Developers like Jody Kriss and East River Partners rely on certain legislative codes in order to keep up with demand and to make performing neighborhood renewals more affordable. One of the most-notable is referred to as the 421-a, which offers developers tax breaks for including affordable housing into their projects. Now that lawmakers have failed to renew the policy, developments all over NYC could come to a screeching halt. This isn’t just bad news for developers- it could cause serious issues for millions of people in a city that’s already strapped for general housing, let alone affordable housing.
The 421-a has Been in Effect Since the 1970s
The Pratt Center for Community Development explains that the 421-a was created in 1971 when more people started moving to the suburbs and residential construction stalled. Although the agency tried to claim that the incentive was unnecessary, as a low percentage of developers took advantage of it, their own document showed that an average of 530 new buildings were added every year in Brooklyn alone between 1985 and 2002. The actual number for all of NYC exceeds 4,000 building per year. The city is already facing a housing crisis. Imagine if those 68,906 total buildings didn’t exist because developers couldn’t afford to create them.
The 421-a Originally Expired in June, but was Extended Until January 15
Renewal of the legislation hinged on an agreement between the Building and Construction Trades Council and the Real Estate Board of New York. The Trades Council has been fighting aggressively for higher wages and bigger benefit packages for construction workers. When the two could not reach an agreement back in June, Governor Andrew Cuomo decided to give them until January 15, at which point the 421-a would be suspended until the matter was settled. No agreement was reached. DNA Info published some numbers crunched by the Independent Budget Office. If the Trades Council gets its way, construction costs will go up by about 13 percent, or $45,000 for each and every unit built. On a grander scale, this means that the 80,000 units that are part of Mayor Bill de Blasio’s affordable housing plan will cost about $2.8 billion more to come to fruition.
Developers Scrambled to Qualify Before Time Ran Out
As the New York Law Journal points out, the loss of the 421-a doesn’t hurt anyone right now, but experts agree that future development around the city could seriously suffer in the long run. The Wall Street Journal tallied up all the permits that were applied for in the month preceding the anticipated loss of the incentive. Nearly 300 permits were issued, affecting 7,781 housing units. More than half, a whopping 59 percent, were for buildings in Brooklyn, and about one-quarter of them were from Queens. The uncertainty over the possibility of losing the 421-a led developers to have a record-breaking year for applications. While the previous chart-topping year was 2008, with 33,11 permits, 2014 blew it away with 56,248.
Jody Kriss and East River Partners tend to focus on restoring historic properties. Unexpected and luxurious touches are integrated into their projects, while maintaining the integrity of the architecture and honoring the neighborhood appeal. Because of the types of properties East River Partners is involved in, the loss of the 421-a will leave their ongoing work largely unaffected. However, Jody Kriss explained in a statement, “We are fortunate that our condo projects are largely unaffected by the expiration of the 421-a program. But the program is extremely important to the development community in the city and the uncertainty surrounding its extension has made it very difficult to build new homes since developers are operating in and uncertain regulatory environment”