May 26, 2015
By Marc Bussanich
New York, NY—The legislative session in Albany ends very soon, but the real estate industry and organized labor are spending profusely on an all-out campaign to renew the 421-A tax exemption as is or reform it so that real estate developers are required to pay higher wages when they receive public subsidies.
The real estate industry-backed Affordable Housing and Local Jobs Now coalition released a statement this morning that they would be spending millions on an advertising campaign that would leave Donald Draper speechless—TV, Digital, Radio and a “grassroots” campaign to educate New Yorkers on what they say is a “deceptive wage proposal that would stop builders from hiring local workers and constructing tens of thousands of more new affordable housing units.”
Accompanying the statement is a sleek and polished 30-second YouTube video portraying ordinary working New Yorkers smiling with their families and a narrator imploring the public to call their legislators and tell them to reject the prevailing wage proposal being sought by “special interests.”
The 421-a property tax exemption program started in the 1970s as a means to give developers an incentive to build residential, as officials then were concerned that residential construction was dropping because many residents were moving to the suburbs. According to the Housing Preservation & Development agency’s website, eligible projects for the exemption include “multiple dwellings on lots which were vacant, predominantly vacant or improved with a non-conforming use three years prior to the start of construction.”
The benefits to developers are manifold, according to the Pratt Institute.
“Under the program, owners are exempt from paying the increase in property taxes that results from new construction. For example, if the vacant land was valued at $1 million and the new property is worth $10 million after construction, the property owner will not be taxed for the $9 million increase in value for the exemption period.”
The organized labor-backed Up4NYC coalition is running its own campaign to challenge the real estate industry’s assertions in their advertising campaign. It also produced a YouTube video where the narrator announces that as developers get millions of dollars in tax breaks, thousands of construction workers aren’t getting an honest day’s pay.
In response to the real estate industry’s new advertising push, Tim Meara, a UP4NYC spokesperson, said in a statement that the 421-a property tax exemption program must be fixed.
“UP4NYC is committed to improving the lives of working class families. We will not retreat because wealthy special interests are going to advocate protecting their profit model. 421-a must be fixed. Public subsidies require public responsibilities. [We must] increase the wage and increase the true number of affordable units. Anything less is Albany being run by wealthy special interests."