421-a tax breaks cost New York City over $1 billion in lost tax revenue.
Mayor de Blasio proposes to renew and extend the scandal-plagued tax abatement program in exchange for requiring a marginal increase in designated affordable housing from wealthy landlords.
By LOUIS FLORES
To help achieve his goal of building or preserving 200,000 units of affordable housing over the next decade (even though he will only be in office for seven of those 10 years), Mayor Bill de Blasio (D-New York City) has proposed extending for an additional 15 years controversial 421-a tax breaks for landlords of rental buildings for which the tax abatements are set to expire, provided that the landlords marginally designate five per cent. more rental apartments as affordable housing.
How affordable the newly designated apartments will be remains unanswered, since affordable can be defined as a percentage of area median income. Sometimes, the percentage is set at 50%, meaning that tenants earning half of the area median income can qualify to apply for the affordable housing. Other times, the percentage can be set at almost 200%, meaning that tenants earning twice the area median income can qualify to apply for the affordable housing. The higher the percentage is, the more likely that the affordable housing will be taken by high-income earners, as opposed to low-income earners, the latter for whom the affordable housing should be reserved, some tenant activists argue.
The press office for City Hall declined a request for an interview for this article.
The proposal, published in a report by Capital New York, comes as tenant activists are organizing to oppose the scandal-tarnished tax abatement program.
The criminal cases against Assemblymember Sheldon Silver (D-Lower East Side) and State Senator Dean Skelos (R-Rockville Centre) involve Glenwood Management, an influential real estate developer, which has lobbied to receive 421-a tax abatements for its properties. A reported criminal investigation is also under way into the circumstances that gave rise to allowing Extell Development, another influential developer, to receive 421-a tax abatements for its $2 billion luxury condominium tower, One57, according to a report published by The New York Post.
The criminal cases and the investigation are under the jurisdiction of office of U.S. Attorney Preet Bharara, the nation's top federal prosecutor in New York's southern district.
The 421-a tax abatement program is opposed by tenants activists and by some nonprofit groups, such as the Community Service Society of New York. David Jones, the president and CEO of that nonprofit, published an essay in The New York Daily News last February, calling for the elimination of the tax breaks, further noting that the tax breaks were inefficient at actually creating affordable housing.
Another report, published last March in Jacobin, a leftist magazine, rightfully questioned how Mayor de Blasio could continue to self-annoint himself as the leader of progressive causes when he has been backing a blatantly neoliberal program, like many view the 421-a tax breaks to be.
"De Blasio had a stark choice on the 421-a program," Sandy Boyer wrote in Jacobin, adding that, "He could either side with the developers and landlords or with the tenants who need affordable housing. The mayor has come down firmly on the side of the real estate millionaires."
Many tenant advocacy nonprofit groups fall under the political influence of Mayor de Blasio, the New York City Council, or campaign consulting firms with political ties to Governor Andrew Cuomo (D-New York) or Mayor de Blasio. This political influence, sometimes described as the phenomenon of locking up activists or advocacy groups in a "veal pen," acts to stymie more aggressive calls for reforms, such as the end to the 421-a tax breaks.
If Governor Cuomo and the New York State legislators, who are ultimately responsible for renewing or defeating the 421-a tax breaks, renew the tax abatement program, then it will be because the nonprofit tenant advocacy groups succumbed to veal pen politics in order to protect Mayor de Blasio's precious relationship with wealthy landlords and developers.
Some of New York's largest real estate developers, landlords, or their lobbyists, were key political supporters in Mayor de Blasio's 2013 campaign for the mayoralty. He wants to stay on their good side, but, more and more, critics of Mayor de Blasio are seeing the dark side of this relationship.
"De Blasio might like to build all the housing he knows New Yorkers desperately need, but his entire affordable housing plan is based on bribing developers," wrote Ms. Boyer.
As it stands, Ms. Boyer noted that Mayor de Blasio's target of building 80,00 new units and preserving another 120,000 units of affordable housing was insufficient to meet the drastic demand for affordable apartments.
According to statistics compiled by Mireya Navarro and published by the The New York Times, for example, Mayor de Blasio's affordable housing plan has been confirmed to fall short of meeting actual needs.
Referring to 2014, Ms. Navarro wrote, "Last year, tenants won 2,500 new apartments through 41 lotteries that drew a total of 1.5 million applications, housing officials said. The lotteries are expected to multiply under Mayor Bill de Blasio’s pledge to produce 80,000 moderately priced apartments over the next 10 years, a goal that, even if reached, would still leave many lottery hopefuls empty-handed."
Essentially, Mayor de Blasio is justifying the extension of the $1 billion 421-a give away to developers and landlords for an affordable housing program that will not answer the affordable housing needs of New Yorkers.
Nonprofit groups, which hesitate to call out Mayor de Blasio for such a failure, will ultimately share responsibility with Mayor de Blasio for perpetuating the gross shortage of affordable housing.