Hochul's proposed revamp to 421-a likely to be modified, at least. NY Focus points out how "affordable" rents often exceeds unsubsidized ones.

I recently noted that mission-driven affordable housing groups, under the umbrella of ANHD, have opposed Gov. Kathy Hochul's proposed replacement for the 421-a (aka Affordable New York) tax break, called Affordable Neighborhoods for New Yorkers.

Hochul's proposal would require deeper affordability, especially among larger buildings, than the current version, which has spurred buildings with income-targeted units aimed at middle-income households earning 130% of Area Median Income, such as 18 Sixth Ave. (B4, aka Brooklyn Crossing) and 662 Pacific St. (B15, aka Plank Road), in Atlantic Yards/Pacific Park.

But it's favored by the real-estate lobby, which indicates they still consider it a good deal--which opponents point to the hit to public coffers from the abatement. It's also backed by Mayor Eric Adams, who's friendly to real-estate.

As Politico reported;

But the broad contours of the tax break would remain the same, prompting criticism that Hochul’s proposal would not address the root problems cited in the current program, namely that it’s too costly and produces too little legitimately affordable housing. The tax break cost the city $1.7 billion during the last fiscal year...

On the other side, proponents argue the absence of the tax break would bring a significant drop in rental housing production in the five boroughs, particularly affordable units, as the city faces a housing shortage.

One unanswered question, posed to State housing Commissioner RuthAnne Visnauskas, as Politico reported: the new program would cost the public less than the current one--unsurprising--but couldn't be specific.

Legislators want a fix

NY Focus reported 2/7/22 that Hochul’s Proposed 421-A Replacement Is In For a Fight, Key Lawmakers Signal, quoting key lawmakers:

“Nothing less than a wholesale redesign is necessary to transform what is now an annual two billion dollar boondoggle into a program that would actually provide a benefit commensurate with its cost,” said Liz Krueger, chair of the Senate finance committee and number three in the chamber. Such an effort would take time, she said, and should be pursued outside the budget process, with its March 31st deadline.

Brian Kavanagh, chair of the Senate housing committee, struck a similar tone.

“The Executive Budget proposal regarding 421-a is not anywhere near where we would need to be if we were going to enact a new tax subsidy program—in terms of affordability, labor concerns, and environmental sustainability,” he told New York Focus.

That suggests, at minimum, deeper affordability.

Drilling down

From the article:

Critics say Hochul’s 421-a update would do little to house those who need it most. In large buildings, only 10 percent of new units would be targeted at households making less than half of AMI; the remaining 15 percent would go to households making 60 and 80 percent of AMI.

That's certainly below market in areas like Prospect Heights. But maybe not elsewhere:

The looser criteria for smaller buildings, which only require them to offer 20 percent of units to people making up to 90 percent of AMI ($97,000 for a family of three), mean many outer-borough developments could still charge more for income-restricted units than median rents in the surrounding neighborhoods—while charging even steeper prices for the remaining 80 percent of units in the building.

So smaller developments would be less affordable. Politico noted that the real-estate industry has some qualms:

Basha Gerhards, REBNY’s senior vice president of planning, said the elimination of the higher-income affordable housing option “stresses economic viability of projects in medium-low rent markets.”

The citywide perspective

The NY Focus article includes a very interesting graphic titled "Rents in 'affordable' units often exceed unsubsidized rents." That's not true of Prospect Heights, but it's true of significant portions of the city.

I've posted a screenshot at right, but go to the original article for the interactive version.

Note that NY Focus is using the city's "affordable" standard, but in many cases, such as with Plank Road (and to a lesser degree at Brooklyn Crossing), the developers are not seeking those rents, because they aren't deemed viable.