Gotham Gazette http://www.gothamgazette.com/component/tags/tag/1775 Thu, 23 May 2019 13:34:01 +0000 Joomla! - Open Source Content Management en-gb webmaster@gothamgazette.com (Webmaster) Panel Previews 2019 Rent Regulation Discussion in Albany http://www.gothamgazette.com/state/8118-panel-previews-2019-rent-regulation-discussion-in-albany http://www.gothamgazette.com/state/8118-panel-previews-2019-rent-regulation-discussion-in-albany rent reg agen

(photo: Edwin J. Torres/Mayoral Photography Office)


This is part of AGENDA 2019, a joint Gotham Gazette-City Limits project
Find the rest of the series here

One of the most contentious issues on the 2019 docket in Albany will be the expiring rent regulations that apply to roughly 1 million apartments in New York City and determine several ways in which rents are capped and when and by how much landlords are allowed to increase rents or remove a unit from the regulated rolls. While the regulations are set to expire in June, it is widely expected that they will be extended, the main question is what exactly they will look like, and whether the fact that Democrats are set to control both the governor’s office and both chambers of the state Legislature will mean sweeping changes that benefit tenants.

Though that debate is certain to heat up when Governor Andrew Cuomo gives his State of the State address and the legislative session begins in the new year, a lot of discussion is already happening. On Tuesday, the New York Housing Conference hosted a panel discussion with key stakeholders in the rent regulations debate: State Senator Liz Krueger, a Manhattan Democrat; Assemblymember Steven Cymbrowitz, a Brooklyn Democrat; John Banks, the president of the Real Estate Board of New York; and Thomas McMahon, principal of consultancy TLM Associates. The hour-long discussion, which largely focused on rent regulations, but also touched more generally on housing development, was moderated by Gotham Gazette’s Ben Max.

“The Senate Democrats will be heavily focused on ensuring an improvement and strengthening of tenant protections in our rent regulation system,” Krueger said at the event, signaling that her new majority conference is looking forward to working with an Assembly majority that has held rent regulations as a top priority for many years.

Housing was one of the most prominent issues of the recent elections in New York, with the broad and ever-present issue of affordability talked about all over the state, some state Senate candidates in New York City running campaigns largely focused on rent regulations, and public housing crises popping up throughout. A slate of progressive Democratic reformers were swept into the state Senate on the promise of, among other things, reforming rent laws such as vacancy decontrol and how major capital improvements are assessed, and many candidates rejected campaign contributions from real estate developers. Those Democrats now join other state senators who will take over the majority from Republicans who were especially close with large real estate interests, and plan to team with Assembly Democrats who have been looking to strengthen rent regulations on behalf of tenants for years.

As legislators, negotiating with the governor, look to reform rent regulations and get the new formula right, there are certain to be complicated discussions, as members of Tuesday’s panel made clear. Stakeholders, from activists to developers, tenants to landlords, legislators to bureaucrats, will want their say in how new laws will be shaped. The state’s rent regulation laws are set to expire in June, two months after the state budget is due. Working rent reforms into the budget would provide faster resolution and may offer an opportunity for broader horse-trading as often happens in Albany, but a rushed job could also potentially leave open loopholes or fail to adequately address the issue.

To the potential chagrin of some, the panelists advocated a slow and steady process instead of immediate legislative reform, while hitting on a variety of specifics that must be considered.

“We will move slowly,” said Cymbrowitz, the Assembly housing committee chair, after Banks, the head of the city’s most powerful real estate lobby, advocated the same. “We will not just throw legislation, take them out of committee and just put them on the floor. We will have discussions with our partners, we will talk about it, and if there has to be changes to existing legislation, we’ll look at that as well.”

The Assembly has passed rent reforms such as repeal of vacancy decontrol, which allows apartments to be removed from rent regulation, on several occasions, but the Senate has been opposed. Krueger said that while the new majority with many new members that she will be a part of has not held a conference she believes the Senate Democrats will be “very open” to repealing vacancy decontrol. Governor Cuomo, who has close ties to real estate, recently said on WNYC radio that if a vacancy decontrol repeal bill passed the Legislature, he would sign it into law.

