Subsidies? Toward What End?

Adrianne Shropshire

Subsidies? Toward What End?

There was a great article in the NY Times yesterday on the use of public subsidies to encourage housing development. ACORN released an important report that looks at the use of 421-a subsidies and the relationship of those tax breaks (or lack there of) to the development of affordable housing.

The Mayor's task force, that is in the process of re-evaluating the 421-a program, presents us with an interesting opportunity to debate not just housing subsidies but how public capital in general is used. Subsidizing condos for the affluent doesn't quite seem like the appropriate use of tax payer money. Nor does subsidizing businesses or developments that in turn pay New Yorkers wages that lock them into poverty.

The ACORN report and the Mayor's task force raise critical questions that we should answer and hopefully not in isolation from other critical issues. This question of how public subsidies are used should not happen separate from the question of how do we address the growing poverty in NYC or what do we do about the widening gap between rich and poor in the state. Hopefully the Mayor's poverty initiative crew is in loop on the 421-a conversation.

Comments

I have always believed that the 421-A tax abatement program should end. In the 70s, when no one was developing, it was a wonderful plan. But now the incentive has been bastardized, used as a come on to entice prospective buyers of luxury units. The abatement is a crutch for developers that costs us millions in tax revenue, dollars badly needed to improve the city's increasingly overloaded infrastructure and fund affordable housing, schools, firehouses, ect.
The problem with any standard 421A is after the abatement expires the requirements for affordability usually go with it. Then you have the huge towers, it's important to look at the 80% luxury units that change the demographics of low and middle income communities and have the effect of forcing many longtime residents out .The 80% that move in put pressure on stores and small businesses to change and raise prices.In Williamsburg all we see are bars, expensive restaurants and chain stores moving in. Mom and Pop stores that sell lower priced goods can no longer pay rents of the gentrified neighborhood. Industrial businesses are displaced due to real estate speculation. A tower with 30% affordability would not change this pattern.

In the end you have a net loss of affordable housing in the surrounding areas as real estate values(and rents) rise. With the loss of protections and enforcement of any meaningful rent regulation, surrounding affordable units are lost. Unless this changes even 30% affordability wont save affordable communities.
And remember in the Aspen the city's so called 50/30/20 housing unit in Harlem a family that grosses $45,000 a year pays $1900,00 a month in rent. Is that affordable?

Simple fact ... 421(a) and Inclusionary Zoning go hand-in-hand with large towers, often out-of-scale in low-density, low-height and low-to-moderate income neighborhoods. You don't get the abatements and bulk bonuses without the towers. So when they talk about the benefits on these programs, they are hurting neighborhoods. It doesn't matter if it's 20 or 30%, you are still pushing people out of their communities.

While there are probably some well-meaning people in some of these organizations (most of whom do not understand what is going on), groups like Acorn become predatory in their agenda. Here it isn't to end 421(a)'s (despite their talk about how subsidies should not go to the wealthy). They want to expand these programs and exacerbate the destabilization. Oh, and along with it, they might get some housing contracts for themselves.

80-20's and Inclusionary Zoning are neighborhood killers.