News & Politics

NYC’s Cheap Housing Policy: Too Pricey?

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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.

10.11.demause.jpg
(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.”