Vacancy decontrol, vacancy bonuses, preferential rent, the Urstadt Law preventing New York City from controlling its own rent laws, and the way landlords can account for major capital improvements (MCIs) are just some of the policies that could be on the table in 2019. Advocates who want to do away with or drastically modify vacancy bonuses, vacancy decontrol, and how MCIs can be passed on to tenants argue that they will protect tenants in rent regulated apartments from abusive practices by landlords and will protect the city’s rent regulated housing stock, which has diminished significantly in recent decades.

After Senator Krueger said that her conference will be focused on strengthening tenant protections, she later added that vacancy decontrol would definitely be taken up, and singled out MCIs in particular as well.

“People are not saying end MCIs, we’re saying end the ridiculous system where if you put in for an MCI, you get to get paid back for it forever by adding it onto the rents and inflation-adjusting it forever, when on average you’re getting your full money back in seven years,” Krueger said.

For Banks, whose organization is made up of and lobbies on behalf of the city’s largest real estate developers and landlords, reforms pose a fundamental threat to the industry’s ability to do business, and to the availability of good and abundant housing in the city. He argued that vacancy decontrol, wherein an apartment leaves regulation after rent passes a certain threshold, is a tool to subsidize regulated units.

“At a fundamental level, rent regulations affect the amount of money that can go into a building, the revenue streams that go into supporting a building,” Banks said. “If those numbers are not sufficient to support the construction and maintenance of the building, then it will further chill production. It will limit people’s incentive to create additional supply.”

“We shouldn’t vilify the entirety of a segment of our economy that is as important to New York City and New York State as the real estate industry is,” he said.

Banks, as well as the other panelists, also singled out the city’s property tax system as a culprit in the increasing unaffordability of housing. A commission jointly empaneled by the mayor and City Council is currently working to discuss potential reforms to the property tax system, and City Comptroller Scott Stringer introduced a housing proposal last week to fundamentally alter the city’s real estate tax scheme. Whatever the city commission puts forth will have to then be dealt with in Albany -- like with rent regulations, the city has limited powers over its own affairs with regard to taxes, though property taxes are one area the city has significant leeway.

“It is so complicated, it is so obtuse, and there are layers upon layers of abatements and other incentives to try to get to the fundamental problem, which is it doesn’t reflect the policy realities,” Banks said, also referring to the system as “broken” and specifically calling out Class 2 property taxes, the owners of which he characterized as shouldering the greatest tax burden.

McMahon, who worked in government for decades before moving to the private sector, argued that the property tax reform commission could be used as an opportunity to help vulnerable New Yorkers.

“Should we be looking at using property tax reform to supplement low-income tenants?” he asked. “I think it’s a conversation that could be had. So it’s important that the budget be cognizant of the need to extend this program.”

On the issue of public housing, both Krueger and Cymbrowitz lent their support to using Rental Assistance Demonstration, which Mayor de Blasio recently announced would be expanded to dozens of developments throughout the city and leverages both federal vouchers and private funding to allow private companies to manage NYCHA properties, providing additional sources of revenue for housing authority developments and key upgrades to the deteriorating housing stock.

“The RAD model seems to be working very effectively in other parts of the country and the state,” Krueger said. She clarified her remarks by noting that she is not in favor of privatization of NYCHA, which some say RAD effectively does, or at least is a gateway toward.

Krueger also didn’t outright dismiss the idea of building on unused NYCHA land, a controversial process known as “infill,” but argued that the balance of market-rate and affordable units needed to be carefully found, noting that she has a development in her district where a building is being built that will be 50 percent market rate and 50 percent affordable.

Cymbrowitz talked about using NYCHA land to build senior affordable housing, but acknowledged that more senior and other affordable housing means less revenue being brought in by infill for NYCHA’s tens of billions of dollars in needs.

But Krueger also cautioned about how infill developments are designed in terms of revenue.

“A real sticking point for the community was who’s getting the money that NYCHA will get from the building,” Krueger said. “Residents want their problems fixed, and many of their position is if you’re going to be putting a new building on our site, you’re taking away a playground, at least the money that’s coming in should come to meet the needs of this facility.”

