New York’s 421a development tax break doomed as legislation ends – trade watchers

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New York State’s legislative calendar drew to a close Saturday morning as lawmakers failed to extend it a housing tax concession for property developers or take action to protect tenants from evictions as rents balloon across New York this year.

Governor Kathy Hochul conceded last month that an agreement to replace the tax incentive would not be reached until the end of the legislative session and that the current law, known as Affordable Housing New York or 421a, would expire at the end of June.

Instead, developers must pay taxes on new housing projects even if they sell houses in their building below market price. (The reduction had granted owners a multi-year property tax exemption as long as developers set aside 20 percent of their units that would be rent-stabilized).

Some lawmakers had hoped the renewal of the law wouldEviction for good reason” bill after market rents in New York skyrocketed 33 percent from January 2021 through earlier this year, and New York City’s Rent Guidelines Board appears poised to increase rents by up to 100% for stabilized tenants 6 percent. This bill would prevent landlords from evicting tenants if they could pay their rent and raise the cap to either 3 percent or 1.5 times the consumer price index.

But there would be no “big ugly” this year, as lawmakers refused to combine multiple conflicting bills into an unseemly package. The real estate industry lobbying strongly opposed the eviction for good reason, while progressive groups and pro-housing advocates preferred the cut that nearly cost the city $1.8 billion of lost tax revenue in the last financial year expire automatically.

Now both camps are sad as the session ended without the passage of a housing package that addresses the city’s lack of affordable housing.

“It would be to our collective shame to leave Albany later this week without taking action on housing rents and the climate,” said Greenpoint Democratic MP Emily Gallagher tweeted. “How can we exit Albany without addressing this crisis?”

Jay Martin, who represents small landlords as executive director of the Community Housing Improvement Program, accused lawmakers of sabotaging 421a to advance rent controls, which he says has exacerbated the housing crisis.

“The affordable housing problem facing our state is largely due to a lack of supply,” Martin said in a statement Friday. “The only way to solve this problem is to implement housing-friendly solutions that include regulatory reform, zoning reform and property tax reform. Eviction for good reason would not have created a single housing unit and would not have lowered the rent for a single person.”

Instead, lawmakers passed a bevy of smaller housing and energy bills. legislature locked Cryptocurrency companies mining bitcoin in facilities that emit fossil fuels for two years. cryptocurrency company searched Operating natural gas plants to generate the energy needed to perform the calculations necessary to make and record transactions, but environmentalists warned the plants would decimate the state’s climate targets for reducing emissions.

Three of New York Mayor Eric Adams’ top priorities also made the cut — a law that makes it easier Convert underutilized hotels into apartments and the creation of a new trust for the city’s public housing authority which would be used to repair 25,000 units (The New York City Housing Authority would retain ownership of the buildings and land).

Adams also secured control of the city’s public schools for two years, though the Legislature instructed the city to reduce class sizes to 20 to 25 students. He announced victory anyway.

“While there is still more work to be done to meet the priorities requested by New York, we are optimistic there is a way forward on key elements, including ensuring we meet the common goal of smaller class sizes without closing the city.” forcing a fiscal crisis and impacting programs for our most vulnerable students,” Adams said in a statement Friday.

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