Affordable housing advocates called on Mayor Bloomberg this week to quit subsidizing the construction of luxury apartments, saying his long-awaited reform proposal for a controversial property tax break didn’t go far enough.
“It’s absurd,” said Brad Lander, director of the Pratt Center for Community Development and a member of the city task force that advised the mayor.
“We’re still giving developers substantial government subsidies to build in vibrant Brooklyn neighborhoods.”
The mayor’s proposed changes to the so-called 421-a subsidy program — the first major reform of the incentive since it was introduced in the lean 1970s — would require the builders of city-subsidized housing to set aside 20 percent of their units as “affordable.”
But the only Brooklyn neighborhoods that would be affected by the mayor’s recommendations are posh Brooklyn Heights and DUMBO.
The 421-a subsidy is popular with developers because it eliminates property taxes for 15 years. As a result, condo builders can charge significantly more for their units because buyers won’t have to pay the property taxes for those first 15 years.
As a result, the reform could also drive down the price of luxury condos. Lander said a typical condo buyer could see prices drop by $20,000 to $40,000 — more than enough to offset the cost of the higher, unsubsidized taxes.
Last year, the 421-a subsidy cost the city $300 million in tax revenue.
Other advocates wanted to see the mayor’s proposed affordable housing component expand to include poorer parts of Brooklyn, like Bedford-Stuyvesant, Prospect Heights and Crown Heights.
“The task force’s recommendations fail to protect working families and moderate-income residents in the areas of Brooklyn most in need,” said Hakeem Jeffries, the Democratic nominee for central Brooklyn’s 57th Assembly District seat.
The mayor’s plan would have to go through the state legislature, where it faces a tough political fight. Assemblyman Vito Lopez (D-Williamsburg) is already working on his own legislation to require affordable housing in all 421-a projects.
Advocates on both sides said the changes in DUMBO and the Heights, where condos can sell for over $1 million, would do little to affect those neighborhoods, where most sites have already been snapped up.
But where housing advocates urged the mayor to expand the affordable component, real-estate industry titans said that if below-market-rate units were required in slightly less-posh neighborhoods, overall housing production would slow.
“If you cut into the 10- or 15-percent profit margin, developers are going to just build less and the city will get less affordable housing,” said Steven Spinola, president of the Real Estate Board of New York and a member of the mayor’s task force.