Home News 421a’s end means it’s time for real property-tax reform in NYC

421a’s end means it’s time for real property-tax reform in NYC

by admin
0 comment

For those who want to see New York City come back and prosper 421a Reduction of housing constructionIt may look like a batter, known in the section of state law. The city’s most profitable $ 1.8 billion annual property tax cut has enabled the construction of thousands of “affordable” units with limited income. Most of the city’s new housing developments since 2013 (and 28% of affordable units) have taken advantage of it.

But 50 years later The subsidy appears to be at the end of Albany’s line..May expire as a result of Progressive arguments That 421a is another tax cut for the rich, whose affordable units have not reached the income levels of the very poor.

But this is one case where people across the political spectrum need to agree. And 421a moves forward to fix the underlying problem of placing band-aids at best.

Brad v, a city accounting inspector who politicizes the city’s pension investment and sees it as violating rent control, is right this time. He is in the city “The property tax system is well known to be opaque, unfair and regressive. For the past 40 years, New York has been a variety of owners rather than addressing its structural flaws. We’ve been patchworking exemptions and mitigations to lower the tax rate. “

Central to the complexity and whims of the system is the fact that city property tax invoices are often separated from the actual market value of real estate. That was the motivation for 421a, but Lander says it’s another example of how you need to be a connected company with access to the best legal talent to do business in New York. I’m sorry. That’s the same reason Walgreens had to buy Duane Reade to build a foothold in the city. Real estate development is not the “right” option available to aspiring Houston entrepreneurs, for example, but here a specialist skill.

Congressman Albany plans to revoke 421a in June.
Hans Penink

The underlying problem is better known as the older news is, but it’s still worth checking out.As NYU’s Farman Center Rental condominiums have a higher “effective tax rate” than single-family homes, and it’s no wonder that unregulated rents continue to rise. Also, condos and co-operatives are taxed like single-family homes, so Park Avenue condos can pay far less tax than their value suggests.

Commercial real estate has long been a cash cow — a situation that is no longer acceptable in post-COVID work patterns. An unbalanced burden on rental properties also means that developers have a financial incentive to build just for the luxury market. Those who build “affordable” units need a variety of subsidies, including 421a.

The whims of the system have not escaped from elected officials, including former Mayor Bill de Blasio, who convened a committee to come up with alternatives. The good news is Property Tax Reform Advisory Board I did exactly that in my December report. Among its important proposals are all small homes (1 to 3 households, 4 to 10 rental buildings, condominiums, co-operatives) in the same tax class, “the rules are applied uniformly regardless. There is something like “to do so”. Of property type. ”

Progressivists like City Comptroller Brad Lander claim that 421a is a tax cut for the rich.
Progressivists like City Comptroller Brad Lander claim that 421a is a tax cut for the rich.
Photo courtesy of Noam Galai / Getty Images for One Fair Wage

Methods for doing so include “sales-based market value.” In other words, don’t tax Upper East Side co-operatives as if they were rent-controlled apartments.

Indeed, in a narrow sense from a tax obligation perspective, reform will create winners and losers. The The city’s independent budget office was found If all residential properties in the city pay property tax based on market value, nearly 500,000 will receive a median tax reduction of $ 1,100. Almost all Staten Island homes will be tax-reduced, but 98% of Park Slope homes will receive a significant median tax increase of $ 11,000. Of course, that’s the result of gentrification — and neighborhood liberals should be willing to pay their “fair share”.

The demise of 421a sets the moment for Albany’s progressives to “stand up or silence”. This requires approval of the city’s new property tax system. Find out if, as Lander argues, they are only interested in punishing tax incentive real estate developers, or if they are serious about general property tax reform.

A full-fledged New York City comeback requires a plethora of factors, from getting the homeless out of the street to reducing crime altogether. However, it is important to make housing construction much easier and not require complex tax subsidies for it. Albany must act.

Howard Husock is a Senior Fellow at the American Enterprise Institute.

You may also like