421a Tax abatement program grant subsidies to developers who offer affordable housing in new buildings. If the 421a tax abatement program is not available, developers will lease all units at market rate which in turn will drive out lower income residents in New York City.
In June 2015, lawmakers allowed this 421a tax abatement program to expire and extended it through January 15th 2016. The 421a program is now expired and has been suspended until a new agreement can be reached.
Without the 421a tax abatement program, developers have little to no incentive to lease out these new units even at market rates and more than likely force developers to ultimately sell these units as condominiums. The absence of the 421a tax abatement program will apply downward pressure on the value of newly built condo units.
Mayor De Blasio said “The proposed reforms were a win-win for families in need of stable homes and for taxpayers. It is deeply disappointing that these reforms were not enacted. We are facing an unprecedented crisis of affordable housing, and we must employ every tool at our disposal to confront it. We will continue to move forward with our partners at all levels of government as we implement the City’s plan to preserve and create 200,000 affordable homes.”
There is still a chance to reenact the 421a tax abatement program. Let’s hope its put into place in the coming days. Stay tuned..