Tool Test

421a is a NYC property tax break for new residential developments that allows landlords – and later their condo owners — to pay virtually no property tax for 10 or 25 years depending on the specific circumstances. In Manhattan and select parts of the other boroughs, developers must provide 20% “affordable housing” in exchange for receiving the 421a – but this is again the very flawed, not actually affordable, “affordable housing.” 421a allows new buyers of multi-million dollar luxury condominiums pay no property tax while longtime neighborhood homeowners have their homes reassessed for record sums due to the gentrification from the new condos. In the last 25 years, fewer than 10,000 affordable housing units have been produced by 421a but the program has cost the City billions in revenues.*The 421A property tax break is now costing New York City over $1 billion a year in revenues. $1 billion could build a whole lot of real affordable housing.
 
*To put this cost in context, the entire budget of New York City’s Housing Preservation and Development (HPD) agency is less than $200 million a year.

J-51 is a NYC property tax break that allows residential building owners to recover 75% of the cost of building renovations on average. J-51 allows owners who renovate their apartments to be exempt from increases in property tax for up to 34 years. J-51 was established in 1955 to encourage landlords to upgrade their tenement buildings to hot water plumbing. But over 600,000 apartments are still receiving the subsidy today and it costs the City hundreds of millions in revenue each year. A recent court ruling made it illegal for building owners to receive the J-51 while converting rent-regulated apartments to market rate, making it less of an overt gentrification subsidy.
 
*J-51 is now costing New York City over $250 million each year in tax break expenditures. J-51 is up for renewal in 2012 and must be extended by the State Legislature in Albany – or could be significantly altered or eliminated to shift this money to providing true affordable housing.
*To put this cost in context, the entire budget of New York City’s Housing Preservation and Development (HPD) agency is less than $200 million a year.
 
J-51 is a NYC property tax break that allows residential building owners to recover 75% of the cost of building renovations on average. J-51 allows owners who renovate their apartments to be exempt from increases in property tax for up to 34 years. J-51 was established in 1955 to encourage landlords to upgrade their tenement buildings to hot water plumbing. But over 600,000 apartments are still receiving the subsidy today and it costs the City hundreds of millions in revenue
each year. A recent court ruling made it illegal for building owners to receive the J-51 while converting rent-regulated apartments to market rate, making it less of an overt gentrification subsidy.
 
*J-51 is now costing New York City over $250 million each year in tax break expenditures. J-51 is up for renewal in 2012 and must be extended by the State Legislature in Albany – or could be significantly altered or eliminated to shift this money to providing true affordable housing.

ICAP – Industrial and Commercial Abatement Program is a property tax exemption program for the construction/rehabilitation of eligible industrial and commercial properties. Created in 1976 as the Industrial and Commercial Incentives Program (ICIP), this subsidy was intended to prevent the department of business from NYC during the period of urban crisis. It offers 10 to 25 year exemptions from property tax. ICAP is the second-largest NYC tax subsidy program with accosts of $681.6 million in Fiscal Year 2012 according to the most recent tax expenditures report from the Department of Finance. ICAP can be looked at as the commercial “sister” of the 421a subsidy. Studies by the EDC and the Manhattan Borough President in 2007-2008 found that only 8% of the subsidies went to industrial businesses, with the vast majority going to fund office and retail development. These reports also found that the subsidy was completely unnecessary – the vast majority of the projects would have been built without the subsidy. Reforms of the program in 2008 – and its renaming to ICAP – eliminated some of the most blatantly wasteful subsidies to retail in Midtown Manhattan but largely kept the program intact.

Low Income Housing Tax Credits (LIHTC) are federal subsidies administered by the US Department of Housing and Urban Development (HUD). LIHTC was created in 1986 to “incentivize the private market to invest in affordable rental housing.” Every year the IRS distributes the tax credits per resident to state housing agencies (in New York, this is the NYS Department of Housing and Community Renewal). State agencies then award the tax credits to developers of eligible projects. LIHTC are often rewarded to financial investors who partner with non-profit developers to fund “affordable housing” projects. To be eligible to receive LIHTC, a development must either have 20% of the units affordable to households at 50% AMI ($40,100 in NYC) or 40% of the units affordable to households at 60% AMI ($48,120 in NYC). LIHTC is almost always combined with subsidies from the State and City in funding an “affordable housing” development. A report by President Obama’s Economic Recovery Advisory Board estimates that LIHTC costs the federal government $6 billion a year in revenues. Many question the efficiency of the program – it’s estimated that only 35 cents on the dollar actually goes to housing development and the rest is pocketed by investors and other middlemen.

Section 8 Vouchers, also known as the “Housing Choice Voucher Program”, are vouchers that are distributed from the federal HUD to local public housing authorities (in NYC this is NYCHA) and then to low-income tenants. The voucher covers the difference between 30% of the household’s income and the cost of the apartment.

