New York City’s affordable housing crisis cannot be ignored much longer. The past few years this problem has been exacerbated with the pandemic and inflation. Inflation is causing more people to be without a home because everyday items are becoming increasingly more costly while wages are staying stagnant and even decreasing at the same rate. The need for affordable housing has never been greater. Which begs the question, why would New York State, and by extension New York City, let the 421a tax abatement lapse? Albany, at the state legislature, has not made any progress in producing a replacement and New York City has not done any meaningful lobbying to compel the legislature to act. Governor Hochul put up a proposed replacement to the 421a tax abatement dubbed, “485w”.
The 485w proposition addresses the affordable housing needs of today by imposing deeper affordability thresholds in new developments. Affordable housing is very much reliant on the private sector. Interest rates and the rise in construction costs have made development challenging, not to mention affordable housing. Couple this with the fact the 421a tax abatement has expired with the only hope of replacing it being the new proposed 485w tax incentive.
Affordable housing is hinged on a tax abatement. Repeatedly, every year, the city and state try to address this crisis, and it is only getting worse. To have any lapse in an introduction to a new tax abatement or at least an extension of the old 421a while Albany and the legislature iron out a replacement is dangerous and irresponsible.
Mandatory Inclusionary Housing (MIH) was implemented in East New York and East Harlem as the two first neighborhoods to be rezoned utilizing the program with the goal of setting aside a percentage of units for affordable housing. East New York seemed to have adopted it well, but East Harlem, due to the already high land values in the area before the MIH rule was implemented, has not fared well amongst private developers. Mandatory Inclusionary Housing is heavily reliant on a tax abatement like a 421a. The private sector has not been a fan of Mandatory Inclusionary Housing, just look at Real Estate Equities Corporation’s Third Avenue development or Extell’s proposed development for their 125th Street site. Both large sites are situated in Mandatory Inclusionary Housing zones but both developers elected to take the risk and build state of the art office buildings, the first of their kind in East Harlem.
I believe instead of demonizing developers in the private sector, the city and the state should embrace them. The public sector cannot perform well and be trusted to build affordable housing on time and under budget.
The East Harlem rezoning as it pertains to private developers following the Mandatory Inclusionary Housing rule, has had a lackluster rollout. A lot of developers who had bought land are sitting on the sidelines. One of the problems developers face especially in the rezoned areas in this neighborhood, are rent stabilized tenants in existing, dilapidated buildings. There should be a program that guarantees these people a temporary apartment while the new building is being built and then a replacement apartment in the new building once it is complete. This will make way for a multitude of new buildings along the avenues in East Harlem and expedite the entire process. If New York City is facing an imminent affordable housing crisis, then we should expect innovative solutions.
The city should also investigate rezoning parts of Washington Heights, Central Harlem, and Marble Hill neighborhoods. The city must create thousands of new units by 2030 to keep up with the demand.
There are many different solutions the city can put in place even before we have any guidance from Albany regarding the new 485w or something similar they will put in its place. There should not be a lapse like this again, especially in the future. It is simple math that the tax abatement helps create affordable housing. To meet the goal of putting thousands more units online before 2030 to meet the demand, it is clear that the city and state must incentivize the private sector.