This is part of AGENDA 2019, a joint Gotham Gazette-City Limits project
Find the rest of the series here

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by Ben Brachfeld, Gotham Gazette

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Panel Previews 2019 Rent Regulation Discussion in Albany Tue, 04 Dec 2018 05:00:00 +0000
As Affordability Crisis Becomes More Acute, Real Estate Donations Emerge as Litmus Test for Some Democrats http://www.gothamgazette.com/state/8112-as-affordability-crisis-becomes-more-acute-real-estate-donations-emerge-as-litmus-test-for-some-democrats http://www.gothamgazette.com/state/8112-as-affordability-crisis-becomes-more-acute-real-estate-donations-emerge-as-litmus-test-for-some-democrats  Ocasio-Cortez Teachout

Alexandria Ocasio-Cortez & Zephyr Teachout (photo: Gotham Gazette)


This is part of AGENDA 2019, a joint Gotham Gazette-City Limits project
Find the rest of the series here

Queens City Council Member Jimmy Van Bramer has said he will refuse donations from wealthy landlords and the real estate industry as he runs for borough president. Julia Salazar, a democratic socialist in Brooklyn, defeated an eight-term incumbent state senator using her rejection of real estate donors as a rallying cry. Alexandria Ocasio-Cortez did the same when she toppled Democratic Rep. Joe Crowley and became the youngest woman elected to the United States House of Representatives. Zephyr Teachout sought the Democratic nomination for attorney general while eschewing real estate contributions and making it a core plank of her campaign. Nomiki Konst, an investigative reporter, recently launched her campaign for New York City public advocate with the same promise.

New York’s real estate industry, most of it concentrated in the dense confines of New York City,  has long played a significant role in funding candidates for elected office up and down the ballot across the state and beyond, a role that candidates of both major parties and political insiders have always recognized. But as voters, particularly energized, activist Democrats, focus on the affordable housing crisis and take heed of the state’s broken campaign finance laws, including loopholes that donors, especially those in real estate, have exploited to pad the coffers of legislators and executives, some progressive Democrats have begun to reject campaign contributions from the real estate industry.

Affordable housing policy, including the already-begun debate over rent regulations decided in Albany that will be a significant issue in 2019, is at or toward the top of many activists’ lists, and housing justice advocates increasingly see campaign finance pledges as a litmus test for candidates. Increasing numbers of Democrats eschewing real estate money, or at least any given through the so-called LLC loophole, has given those activists and advocates cause for optimism that real estate’s role in state elections may be on the decline and that their elected representatives will heed the clarion call to protect tenants and listen to small donors over wealthy special interests.

“I think that it’s clearly a concern amongst a growing number of voters,” Van Bramer told Gotham Gazette. “I think it’s increasingly one of those issues that people want a response on from their elected officials and candidates. And I think that they’re right to be concerned about the influence of big money, generally speaking.”

“Money still plays a huge role in our elections and real estate is a good way to raise money in New York City and New York State,” said Celia Weaver, research and policy director at New York Communities for Change, a leading housing and economic justice advocacy group pushing campaign finance reform, strengthened rent regulations, and deeper affordable housing development. “It’s like oil in Texas.”

Though questions about the influence of real estate money have swirled for decades, Weaver traced the budding trend of declarations against taking any of it to Diana Richardson’s election to the state Assembly in 2015, in a district that includes rapidly gentrifying Crown Heights and at a time when state rent regulation laws were up for renewal in the state Legislature. “Her decision to refuse real estate money in that election turned what would ordinarily be a pretty boring special election where the Democratic machine just gets to anoint the person who’s going to run and take the line to a widely covered exciting race that was really a referendum on the real estate industry and its role in politics,” Weaver said. “That became a huge touchstone for voters in the district.”

It’s common knowledge that the real estate industry has been a staple in electoral politics for decades and its members’ donations have been part of the picture across the political spectrum. Democrats and Republicans have benefited from them, none more so than Governor Andrew Cuomo, a Democrat recently re-elected to a third term. But the recent election cycle, the first since Donald Trump was elected president, saw greater awareness among voters about the power of state government and the special interests that fund campaigns. Actor and education activist Cynthia Nixon also used that backdrop to run a competitive primary challenge against Cuomo. She refused donations from real estate and issued a scathing indictment of the governor’s reliance on big donors in the industry, while calling for sweeping housing justice reforms.

