With 421-a up in the air, new city rezonings (and Atlantic Yards towers) in doubt. Were approvals made without due diligence?

As Atlantic Yards/Pacific Park watchers know, approval of a project does not mean construction of a project, since the latter depends on factors like financing and tax breaks like 421-a, the tax break that expired June 15 and was not renewed--though Gov. Kathy Hochul had proposed a replacement seen as more politically palatable, since it required somewhat more affordability.

Scott Solish of Greenland USA has said that 421-a, or the equivalent, is critical to their plans going forward.

And that's why project deadlines are important, and/or--as I'll discuss separately--other spurs, like a tax on vacant land.

So some of the recently approved rezonings in City Council come with question marks, as Politico reported 11/21/22, in Housing plans could stall in the absence of 421-a:

“It has a very, very significant impact, and I think every developer would tell you the same thing, it’s questioning the viability of residential rental development,” Jesse Masyr, an attorney for the developers behind the Astoria proposal — known as Innovation QNS — told City Planning commissioners in August when asked how the end of the 421-a tax break would impact the project.

Others spoke similarly.

Will Innovation QNS happen without 421a?, the Real Deal also wrote 11/21/22, citing the large proposal that reaches Northern Boulevard:

In fact, the developers — Silverstein Properties, Bedrock Real Estate Partners and Kaufman Astoria Studios — acknowledged last year that they were banking on the tax break’s return. Silverstein’s director of development said at a Bisnow event that the project was being pursued as a “leap of faith” given 421a’s uncertain future.

City officials have also acknowledged that the Mandatory Inclusionary Housing program relies on 421a, because the program’s affordability requirements were based on an assumption that property taxes will not increase from the pre-project level for 25 years. The program is a city law, but 421a was a state law and can only be reinstated by Albany.

What next?

So this gives the administration of Eric Adams ammunition to push legislators in Albany. Note:

The Innovation QNS development team would not comment on whether the project hinges on a property tax break being restored, nor if it has a contingency plan if it isn’t.

The question then is whether city (and state) officials should be approving such projects without probing as to whether they're even financeable, since the lack of financing could then be used to justify loosening of promises.

Moreover, delays in construction mean that assumptions about baseline affordability, calculated from ever-rising Area Median Income (AMI), must change. In other words, low-income households eligible for units under current AMIs may not be eligible in five or ten or 15 years, given that their incomes don't rise in lockstep with AMI.

Timing issues

Note, from Patch, 11/22/22, Innovation QNS Is Approved, Cementing Transformative Astoria Rezoning, describing "a dozen new buildings in the low-rise, industrial area between 37th Street and Northern Boulevard, north of 36th Avenue. The final plans include 3,190 apartments, of which about 45 percent — 1,436 units — will be considered affordable."

The article says the developers say construction will take about ten years--but, really, who knows. It will depend on business cycles.

Stop worrying and love the crane: Another New York progressive backs a big development, the New York Daily News predictably editorialized, calling Council Member Julie Won finally pragmatic, for accepting a project with 45% affordability rather than her 55% target.

The editorial concluded:

Following a win at Hallets North (1,340 apartments, 335 of them affordable) and with Willets Point getting readied for 2,500 units of affordable units, the Council’s final yes today on Innovation QNS is a sign that Queens — and New York — are finally getting serious about building new housing. May these cranes never fly south.

Well, maybe they're serious about approving new housing based on current estimates. Whether the housing gets built is another story.