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The Times highlights 550 Vanderbilt tax savings, ignores the 421-a maneuver

A front-page story in the New York Times Real Estate section, headlined online as Minimizing the Pain of Trump’s Tax Law, describes how the new tax bite has, among other things, pushed buyers to seek out "buildings with tax abatements to reduce their costs."

From the article:
Some prospective buyers have focused their searches on buildings with tax abatements to limit their tax costs. Buyers at 550 Vanderbilt, a new development in Prospect Heights, Brooklyn, for example, benefit from a 25-year tax abatement. Owners of studios at the building pay as little as $18 a month in property taxes, compared to $563 a month without the abatement.
“It was a huge factor in our decision to buy here,” said Rebecca Miller, 33, who purchased a two-bedroom at 550 Vanderbilt with her husband, Adam Tau. “We got our recent tax bill, and it worked out to be about $42 a month. It would have been closer to $1,500 a month without the abatement,” she said.
Ryan Serhant, the associate broker with Nest Seekers International who is handling sales at 550 Vanderbilt, said that since the tax changes were implemented, “we have seen a massive uptick in people coming from Manhattan. Before the tax law passed, people paid attention to real estate taxes, but if it was a little more, they just wrote it off. Now you can’t do that.”
But no one unit at that building was ever for sale without a 421-a tax abatement. The article ignores the contrast between the originally planned abatement, as well as the maneuvers to change it, much less whether this is good public policy for NYC.

As I wrote last October in City Limits, the building was originally supposed to have a 15-year abatement under the 421-a law, so a shorter period, and with a cap on valuation.

So more expensive units got a limited tax break. Those like the buyers highlighted, with a price tag near $1.5 million, were projected to pay closer to $300 a month, not $1,500.

However, developer Greenland Forest City Partners, around the time Serhant was hired, also engineered a change from the 15-year tax break to the 25-year tax break, dubiously connecting the 278-unit 550 Vanderbilt into one "zoning lot" with "100% affordable," 298-unit 535 Carlton, even though they're separated by two unbuilt development sites

By treating those two buildings as a unit, and averaging out affordability across the board--lowering rents at 11 middle-income units at 535 Carlton--the developer was able to engineer savings of an estimated $86.5 million over the life of the tax benefit, $50 million more than in the earlier projection.

The June 2015 Offering Plan for buyers at 550 Vanderbilt promised an aggregate yearly tax bill of $1.2 million, a 69 percent discount off the annual property-tax hit that would have occurred without the tax break. The 2017 revision meant they'd collectively pay less than $123,000, a 97 percent discount.

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