Weaver also pointed to the high-profile corruption convictions of former State Assembly Speaker Sheldon Silver, a Democrat, and former Senate Majority Leader Dean Skelos, a Republican, in trials that exposed how a real estate firm, Glenwood Management, attempted to wield influence over legislation. Glenwood, an enormous donor to Cuomo and many legislators, recently made massive contributions to Senate Democratic candidates ahead of the November election where it appeared likely they would become part of a new majority in the chamber.

The primary mechanism for real estate donations has been the gaping loophole in state campaign finance law that allows limited liability companies with opaque ownership -- a common instrument in the real estate business -- to circumvent contribution limits. City Limits reported in September that LLCs had been used to donate more than $188 million to political campaigns since the late 1990s, with about $31 million given to gubernatorial candidates alone, including Cuomo. “Combining his campaign for attorney general in 2006 and his three runs for governor, Cuomo has received roughly one of every eight dollars donated by LLCs,” City Limits found. Those donations are largely dominated by the real estate industry.

Mayor Bill de Blasio has also come under scrutiny for accepting significant real estate donations, especially to a political nonprofit he established to push his agenda that became the subject of law enforcement investigations related to whether City Hall did favors for its donors.

A collaborative report in 2016 by ProPublica, The Real Deal and the National Institute on Money in State Politics tracked how real estate developers who benefitted from a prominent tax incentive called the 421-a program gave about $21 million to party committees and candidates since 2000, out of $83 million that the real estate industry donated in the same time.

“I think people are very much aware that rich donors including real estate developers and landlords are distorting our election system,” said Michael McKee, treasurer of Tenants PAC, a political action committee dedicated to affordable housing. “I think that’s the growing awareness. There’s no question about it.”

It was in that context that a slew of progressive Democrats ousted their more moderate and real estate-tied partymates from office with the support of smaller donors and by rejecting corporate backers. “The housing crisis in this city is out of control and going into a year when candidates are going to be debating rent regulations in Albany, voters wanted candidates that are gonna act with integrity and widely believed that candidates who work for the real estate industry won’t,” said Weaver.

Besides Salazar, Zellnor Myrie and Alessandra Biaggi similarly ran for and won Democratic primaries in the state Senate in opposition to wealthy real estate interests. Each of the three represents a district, much like a lot of the city, grappling with a deep affordability crisis and pockets of gentrification displacing low-income residents of color. Their opponents all received significant contributions from real estate.

The decision to reject real estate seems based in both principle and pragmatism. Biaggi made housing justice a prominent campaign issue as she successfully dethroned Senator Jeff Klein, once the powerful leader of the Independent Democratic Conference, a breakaway faction of eight senators that propped up Republican control of the Senate. Democratic voters rejected six of the IDC members, blaming them for preventing the passage of many bills, including stronger rent regulations, and replaced them with progressive Democrats, including Biaggi and Myrie.

“It’s not necessarily that taking real estate money makes you a bad legislator or a bad person...but for me, it’s very clear that it’s a slippery slope,” Biaggi said in a phone interview.

Even as she acknowledged how difficult it can be to run for office without wealthy donors, Biaggi said it was important to her to retain her independence and answer to everyday constituents, not just those who can write big checks. “The winning can’t take precedence over the fact that, once you’ve won, the people who have helped get you there are the people who are going to come knocking on the door and that’s really a very challenging thing to come to terms with,” she said. Biaggi spent about $330,000 on her campaign and won with 53.1 percent of the vote, while Klein disbursed more than $3 million to try to keep his seat and got 44.5 percent.

Salazar said her commitment, and Myrie’s and Biaggi’s, to refuse real estate donations proved that it’s possible to run a viable campaign with small donors, and build grassroots support and trust in communities by doing so.

“I think advocates have long recognized the correlation between the amount of real estate money that many electeds have taken and their failure to advocate vigorously for tenants,” she said. “When other candidates see those campaigns being successful and they see this growing and increasingly loud demand from advocates, I think that is what is translating to them paying more attention.”

