Kathy Hochul: Key affordable housing program set to lapse as rents soar
Gov. Kathy Hochul acknowledged Tuesday that one of the state’s largest and most controversial affordable housing programs will likely lapse next month, potentially playing havoc on new construction in the Big Apple as rents soar across the city.
The program, known as 421-a, provides nearly $1.8 billion in property tax breaks to builders in exchange for putting a portion of the new apartments in rent stabilization and capping the rents based on tenants’ income levels.
“This is not resolved yet and if it does not result in this session, then I would say we certainly will be revisiting this early next year,” said Hochul during an unrelated press conference in Albany.
“I’m not making assumptions on what the Legislature will do. Let them do their work and then I’ll continue my conversation from behind the scenes,” she added. “But I would say before that this is an important objective, but I don’t know that there’s the interest in legislative bodies at this time to get to it this year.”
The Big Apple has been building insufficient amounts of new housing for decades: Just 407,000 new units of housing were permitted between 2001 and 2018, while employers created another 770,000 jobs across the five boroughs, city data shows.
New York City actually permitted fewer new units of housing between 2009 and 2018 than it did between 2001 and 2008, according to the Department of City Planning.
“I say this over and over again — my job is to present my case to Albany, I don’t control Albany,” said Mayor Eric Adams when pressed on what his administration would do if the program lapses. “We’re going to continue to encourage building in the city.”
Sources in Albany say Democratic lawmakers are worried about running afoul of lefty critics with primary elections just weeks away, making a lapse likely.
“A lot of people have big problems with 421a — even people who want to see more housing and especially more affordable housing, period. Speaking for myself, I think 421-a is an expensive program and we are just not getting our money’s worth,” Assemblyman Jeffrey Dinowitz (D-Bronx) told The Post in a recent interview.
The dysfunction of Adams’ Albany operation has come under intense scrutiny as it struggled to rally support among state lawmakers for key city programs, like the tax abatements, in the closing weeks of the legislative session.
Progressives have campaigned against either extending the program or renewing it for years, claiming it’s a giveaway to developers and that lawmakers should focus on overhauling the Big Apple’s broken property tax system.
Attempts to fix the property tax system in New York City have gone nowhere for decades, in large part because it heavily advantages politically powerful homeowners in rapidly gentrifying neighborhoods at the expense of rental buildings.
Housing experts say the tax incentives build units for working-class and middle-income families in well-to-do neighborhoods that are typically closed off from affordable housing programs because of the cost of land and construction.
And developers and the housing experts warn that allowing the program to permanently expire would make it virtually impossible to build apartments in New York City as current rates mean property taxes can equal a third of a building’s operating budget.
The abatement temporarily lapsed for several months in 2016 with little impact on overall construction because developers rushed through projects to capture the breaks in case 421-a was not subsequently renewed.
