FOR IMMEDIATE RELEASE

ANALYSIS: 98 Percent of NYCs Affordable Housing Projects

Use Some Form of Property Tax Benefit and
Half of the Affordable Housing Projects Use 421-a
-- Less than 10 percent of NYCs affordable housing projects are union built -NEW YORK, NY April 28, 2016 The Real Estate Board of New York (REBNY)
today released an analysis of public data available from the New York City Department
of Housing Preservation and Development (HPD) regarding the Housing New York Plan
(2014-2015). The analysis found that:

98 percent of HPDs designated affordable housing projects use some form of a

property tax benefit;
Over 50 percent of the affordable housing projects use the 421-a tax benefit
program; and
Less than 10 percent of the affordable housing projects are union built.

As the chart below shows, the 421-a program plays a critical role in creating below
market, or affordable, rental housing in those areas of the City where the cost of land,
property taxes and the higher construction costs impose significant economic obstacles
to affordable housing development. For example, over 78 percent of the affordable
housing projects in Manhattan use 421-a, and approximately 55 percent of the
affordable housing projects in Brooklyn use the tax benefit. In the absence of the 421-a
benefit, affordable rental housing would be dramatically curtailed in areas of the City
where it otherwise would be infeasible to produce new affordable housing.
TABLE 1: RESIDENTIAL PROJECTS WITH AFFORDABLE HOUSING
(SOURCE: HOUSING NEW YORK, 2014 - 2015)
Number of
Affordable Projects

Projects Built
Using 421-a

Union Built Projects

Citywide

156

50.6%

9.6%

Manhattan

42

78.5%

26.2%

Brooklyn

62

54.8%

4.8%

Queens

44.4%

11.1%

Bronx

41

17.1%

0.0%

Staten Island

50.0%

0.0%

* High Demand Market

74

77.0%

16.2%

* High Demand Market: Manhattan below 96th Street, Downtown Brooklyn, Greenpoint / Williamsburg and LIC

The analysis also shows that few affordable housing projects are fully union built.
Citywide, less than 10 percent of the affordable housing projects are union built. The
remainder of such projects are built using non-union contractors and laborers or with a
combination of union and non-union contractors and laborers (commonly referred to as
open shop or merit shop). Even in Manhattan, historically considered the epicenter
of union construction activity, only 26 percent of the affordable housing projects are
union built. This low market share is probably a reflection of the burdensome cost of
union construction. According to a recent report by the NYC Independent Budget Office
(IBO), to maintain the Citys plan for constructing a total of 80,000 new affordable
housing units, a requirement to pay prevailing wages for construction would necessitate
roughly $4.2 billion in additional funding.
New York is a city of renters and a city that continues to grow. It is clear that without
421-a, much less affordable housing will be developed, particularly in those areas of the
City where it is most difficult to build, said John H. Banks, III, President of REBNY. The
analysis also validates what numerous other groups have found affordable housing
production is significantly impacted by the cost of construction. The construction trade
unions market share reflects how much more expensive it is to build under their cost
structure. A responsible and practical approach is needed to address labor costs
moving forward or else there will be much less affordable housing in New York City.
Other Affordable Housing Programs Are Only Available in More Limited
Circumstances than the 421-a Program
The analysis shows that other programs produce affordable housing in New York City
as well. However, the instances in which such programs can be used are much more
limited than 421-a. A brief review of these programs is below.
TABLE 2: BREAKDOWN OF AFFORDABLE HOUSING PROJECTS
(SOURCE: HOUSING NEW YORK, 2014 2015)
Total NYC Affordable Projects = 156

Built Using
421-a

Built Using
420-c

Built Using
Article XI

Built Using
UDAAP

* No property
tax benefit
program
utilized

# of Projects

79

59

12

% of Total

50.6%

37.8%

7.7%

1.9%

1.9%

* Two of these three projects may still opt to use a property tax benefit for their construction.

421-a is a property tax exemption program that provides a benefit for the development
of market rate and affordable housing. The program is as-of-right, available citywide and
can be used by for-profit builders. Recent legislation that is now suspended would
further strengthen the program by ensuring a 25 or 30 percent on-site affordability
requirement anywhere in the city, in exchange for a 35 year tax benefit.

According to Housing New Yorks 2014-2015 data, other affordable housing programs
include 420-c, Article XI and the Urban Development Action Area Program (UDAAP). In
general, these programs produce a smaller number of projects, mandate a higher
percentage of affordable units, typically require direct government subsidy, and include
a regulatory agreement that imposes additional restrictions on the project.
420-c is an as-of-right tax benefit program for new construction and rehabilitation
projects that requires HPD review and approval. The builder must be an entity in which
at least 50 percent controlling interest is held by a tax exempt or charitable organization.
The tax benefit can be granted for a maximum of 60 years and the taxes can be as low
as zero. At least 70 percent of the units must be affordable to households earning up to
60 percent of the Area Median Income (AMI). There is no exemption for any
commercial space in the project.
Article XI is a tax benefit program for new construction and rehabilitation carried out by
a Housing Development Fund Corporation (HDFC) and its use must be approved by the
City Council. (An HDFC is a corporation formed to build low-income housing and is
individually chartered by HPD or New York State Homes and Community Renewal
[HCR]). The tax benefit cannot exceed 40 years and taxes can be as low as zero. A
renters income cannot exceed 165 percent of AMI.
Urban Development Action Area Project (UDAAP) is a tax exemption for the
rehabilitation or new construction of housing in UDAAP designated areas land that
used to be owned by the City and has been designated by the City Council as an area
in need of urban renewal. UDAAP provides up to a 20-year exemption from real estate
taxes on the assessed value of the building.
About The Real Estate Board of New York
The Real Estate Board of New York is the Citys leading real estate trade association
with more than 17,000 members. REBNY represents major commercial and residential
property owners and builders, brokers and managers, banks, financial service
companies, utilities, attorneys, architects, contractors and other individuals and
institutions professionally interested in the citys real estate. REBNY is involved in
crucial municipal matters including tax policy, city planning and zoning, rental
conditions, land use policy, building codes and legislation. In addition, REBNY
publishes reports providing indicators of market prices for both the residential and
commercial sectors. Please visit us online at www.REBNY.com.
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Media Contacts:
Jamie McShane, Nicole-Chin-Lyn
Real Estate Board of New York
(212) 616-5200
jmcshane@rebny.com, nchinlyn@rebny.com