Good morning. It's Tuesday. Today we'll find out about a tax break that expired in 2022 — and why the fight over replacing it has implications for New York City's future. We'll also get details on why the City Council is expected to override Mayor Eric Adams's veto of two bills today.
In conversations about the housing crisis in New York City, you almost always hear three digits and a letter — 421a. They refer to a program that provided tax breaks for developers that many of them, and some elected officials, say were essential to getting rental properties built. Then, in 2022, 421a expired. I asked Mihir Zaveri, who covers housing for the Metro desk, to assess what 421a meant to the city and why there's a fight over replacing it. The 421a program was around for a long time. It dated to the 1970s. How did it shape the cityscape? Why was 421a so important for the construction of rental buildings? New York's problems were different 40 and 50 years ago — the city desperately needed revitalization. In recent years, the city has faced a different problem. More people want to live here than can be reasonably accommodated by the number of available apartments, driving up rents and home prices. That has made it urgent to build, and specifically to build apartments that might be affordable for the moderate- and lower-income people the economy depends on. Separately, nearly everyone agrees the property tax system, which taxes rental buildings at much higher rates than condos, co-ops and many single-family homes, is one barrier to making that happen. Construction costs are high, and many housing experts feel nothing would get built — including many market-rate rental buildings, let alone affordable housing — without some tax exemptions. Did 421a address that? More than two-thirds of the 117,042 rental units built between 2000 and 2010 benefited from 421a, according to research from the New York University Furman Center. The economic effects of 421a will continue to be felt, even though it expired in 2022: The tax exemptions typically last for 35 years after construction. What did 421a have to do with affordability, and how did the rules under 421a change over the 50 years that 421a was in effect? The earliest version, according to the Furman Center, promoted only the development of market-rate apartments. In the 1980s, some affordability requirements were added for Manhattan, and, later, for other parts of the city. The version we're most familiar with today was put in place in 2016 and figured in many of the new developments in Downtown Brooklyn and Long Island City. It required developers to keep a proportion of units affordable for people at different income levels and different family sizes. How did that work? The most common option was to keep about a third of the apartments in a building affordable for people making 130 percent of something called the "area median income" — a complex measure calculated by the federal government and used by housing officials. In 2023, those apartments would have cost $4,130 a month for a two-bedroom — not particularly affordable. Why was 421a allowed to expire? The program had long been criticized as a giveaway to the real estate industry and a poor use of public funds. Left-leaning lawmakers led the opposition, saying they would not support a replacement unless the state also enacted better tenant protections. Since 421a expired, have developers shelved their rental projects? Sort of. In 2023, developers planned to build 9,090 units, compared with 45,593 in 2022, according to a December analysis of New York City Buildings Department data by the Real Estate Board of New York, the industry's lobbying arm.
But it's hard to disentangle the effect of 421a's expiration from the effect of the high interest rates that make borrowing expensive right now. It's possible that even if 421a were in place, developers would wait until the rates came down to build. In 2022, Gov. Kathy Hochul proposed a replacement for 421a. Why didn't that become reality? What are the chances of a replacement now? The governor needs the support of the left wing of her party, which is powerful in the Legislature, to get a new program passed. That's not going to happen without new tenant protections, and specifically new safeguards against evictions, which she has opposed. People like Mayor Eric Adams, influential labor unions and many housing advocates are calling on state officials to make a deal. But the real estate industry, which has donated heavily to Hochul, has been steadfastly opposed to any new tenant protections. So, for now, it seems unlikely that anything will get done.
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We hope you've enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times. Expected today: 2 veto overrides
The City Council is expected to override Mayor Eric Adams's veto of two bills today. The bills would:
Adams has been pushing back against the two bills since the Council passed them in December with veto-proof majorities. The Council speaker, Adrienne Adams, said on Monday that she was "very confident" that she had the votes to override the mayor, who maintains that the bills would make the city and the jail system more dangerous. Leaders in the Council have said the police stops bill is needed to wipe out remnants of discriminatory stop-and-frisk policing. The debate over the bill intensified over the weekend when Yusef Salaam, a newly elected council member who was wrongly convicted in 1990 as a member of the Central Park Five, was pulled over while driving with his family. Salaam, who said the officer did not give a reason for the stop, said that the episode pointed to the need for the greater transparency that the bill would provide. Mayor Adams called the stop a "picture-perfect example" of a police interaction. The police released video from the body camera of the officer who stopped Salaam and said he pulled him over because the dark tint on the windows was "beyond legal limits" under state law. Salaam said he would vote to override the mayor's veto on the police stops bill. METROPOLITAN DIARY Swamped
Dear Diary: It was 1961, and I was standing at the Bergen Beach shoreline with my friend Ricky. We were two 13-year-old Brooklyn boys, peering across the Jamaica Bay waves looking for a canoe. We were the fourth leg of a cross-bay relay race from the John Rueger Sea Explorer Base in Sheepshead Bay. The other teams had long ago handed off their canoes, which were headed to the finish line. Ricky and I waited, wondering where our team was. Then we spied not a canoe but two heads bobbing in the waves. As they got closer, we realized the canoe had gotten swamped. It was filled with water to the side rails, but still afloat. Our teammates pulled ashore, and together we tipped the canoe over to dump out the water. Ricky and I jumped in and paddled off furiously. We hadn't gotten far when water started to fill the canoe again. There were holes in the bottom. A Sea Explorer escort boat soon pulled up alongside us, and we were told to climb aboard. The other teams were at the base, and the race was finished. We were an hour, maybe an hour and a half, behind everyone. As we rode back in the escort boat, I was livid and prepared to give the organizers a piece of my mind. I never got the chance. We arrived just as the award ceremony was ending. Our team was called to the podium, where we were introduced as winners of the Good Sportsmanship award: a coffee cup emblazoned with a sailboat and the words John Rueger Sea Explorer Base. Sixty-three years later, I still have it. — Bob Berlan Illustrated by Agnes Lee. Send submissions here and read more Metropolitan Diary here. Glad we could get together here. See you tomorrow. — J.B. P.S. Here's today's Mini Crossword and Spelling Bee. You can find all our puzzles here. Sofia Poznansky, Bernard Mokam and Ed Shanahan contributed to New York Today. You can reach the team at nytoday@nytimes.com. Sign up here to get this newsletter in your inbox.
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N.Y. Today: The 421a tax break, explained
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