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Governor signs 421-a revision; Times, others ignore "Atlantic Yards carve-out"

So Governor Eliot Spitzer has signed the reform of the 421-a tax break, which includes an "Atlantic Yards carve-out" worth up to $200 million for developer Forest City Ratner. When the "carve-out" was worth $300 million, it was criticized by Mayor Mike Bloomberg, ACORN's Bertha Lewis, Daily News columnist Juan Gonzalez, affordable housing advocate Brad Lander, Assemblyman Hakeem Jeffries, Develop Don't Destroy Brooklyn (DDDB), the Brooklyn Paper, and others.

When it was reduced but not eliminated, the only official to offer measured criticism was Jeffries. (He issued it after I queried him, but he may have been prepared to issue a statement anyway.) DDDB seemingly stood alone in its forceful criticism.

Affordable housing advocates, city officials, state officials, and the public at large all had something to gain in the revised legislation, beyond the "carve-out." So perhaps some critics felt they could only go so far.

But what about those seemingly independent? Good government advocates were silent, as were editorial pages beyond that initial Brooklyn Paper comment. The New York Times, in its reporting, managed to mangle the historical record. No one beyond a few Brooklynites questioned whether signing the bill comports with Spitzer's claim of being a reformer.

Moses redux?

It's somewhat reminiscent of the success of Robert Moses, the power broker and master builder who changed the face of New York not merely by leveraging significant federal funds but by getting the pillars of New York liberalism to concur. (Also, he had the press on his side.)

We've recently been through some Moses revisionism, but that began years ago. One example is Joel Schwartz's 1993 book The New York Approach: Robert Moses, Urban Liberals, and Redevelopment of the Inner City, which is available online in full from the Ohio State University Press.

Schwartz concludes:
The New York approach depended not only on Moses and his men on the Committee on Slum Clearance, but also on his allies in the liberal city. He could not have succeeded without them and the era of active, interventionist government that they shaped. The Title I program, the product of postwar liberalism, could not have been engineered by the AFL building trades alone or by Tammany, which was battered and in eclipse. It also depended on the ambitions of liberal New Yorkers. Moses could count on a realtor such as William Zeckendorf, a Brooklyn banker such as Thomas Shanahan, and a political fixer such as John McGrath. But redevelopment also needed stalwart liberals such as Samuel Rosenman and Franklin D. Roosevelt, Jr., union housing visionaries such as Abraham Kazan and Maxwell Tretter, ethical realtors such as James Felt and Milton Saslow, inspired capitalists such as David Rockefeller, and inspired planners such as Lawrence Orton. Some were Randall's Island cronies. Others were only limited partners in particular projects. Still others managed to convince themselves that their own decent pursuits were detached from Moses's ruthless deals. But they were all participants in the redevelopment of New York.

(Emphasis added)

The Times's report

From today's New York Times, an unbylined article, headlined New Laws for Housing Tax Break, seems based on the governor's press release, but ignores the carve-out:
Gov. Eliot Spitzer signed into law yesterday three bills to revamp a popular tax break for developers and encourage the construction of thousands of apartments for low-income New York City residents.

The laws are expected to expand the number of neighborhoods where developers are required to include apartments for residents of limited means in order to receive tax breaks. Advocates for lower-cost housing have long said the laws would mean more housing for low-income residents and fewer incentives for developers to build luxury high-rises.

“This legislation will allow New York City to target its limited tax abatement resources to more effectively promote the construction of affordable housing in the neighborhoods that need it most,” the governor said. The tax program that is being revamped, known as 421-a, was started in the 1970s to spur housing development of any kind. Under it, developers received a 10-to-25-year exemption from increases in property taxes resulting from their work. But government officials and advocates for affordable housing say that given the change in New York’s real estate market since the program’s inception, the tax breaks are no longer needed in Midtown and other thriving parts of the city.

Under the new laws, developers will be required to meet more stringent affordability standards, give priority to neighborhood residents for lower-cost units, and ensure that units remain affordable for at least 35 years.

