In the Absence of 421-A Affordable Housing Development May Not Pencil Out

Under the current tax system, “developers have long argued that it is virtually impossible to build rental buildings in the city without an incentive to offset the high cost of land, construction and especially property taxes on rentals.” Furthermore, the Mandatory Inclusionary Housing Program relies on the 421-a tax abatement program, “because the program’s affordability requirements are based on an assumption that property taxes will not increase from the pre-project level for 25 years.” However, critics of the state program “fear that a revised tax break would not fundamentally change a program that forgives $1.8 billion in annual tax revenue” and according to a March 2022 report by the Community Service Society, difficult to quantify the extent to which 421-a is responsible for affordable housing creation due to the use of other subsidies; while advocates of 421-a point out that without a replacement incentive program, projects such as the Innovations QNS development, which promises to create 3,200 housing units, of which 45% will be affordable, could be on the line.

Source:  https://therealdeal.com/2022/11/21/will-innovation-qns-happen-without-421a/