Those in the real estate industry push back against being made the boogeymen of state politics. Real estate is, without a doubt, central to New York City’s fortunes and the industry comprises a large part of the city’s tax base. The sector is scapegoated more so than other industries and groups, like those in health care, finance, or education, that also employ somewhat similar tactics in state elections. And of course, many candidates regularly pursue real estate donors when running for office.

“There are people who are willing to accept our contributions because our philosophies or the ideas that we are espousing are aligned with their philosophies,” said John Banks, president of the Real Estate Board of New York, in an interview. “There are people who don’t want to accept real estate money because their philosophies don’t align with the work that the real estate industry does and there are people who move back and forth across that continuum.”

Banks pushed back against any notion that his industry has used the LLC loophole to improperly sway the political landscape to its benefit. “The real estate industry respects and follows both the letter and the intent of the law and to say that someone who follows the letter of the law is in someway undermining the legitimacy of the political process is a naive statement,” he said.

And, he noted, the real estate industry is intrinsically a part of New York’s landscape, more than any other, even finance, or technology. “Unlike some of the other industries, mobility is not something that is an option for us,” he said.

There are also Democrats, even those who call themselves progressives, for whom real estate donations are far from an insurmountable liability, even if they are unpopular with the party’s left wing. Cuomo sailed to reelection, in part by taking millions combined from LLCs and the real estate industry that he then used to overwhelm his less-funded primary and general election opponents over the airwaves. New York City Public Advocate Letitia James, not a close friend to real estate, accepted similar donations and was resoundingly elected the next attorney general of New York State. In the attorney general primary, for instance, James ran on a platform that included criticism of bad landlords and yet received $10,000 from an LLC linked to the Durst Organization, one of the largest real estate developers in the city. That LLC and seven others under the Durst umbrella also gave a combined $150,000 to one of James’ opponents, Rep. Sean Patrick Maloney, which became a line of attack from Teachout.

“The real estate industry is pretty broad and diverse,” said Jordan Barowitz, spokesperson for the Durst Organization. “I work in it, as do members of 32BJ and the super in your building and the residential broker who leased you your apartment.” He said “painting all these people with a pretty broad brush” is problematic. “Unfortunately there’s a lot of blaming in politics these days and it’s easy to point to one group or person or industry and say they’re responsible for everything that’s bad in this world and that’s pretty simplistic and wrong.”

“Honest politicians don’t take bribes and reputable donors don’t request quid pro quos,” he added.

There is a distance between bribes and quid pro quos on one hand, of course, and donations having some influence on policy-making, even if simply by virtue of how donations help candidates get elected.

McKee of Tenants PAC noted, for instance, that REBNY had begun donating larger sums in this election cycle to Democratic candidates once it seemed apparent that the party was going to regain control of the state Senate and, by result, the entire Legislature.

“REBNY saw the handwriting on the wall. They’re equal-opportunity opportunists. They don’t care who’s in the majority. They’ll try to buy influence with them by giving them money,” McKee said. “I’m not suggesting in any way that the mere fact that REBNY has started giving money to Democratic senators means that those Democratic senators are going to sell tenants out. That’s not my point. My point is that this is how they try to win friends and influence people, with big money.”

The influence of such donations can come down to seemingly small changes in policy, like the exact threshold at which an apartment leaves rent regulation, not necessarily major new legislation that would raise flags as donor-favors.

Gotham Gazette: Myrie wanted to avoid even the perception of corruption when he took his pledge, he said. “The number one reason that I did it was because...when we were gonna be facing the fight in Albany on whether or not we’re gonna protect tenants, I wanted there to be no confusion about which side I was on,” he said.

It would be hard to argue, he said, that real estate hasn’t had a corrupting influence on politics. “Albany for the longest time has passed watered down legislation,” Myrie added. “We have not protected tenants the way that we’ve needed to and that, you can draw the direct correlation to the increase in the amount of real estate donations to the Legislature. I think anyone looking at that objectively could say that it has had a corrosive effect on how we pass policy affecting our tenants.”

“Once you take that money, of course it influences how you legislate,” Biaggi said. “Now I think there are ways to protect against that, and that goes into campaign finance reform.”