The governor's press release

Spitzer's press release mentions Atlantic Yards, but fails to explain how it would get special treatment. The headline is GOVERNOR SPITZER SIGNS BILL TO REFORM NYC TAX EXEMPTION FOR HOUSING DEVELOPMENT: New Law Will Encourage Construction of Affordable Housing. It states:

Governor Eliot Spitzer today announced that he has signed bills that will encourage housing construction throughout New York City, with an emphasis on the construction of affordable housing. The package of bills reform New York’s outdated 421-a law to better target limited resources to neighborhoods in need of affordable housing.

“This legislation will allow New York City to target its limited tax abatement resources to more effectively promote the construction of affordable housing in the neighborhoods that need it most,” Governor Spitzer said. “This reformed law will build on our efforts to solve the housing crisis that has pushed too many working New Yorkers out of the middle class and prevented those struggling New Yorkers from climbing up into economic security.”

The 421-a program was initially established 36 years ago to promote the construction of multiple dwelling housing units in New York City during a housing market downturn. The law has provided property tax exemptions to housing developers, particularly developers of desperately needed affordable housing, and has produced more than 110,000 apartments in New York City.

Given the dramatically changed real estate market in New York City since the program’s inception, tax breaks are no longer necessary as incentives for pure market-rate housing projects in many booming areas of the city. Thus, reform of the program was necessary to direct more of these tax dollars toward the production of affordable housing.

The three bills signed into law amend the 421-a program to significantly expand the areas within which affordable housing is required for tax abatements; require that these units meet more stringent affordability standards; give community residents priority for the affordable units; assure that these units will remain affordable over a long period of time; and require projects receiving City tax subsidies to pay prevailing wages to their building service employees. Moreover, a grandfather provision is included that prevents the disruption of projects already in the development pipeline by exempting them from these new regulations.

The Legislature has also agreed to swiftly pass further reforms that address some outstanding concerns. Among other provisions, these promised amendments will assure New York City’s continued ability to provide tax abatements to moderate and middle income housing projects for which it is providing substantial government assistance. They will also assure that the buildings that make up the Atlantic Yards project will receive enhanced abatements only if they meet on-site affordability requirements during each phase of project construction.

“I am pleased that all sides were able to come together to produce this important reform, which is critical to the future development of affordable housing in New York City,” Governor Spitzer said.

New York City Mayor Michael Bloomberg said: “I want to thank Governor Spitzer and our partners in State government, along with the City Council and the Department of Housing Preservation and Development, for coming to a landmark agreement on 421-a reform. Through inventive rezonings and the largest municipal affordable housing plan in the nation’s history, we have already built tens of thousand of affordable units, and today’s signing - along with the additional amendments that the Legislature has agreed to swiftly pass - will ensure that we have the tools to spur even more affordable housing construction for years to come.”

Assemblyman Vito Lopez, Assembly sponsor of the legislation, said: “I commend Governor Eliot Spitzer for signing the 421-a Reform Bill into law. This groundbreaking reform will for the first time require the production of on-site affordable housing for working class families in many of the City’s up-and-coming neighborhoods. In an unprecedented effort to offset gentrification, our reform also mandates that 50% of the affordable units built using 421-a will be set aside for community residents, and that all the affordable units will remain affordable for at least 35 years. In addition all building services workers in buildings over 50 units will receive a prevailing wage for their services. This is a major victory for low-income and middle-income New Yorkers.”

Senator Marty Golden, Senate sponsor of the Legislation, said, “After a great deal of work from all the stakeholders in the process--governmental, private, and consumer--we have a bill that will not only preserve but will expand and target affordable housing in New York City, and help preserve the vitality of the housing market generally. This measure comes just in time, as the national housing market undergoes tremendous pressure, brought on at first by the collapse of some sub-prime mortgage investors, but with troubles now expanding to some of the more blue-chip lenders. It is no surprise that the first sector to be affected by problems will be affordable housing. This is the right time for government to provide the help needed to stabilize and expand the market.”


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