with Albany legislators, which may explain why he has been using surrogates in the press to steer political blame in the direction of Governor Cuomo once the state legislature renews the 421-a tax breaks, a move that will certainly create ill-will amongst tenant advocates. 

Under the influence of large campaign contributions, it is no surprise that elected officials duck requests for interviews or hide behind surrogates when it comes to discussing the controversial 421-a tax abatement program.  Elected officials don’t want to jeopardize the renewal of the tax abatements.  If voters knew in advance what the “three men in a room” were planning, then voters might not have deferred so much authority to the proxy nonprofit groups and would have, instead, sought to organize their own grassroots pressure politics campaign against the elected officials.

Of the array of nonprofit groups reportedly advocating for the end of 421-a tax breaks, Mr. Fisher, the tenant advocate, asked, “Were some of these groups planning on not fighting real hard from the beginning?” expressing concern later during the interview about the nonprofit groups advocating on behalf of tenants, “Were they serious when they said that they were against 421-a ?”

Part of what confuses voters about tenant laws is that ultimately, as Mr. Fisher told Progress Queens, the “three men in a room” are responsible for passing legislation up in Albany.  However, Mr. Fisher noted, that that realism overlooked the failure of leadership by other officials, like Assemblyman Wright and former Assemblymember Vito Lopez (D-Bushwick), who was Assemblymember Wright’s predecessor on the Assembly housing committee.  While many advocates have complained about the present housing crisis in New York City, Mr. Fisher noted that no nonprofit group openly challenged former Assemblymember Lopez for having failed to have mitigated the pressures of gentrification and rising rents, before these market forces led to the current housing crisis.  In the wake of this vacuum of leadership, real estate developers know they can take advantage, because so much of opposition is talk not backed up by political consequences. 

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