Hochul Takes on 421-a. Will It Be a Rebrand of the Existing Developer Tax Break?
Herrick Real Estate partner, Brett J. Gottlieb, spoke to City Limits about Governor Kathy Hochul's proposal to replace the 421-a property tax abatement program, which is expiring soon, with a similar tax incentive. The article gave the history of the tax incentive, stating, "Over the years, 421-a was amended to include some affordable housing requirements for recipients while reducing their property taxes for up to 35 years. The abatement is popular in the real estate community because it lifts a hefty tax obligation and makes it easier for developers to construct profitable residential buildings."
The article stated that Brett "said Hochul’s stance is probably the best that developers could hope for in an election year with Democrats in control of the state legislature who are critical of the tax break." He said, "We have a one party legislature and governor, and that one party has spoken about their feelings regarding this program," adding, "Given the landscape that exists, I think it’s a positive first step."
The article explained that the governor is straddling the line between her political party base and developer donor base on the issue as she approaches the election. Brett observed, "She’s positioning herself as the moderate and she is trying to thread that needle, but at the end of the day, beyond politics, it really is a necessity[.]"
Samuel Stein and Victor Bach of Community Service Society wrote a report analyzing the effectiveness of 421-a, according to the article, and recommended that Hochul's new program give tax credits based on affordability of the developments. The article noted Brett's speculation that Hochul "may pursue even more flexibility, like a plan that bases affordability on zip code or community district needs, rather than a one-size-fits-all approach." He expressed, "Look at the needs of the community and look at what the market rate is there, rather than taking a global approach and treating all neighborhoods as equal[.]"