Project-Based Section 8 is the sister program to Section 8 vouchers and follows the same affordability structure. The difference is that the vouchers in projectbased Section 8 are tied to a particular development. The landlord enters into a contract to open his building(s) to Section 8 for a period of 10 to 20 years. Tenants pay 30% of their income towards rent and the federal government covers the rest of the price. Many housing advocates argue that Project Based Section 8 is very inefficient as an affordable housing program. It subsidizes rents in apartments where landlords are making sizable profits, does not create permanent affordable housing, and is often much more costly than funding affordable housing produced directly by the government or non-profit organizations.

Rent Regulation is a set of laws that regulate rents and leases in certain privately owned apartment buildings in New York City, generally buildings with six or more units built before 1974. In a rent-stabilized building, landlords can only raise the rent by a small percentage decided annually by the Rent Guidelines Board. Unlike the “affordable housing” programs, rent regulation does not relate the price of the rent to the income of the tenant. More than 2.5 million New Yorkers in over 1 million apartments – about half the city’s total – are covered by rent regulation – far more than all other affordable housing programs combined. But rent regulation is under siege. In 1998, a provision called vacancy decontrol was added that allows landlords to remove apartments from rent regulation when tenants move out.
 
Already more than 300,000 once-affordable apartments have been lost in New York City. Some investors build their entire profit-making strategy around “flipping” rentregulated apartments by removing existing tenants.

Public Housing is housing directly built and owned by the government. Public housing and the governmental authorities that oversee it (NYCHA in NYC) was first initiated by the Federal Government in the New Deal era of the 1930’s. The programs were greatly expanded by Title I of the 1949 Housing Act which gave the local authorities the power to execute urban renewal “slum clearance” and demolish existing buildings to make way for public housing towers. In New York, the Title I “projects” were concentrated in the Lower East Side, East Harlem, the Bronx, and Brownsville in Brooklyn. Concentrating public housing in low-income communities of color stigmatized public housing as many of the developments became centers of crime and social dysfunction. The backlash from this and to urban renewal in general, and continued opposition from conservatives, led public housing to be abandoned by the American government during the 1970’s. But the projects built during this period survive and remain home to nearly half a million New Yorkers.
 
Many other cities like Chicago and St. Louis have demolished their public housing but New York’s remains – for now. When thinking about public housing, it’s important to remember that nothing requires public housing to be built in “towers in the park” architecture or to be home to only very low-income families. Yet to consider the construction of new public housing on different models is considered out of the question, contemporary “affordable housing” policies always requires a middle-man in the form of a non-profit or private developer.

Community Development Corporations (CDCs) are non-profit, neighborhood based organizations that engage in the provision and development of community benefits. Some CDCs operate social service programs like senior care and youth programs, while others focus on the development and preservation of affordable housing, or business incubator space for small businesses. In New York, CDCs played a major role in preserving housing during the 1980’s when many neighborhoods were abandoned by the private markets. In Williamsburg, CDCs like Los Sures and St. Nicks Alliance were very successful in combining public grants and private funding to rehabilitate abandoned housing units. But some question if the CDC model is the best option for a neighborhood under the opposite pressure of gentrification. Dependent on grants from government and limited financing from the private sector, CDCs are in no position to out-compete profit-minded speculators in the housing market. Since CDCs are heavily dependent for funding on same forces usually cheerleading the gentrification, the banks and the Bloomberg administration, they are in no position to challenge these forces. When local development policies like zoning are crafted, it is often the local CDC that is given the “seat at the table” to represent the community’s interest. This position can undermine other grassroots efforts to organize in opposition or in support of an alternative.

Community Reinvestment Act is a federal law passed in 1977 to encourage banks and savings associations to offer credit to low and moderate income neighborhoods.
 
The federal government evaluates each bank’s performance in lending to low and moderate income neighborhoods and issues a rating and written report. The Community Reinvestment Act (CRA) intended to counter the practice of “redlining” by which banks refused to offer credit to low-income neighborhoods, usually with large minority populations. In New York City, the CRA spurred the creation of the Community Preservation Corporation in 1977 to help area banks meet the requirements and lower their risk by pooling resources on investments. While the CRA has helped funnel billion in investment to the neighborhoods most adversely affected by the 1970’s—1980’s urban crisis, it has some serious problems. One way in which banks have learned play the CRA is to invest in market-rate luxury projects in gentrifying areas that are still classified as “low-income” but are quickly changing.
 
It has also been argued that the CRA helped fuel the growth of risky lending to minorities during the 1990’s and create the real estate bubble market that burst in 2008.

“197a” Community Plans are plans composed and submitted by community boards or other local organizations and submitted to the City Planning Commission and City Council for official approval and adoption. “197-a” refers to the section of the City Charter that outlines the rules for this kind of official community planning. But unlike an official rezoning plan composed by the City government, 197-a community plans are “policy guides” and are not legally binding. This weakness has been harshly exposed in recent years, most notably in Williamsburg where the goals and visions of the 197-a community plan adopted by the City Council in 2003 were completely ignored by Mayor Bloomberg’s 2005 rezoning. Communities that have spent years of intensive work putting together 197-a plans have seen the City treat them with contempt and disregard.