Brooklyn’s Gold Coast
The New York Observer reports that State Assemblyman Vito Lopez is not pleased with how the affordable housing program known as 421-a has performed in his district that includes Bushwick and Williamsburg, Brooklyn.
The city initiated a rezoning of the Williamsburg and Greenpoint neighborhoods in 2005 to allow for much denser development. At the same time, the city and state changed the rules regarding the 421-a program, which basically raised the bar for developers that wanted to receive tax breaks under the program. The 421-a program gives developers property tax breaks for new residential development (the program was created in 1971 when the city was desperate to incentivize the construction of new residential units). In the most desirable parts of the city (at least from a developer’s point of view) the tax breaks are only applied if the developer constructs affordable housing, usually consisting 20 percent of the new residential units.
But under the new rules, large sections of Williamsburg—the “Upland” areas—can still qualify for property tax breaks without providing any affordable housing. City Council member Steve Levin, who represents Williamsburg, blasted this aspect of the law at a recent hearing, “We do not need any more luxury housing built without paying property taxes.”
Lopez called for a higher affordable housing requirements for new developments.
“I plan, God willing, to have a hearing in every borough in the next six months to talk about the creation of a 70-30 program and a moratorium on every other kind of development—and ask the city and state not to support anything but that. Now, you may say I'm going nuts. But we don't need any more luxury development.”
There is certainly more that the city could be doing to capture some of the value created with new luxury developments to create affordable housing. One such way would be to update the city’s inclusionary housing policy to make the inclusion of affordable units mandatory in new developments, regardless of whether they receive tax breaks. Another would be to reform the 421-a law as Lopez suggests.
The city needs more market rate residential development if the affordable housing crisis is to be comprehensively addressed. But it is debatable whether the city should continue to encourage the development of luxury housing the same way as it has over the past five years. The city must find ways to leverage the development of luxury units to create the maximum number of affordable units possible.