Thursday, May 07, 2015

How much will de Blasio's 421-a reform help affordable housing? Unclear, but mansion tax seems a bigger deal

Without the details that should emerge soon, it's impossible to assess, as the New York Times reports, Mayor de Blasio’s Plan Aims to Spur More Affordable Housing in New York
Mr. de Blasio’s plan would require developers throughout the city to set aside 25 to 30 percent of a project’s apartments for poor and working-class residents in return for city tax breaks, a substantial change from the existing tax abatement program, known as 421-a.
Given that de Blasio has championed affordable housing that is not so affordable, we'd have to see whether the units would indeed be for working-class residents.

Note that de Blasio "has already won the support of the Real Estate Board of New York, the industry’s powerful lobbying arm." REBNY even will accept an increase in the "mansion tax," currently 1 percent on the sales of homes in New York State over $1 million.

"The de Blasio administration is calling for an additional 1 percent tax on the sale of homes in New York City over $1.75 million, which would rise to 1.5 percent tax on sales over $5 million," the Times reported. Indeed, that seems hardly painful to buyers.

The numbers from the 421-a reform ultimately seem paltry:
In terms of forgiven taxes, the de Blasio administration estimates that its proposal would cut the subsidy per unit to less than $400,000, from nearly $600,000, and double the number of affordable apartments created under the program to 25,000, from 12,400, over the coming decade. The administration says the mansion tax could produce an additional 37,000 affordable apartments.

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