NEW YORK - A 1970s housing program that has helped rich New Yorkers avoid millions of dollars in property taxes could be getting its first major overhaul in decades.
State and city officials are in a final round of talks over rewriting a tax break that was intended to spur construction in distressed neighborhoods, but has turned into a cushy perk for developers building luxury housing.
“It has become a way to maximize profit,” said state Assemblyman Vito Lopez, who has watched the program fuel pricey new construction in his Brooklyn district.
A new plan would make the tax breaks available in many areas only to developers who include affordable housing in their projects.
The tax program is one that dates from the city's bad old days, back when the Bronx was burning and hookers ruled Times Square.
Desperate to spark revitalization, city officials offered an extraordinary incentive: Anyone willing to build new multifamily housing would qualify for a huge tax break - one that would last 10 to 25 years, and, in some cases, allow owners of big apartment buildings to pay as little as someone who owned an empty lot.
At the time, the program made sense, said Brad Lander, director of the Pratt Center for Community Development.
“It's hard to remember how in the doldrums the city was,” he said. “People were abandoning their buildings on the way out of town.”
But in the decades since then, the well-intentioned incentive has seemed increasingly inappropriate.
These days in New York, luxury apartment buildings are sprouting everywhere, including hard-luck neighborhoods once known for high crime and entrenched poverty. The average price of a two bedroom apartment in Manhattan topped $1.6 million this spring.
Yet, the city has continued to offer the tax break, except in the very wealthiest parts of Manhattan.
Last year, the program cost the city $400 million in lost tax revenue. Beneficiaries included the owners of new buildings like 497 Greenwich Street, a downtown condominium tower that opened a few years ago just outside Tribeca.
When it opened to rave architectural reviews, the building had everything its millionaire residents could want: magnificent glass lofts, balconies with Hudson River vistas, and a tax break that will save the owners $2.8 million over 10 years.
The days of the biggest giveaways, however, now appear to be numbered.
State lawmakers late last month passed a bill that would eliminate automatic tax breaks in almost all of Manhattan, a good chunk of Brooklyn, and small sections of the Bronx, Queens and Staten Island.
Developers in those zones would only qualify for the discount if they set aside 20 percent of their new buildings for poor or middle class families. Similar rules have existed for midtown Manhattan and the Upper East and West Sides since the 1980s.
The proposal, however, appears to have hit a series of last-minute snags.
Mayor Michael Bloomberg, who had initially lobbied for the change, asked Gov. Eliot Spitzer to veto it, saying the final draft of the bill had included too many emerging communities that still need incentives for development.
“They have included some neighborhoods where the economics don't make sense,” said Neill Coleman, a spokesman for the city's Department of Housing Preservation and Development.
“It will stop development of housing in a number of neighborhoods,” said Kathryn S. Wylde, president of the Partnership for New York City, a civic group.
The city also opposed a requirement that the affordable units created by the plan go predominantly toward the working poor. City officials wanted looser rules that would also create middle class housing.
Legislative leaders delayed sending the measure to Spitzer's desk, and talks are now ongoing about possible adjustments.
“We'll see what happens,” said Lopez, one of the architects of the state's version of the proposal.
Lopez said he doesn't believe that housing construction will slow if the city limits the tax breaks, but said it wouldn't bother him if expensive new towers stopped sprouting in gentrifying Brooklyn sections like Williamsburg and Bushwick.
“Its driving working class people and poor people out of these neighborhoods,” he said.
AP-ES-07-07-07 1823EDT
“It has become a way to maximize profit,” said state Assemblyman Vito Lopez, who has watched the program fuel pricey new construction in his Brooklyn district.
A new plan would make the tax breaks available in many areas only to developers who include affordable housing in their projects.
The tax program is one that dates from the city's bad old days, back when the Bronx was burning and hookers ruled Times Square.
Desperate to spark revitalization, city officials offered an extraordinary incentive: Anyone willing to build new multifamily housing would qualify for a huge tax break - one that would last 10 to 25 years, and, in some cases, allow owners of big apartment buildings to pay as little as someone who owned an empty lot.
At the time, the program made sense, said Brad Lander, director of the Pratt Center for Community Development.
“It's hard to remember how in the doldrums the city was,” he said. “People were abandoning their buildings on the way out of town.”
But in the decades since then, the well-intentioned incentive has seemed increasingly inappropriate.
These days in New York, luxury apartment buildings are sprouting everywhere, including hard-luck neighborhoods once known for high crime and entrenched poverty. The average price of a two bedroom apartment in Manhattan topped $1.6 million this spring.
Yet, the city has continued to offer the tax break, except in the very wealthiest parts of Manhattan.
Last year, the program cost the city $400 million in lost tax revenue. Beneficiaries included the owners of new buildings like 497 Greenwich Street, a downtown condominium tower that opened a few years ago just outside Tribeca.
When it opened to rave architectural reviews, the building had everything its millionaire residents could want: magnificent glass lofts, balconies with Hudson River vistas, and a tax break that will save the owners $2.8 million over 10 years.
The days of the biggest giveaways, however, now appear to be numbered.
State lawmakers late last month passed a bill that would eliminate automatic tax breaks in almost all of Manhattan, a good chunk of Brooklyn, and small sections of the Bronx, Queens and Staten Island.
Developers in those zones would only qualify for the discount if they set aside 20 percent of their new buildings for poor or middle class families. Similar rules have existed for midtown Manhattan and the Upper East and West Sides since the 1980s.
The proposal, however, appears to have hit a series of last-minute snags.
Mayor Michael Bloomberg, who had initially lobbied for the change, asked Gov. Eliot Spitzer to veto it, saying the final draft of the bill had included too many emerging communities that still need incentives for development.
“They have included some neighborhoods where the economics don't make sense,” said Neill Coleman, a spokesman for the city's Department of Housing Preservation and Development.
“It will stop development of housing in a number of neighborhoods,” said Kathryn S. Wylde, president of the Partnership for New York City, a civic group.
The city also opposed a requirement that the affordable units created by the plan go predominantly toward the working poor. City officials wanted looser rules that would also create middle class housing.
Legislative leaders delayed sending the measure to Spitzer's desk, and talks are now ongoing about possible adjustments.
“We'll see what happens,” said Lopez, one of the architects of the state's version of the proposal.
Lopez said he doesn't believe that housing construction will slow if the city limits the tax breaks, but said it wouldn't bother him if expensive new towers stopped sprouting in gentrifying Brooklyn sections like Williamsburg and Bushwick.
“Its driving working class people and poor people out of these neighborhoods,” he said.
AP-ES-07-07-07 1823EDT
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