BARGAIN OR BUST?

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FYI: Does a tax break that costs the city $130 million a year buy its weight in new and affordable housing? That’s the question posed by an analysis released today by the New York City Independent Budget Office. The IBO considers a contentious possibility: In a competitive residential real estate market like Manhattan’s, many of these so-called 421(a) tax exemptions–worth as much as $91,500 for each apartment built–may have gone to new buildings that would have been constructed whether or not their developers received such breaks. The analysis also addresses the effectiveness of the 421(a) program in creating affordable housing. It’s less than perfect: Luxury housing developers appear to be receiving about twice as much money per unit from their breaks as affordable housing developers gain in cash subsidies under the program. [1/10/03]