A report released Wednesday provides insights into Gov. Andrew Cuomo's proposed 421-a program which may help determine whether it is a fair trade for taxpayers or provides too rich a benefit to developers.
The 421-a program, currently being negotiated in Albany, gives builders of rental buildings a tax break in exchange for including affordable housing in their projects. Wednesday's report, prepared by the NYU Furman Center for Real Estate and Urban Policy, looked at a key change from previous versions of the incentive that requires developers in pricey areas of Manhattan, Brooklyn and Queens to meet a wage floor for construction workers and adhere to stricter affordable housing requirements in exchange for an extra 10 years of full tax exemption.
For Manhattan projects in the wage zone, the extended tax break could be enough to offset an 18% increase in hard construction costs, the report found. What remains unclear is just how much the wage floor. pegged at an average of $60 per hour in Manhattan below 96th Street and $45 per hour along the Brooklyn-Queens waterfront for projects greater than 300 units, will increase those hard costs. If the actual bump in costs is significantly less, then developers might be getting too generous of a benefit, and that extra money would likely result in increased land costs, as developers would be free to increase their bids.
article continues below advertisement"We think 421-a is a really important program," said Mark Willis, senior policy fellow at the Furman Center and an author of the report. "We thought we could help elevate the debate here."
NYU Furman Center's 421-a update by crainsnewyork on Scribd
A report released Wednesday provides insights into Gov. Andrew Cuomo's proposed 421-a program which may help determine whether it is a fair trade for taxpayers or provides too rich a benefit to developers.
The 421-a program, currently being negotiated in Albany, gives builders of rental buildings a tax break in exchange for including affordable housing in their projects. Wednesday's report, prepared by the NYU Furman Center for Real Estate and Urban Policy, looked at a key change from previous versions of the incentive that requires developers in pricey areas of Manhattan, Brooklyn and Queens to meet a wage floor for construction workers and adhere to stricter affordable housing requirements in exchange for an extra 10 years of full tax exemption.
For Manhattan projects in the wage zone, the extended tax break could be enough to offset an 18% increase in hard construction costs, the report found. What remains unclear is just how much the wage floor. pegged at an average of $60 per hour in Manhattan below 96th Street and $45 per hour along the Brooklyn-Queens waterfront for projects greater than 300 units, will increase those hard costs. If the actual bump in costs is significantly less, then developers might be getting too generous of a benefit, and that extra money would likely result in increased land costs, as developers would be free to increase their bids.
"We think 421-a is a really important program," said Mark Willis, senior policy fellow at the Furman Center and an author of the report. "We thought we could help elevate the debate here."
NYU Furman Center's 421-a update by crainsnewyork on Scribd
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