Biaggi asserted that the path to stronger rent regulations runs directly through reforming the state’s campaign finance system, primarily through closing the LLC loophole, but also through lowering individual donation limits, where New York has some of the highest in the country. Closing the LLC loophole alone, advocates say, would take away real estate’s biggest weapon of political influence, and they insist it should be accompanied by a public campaign financing program, like the one currently used in New York City, to boost the voices of ordinary New Yorkers who only give $25 or $100 to a candidate.

Democrats in the Assembly have repeatedly attempted to reform campaign finance law but have been roadblocked for years by Republicans in the Senate, who have been major beneficiaries of real estate donations. Many, Cuomo included, have emphasized that ending the LLC loophole is among their priorities in the upcoming legislative session in January.

“If you had these kinds of reforms, candidates wouldn’t have to spend so much time cultivating rich people to make big donations,” McKee said.

On the other hand, Republicans have long-argued that labor unions often use campaign contributions to support and influence Democrats, and that any LLC reform should also institute limits on how local chapters of unions are classified in campaign finance law.

Weaver, from Communities for Change, said, “Not only are rent laws coming up in 2019 but I think there’s gonna be a big referendum on the role of money in politics generally…and the campaign finance stuff is also gonna be a referendum on tenant issues and real estate money in politics specifically.”

This is part of AGENDA 2019, a joint Gotham Gazette-City Limits project
Find the rest of the series here

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by Samar Khurshid, senior reporter, Gotham Gazette
     

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As Affordability Crisis Becomes More Acute, Real Estate Donations Emerge as Litmus Test for Some Democrats Thu, 29 Nov 2018 05:00:00 +0000
Calls for Public Discussion of New Affordable Housing Incentive Program http://www.gothamgazette.com/state/6138-calls-for-public-discussion-of-new-affordable-housing-incentive-program http://www.gothamgazette.com/state/6138-calls-for-public-discussion-of-new-affordable-housing-incentive-program REBNY speaker

The REBNY gala (photo via REBNY on Facebook)


Earlier this year developers and labor unions failed to reach a deal to renew the controversial 421-a tax abatement program that is designed to entice the development of affordable housing. Gov. Andrew Cuomo and legislators agreed to extend the program early last year while putting the longterm future of the program in the hands of the special interests that benefit from it--an unprecedented move that was met with loud criticism.

With negotiations failed and the program expired, it appears that real estate groups are looking to Cuomo and state legislators to figure out new life for the program. Without it, the future of rental housing, including affordable units, in New York City is in question. Expressing serious concern, Mayor Bill de Blasio has called on Albany leaders to make the situation right.

Asked about how he would like to see the 42-1 issue resolved, Republican Senate Majority Leader John Flanagan said, "I believe that it should be people of good faith sitting in a room working - I'm not kidding - working on a compromise. The housing question in the City of New York is unbelievably important." Flanagan was speaking to reporters after giving a speech to the Association for a Better New York on Jan. 28.

Tenant advocates also want to get key players in a room to hash out a solution, but they want those meetings open to the public and including all stakeholders, not just the ones that make large campaign contributions.

Left out of the last round of discussions, advocates insist that any discussion of renewing the program should be held in full view. They want the housing committees of the legislature to hold hearings to consider alternatives to 421-a. "Everything in Albany is done in secret," said Michael McKee, treasurer of Tenants PAC. "You would expect the housing committees to hold public hearings on this, but that is just not convenient."

"I would like to see more of a public discussion so that maybe REBNY will come and tell us what happened in negotiations," said Thomas Waters of the Community Service Society, referring to the Real Estate Board of New York, the major association of developers and one of the two main parties left to negotiate an extension of 421-a.

"No other interest gets this kind of special treatment," Waters said, referring to real estate. REBNY and individual developers are known to be among the most prolific campaign donors and spenders throughout New York.

Dan MacEntee, spokesperson for state Senator Betty Little, who chairs the Senate committee on housing, said that there had yet to be any discussions on hearings. "The Senator does recognize the impact of the program and would like to see it continue," MacEntee told Gotham Gazette of 421-a. Little, a Republican, represents several upstate towns.

