This morning, Mayor Michael Bloomberg announced his proposal to revamp 421-a, the 35-year-old city policy that grants tax breaks to developers of residential buildings. Among the reported changes that the mayor will call for: requiring developers in more of Manhattan and Brooklyn Heights to include some rent regulated units in order to receive tax breaks; capping tax breaks for projects above a certain price; and eliminating the much-derided “portability” provision whereby developers have been able to get city subsidies for otherwise ineligible market-rate projects by buying tax breaks from low-cost housing elsewhere.
(A New York City Housing Authority development)
It’s a long-awaited move that City Hall officials (and Times headline writers) are promoting as an attempt to fulfill its promise to create desperately needed affordable housing in the five boroughs. Given that 421-a has been under fire as a flawed program ever since its creation in the construction-starved early ’70s, pretty much everyone, developers included, sees the need for reform. (Several for-profit and non-profit developers sat on the task force that helped Bloomberg craft today’s proposal.) But according to some housing experts, the best way to fix 421-a is by erasing it from the books.
Bonnie Brower, who as executive director of the Association for Neighborhood and Housing Development in the 1980s called for replacing the program with grants and no-interest loans to build permanent low-cost housing, thinks Bloomberg’s proposals are far too little, too late. “Are the reforms better than what is? Of course,” she says. “The one I find the most amusing, and it’s taken 35 years to go there, is they’re going to cap the tax breaks for really expensive units, so that you don’t get twice the tax break for building a $2 million apartment as for a $1 million one. Well, bravo. Question: Why are you getting any tax breaks for creating a one- or two-million-dollar unit? It’s like the theater of the absurd.”
Trying to fine-tune a system that relies on private developers to provide affordable housing is “yet another example of a square peg in a round hole,” insists Brower, who says that directly subsidizing housing construction would invariably be cheaper in the long run than doling out year after year of tax breaks. The city Independent Budget Office says 421-a costs the city treasury $320 million a year; Brower, who as director of City Project until the organization shuttered its doors this spring compiled an annual analysis of the city budget, suspects the true number is still higher.
The bang the city’s gotten for its megabucks, meanwhile, has been dismal: According to a recent study by the Pratt Center for Community Development and Habitat for Humanity, only 8 percent of the housing created under 421-a has been affordable even to moderate-income families. “As long as you are depending on the private market to develop truly affordable housing,” concludes Brower, “it’s like letting Jack the Ripper guard the Rockettes’ stage door.”