From attracting jobs to preserving historic structures, tax forgiveness has been a critical tool for policymakers seeking to attract and influence the investment of private capital. Nowhere has this tool been more effectively used than in New York Citys efforts to preserve and expand its housing stock. Since its inception, the 421-a partial tax exemption has helped to create over 124,000 units of housing, more than 5,500 of which have been made available to low-income households through the Negotiable Certificate Program.
The housing industry has been dependent upon some form of tax relief in large part to ameliorate flawed real estate assessment policies. By taxing multi-family buildings at levels that consume an undue proportion of forecasted incomes, lenders and developers are discouraged from investing in new multi-family construction. For individual owners, even when unit size and neighborhood location are comparable, cooperative and condominium apartments are often taxed significantly more than are single-family homes and other Class 1 residential dwellings.
The challenge for policymakers is to provide just enough tax forgiveness to achieve desired results while avoiding the prospect of giving away more than is required. This is far more an art than a science and the Administrations 421-a Task Force deserves a great deal of credit for attempting to reconfigure the program to do just that.
Read below CHPC’s assessment of 421-a and its impact on New York City’s housing market.
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