A spokesperson for Assembly Member Keith Wright, a Harlem Democrat who chairs the Assembly housing committee, said that Wright was not available for comment.

Senator Liz Krueger, a Democratic member of the Senate housing committee, believes that there should be a joint hearing of the legislature's housing and finance committees before anything on 421-a is decided, given that the program deals with housing and taxes. Krueger told Gotham Gazette last year that she would like to see 421-a replaced with a more efficient program.

However, many legislators and advocates say that REBNY is pushing Cuomo and legislators to move quickly on a basic renewal, and one that either does away with Cuomo's insistence last year that prevailing wages for labor are included, or sets a lower increase than the building trades council sought during private meetings.

REBNY President John Banks recently wrote in Real Estate Weekly that he is committed to working with stakeholders to "address the need for more rental housing" while pushing back against calls from labor and Cuomo to include a prevailing wage requirement.

"Given the high cost of property taxes, land costs and construction costs, most owners will opt to do something else rather than build multi-family rental housing with a substantial below market component unless there is a tax benefit program like 421a in place," wrote Banks.

"For example, in the absence of a tax benefit program like 421-a, in many areas of the City, owners will build market rate condominiums where sales prices can offset the high cost of new development (e.g., property taxes, construction, land)."

Advocates say the city simply isn't getting the return on its investment through 421-a and that if the creation of affordable housing is what is motivating public officials then finding a more efficient alternative is paramount.

"The first step is to let 421-a die and spend the money on other housing programs," Waters told Gotham Gazette. "Rather than a program that provides the right to a tax break I'd like to see something like the federal low-income tax credit and have developers apply and have the credit go to those who provide the most affordability."

Tenant advocates have long decried the 421-a program as terribly inefficient.

Waters research has shown that 421-a has only produced one affordable apartment for every $833,000 in tax breaks. "Before the state acted to renew 421-a last June, New York City was foregoing $1.1 billion in revenue each year for a program that led to no more than 1,275 apartments per year," Waters recently wrote in NY Slant.

Meanwhile, advocates point out that provisions in the state's rent laws allow landlords to deregulate 20,000 affordable apartments a year, with landlords voluntarily reporting the deregulation of around 6,000 affordable apartments each year.

"As far as I'm concerned the lapse of 421-a can only be a good thing," said McKee of Tenants PAC. "It is an absurdly inefficient way to get affordable housing. Even if you deliberately tried to create an inefficient program it would be hard to end up with something as absurd as 421-a. I could design a better program than 421-a in my sleep."

A number of observers see the failure to renegotiate 421-a as just another example of how the feud between Mayor Bill de Blasio and Gov. Cuomo has impacted public policy. Last year de Blasio announced a deal with developers to renew 421-a - the mayor was anxious to renew the program that is a key piece of his promise to build 80,000 units of affordable housing over ten years.

Cuomo countered, saying de Blasio had a reached a sweetheart deal with developers and blamed the plan for disrupting the legislature's negotiations. In the end, Cuomo and legislators reached a deal that included much of de Blasio's plan. It mandated that 25 to 30 percent of projects be set aside for affordable housing, banned most coops and condos from receiving abatements, and increased the length of the abatement from 25 to 35 years. All of that came with the caveat that real estate and labor had to come to a deal on wages.

Now many doubt de Blasio will have much of a say at all on the program as legislative leaders and the governor negotiate behind closed doors. Gov. Cuomo has spoken to the importance of reestablishing an affordable housing program at the state level. The de Blasio administration has lamented the loss of 421-a while simultaneously downplaying its importance.

"Having every single set of a tools at our disposal is optimal," Deputy Mayor Alicia Glen told Gotham Gazette when asked about the uncertainty around the 421-a program. Glen noted that the city has several programs at its disposal to encourage the construction of affordable housing but each one is important. "Not one of these individual levers not being available will undermine our efforts or significantly impact our plan, but not having something, a tax incentive...like 421a, you know, does hinder our ability to do what's really important...which is to make sure that there is affordable housing in every corner of the city."

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by David King, Albany editor, Gotham Gazette
     

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Calls for Public Discussion of New Affordable Housing Incentive Program Tue, 02 Feb 2016 23:50:22 +0000