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Gov. Cuomo’s effort to attach a prevailing-wage requirement to 421-a triggered the abatement’s disappearance in 2016 but is part of the renewed version approved over the weekend.

New York City’s most controversial tax break is back after nearly a year and a half in limbo. The 421-a tax abatement, which had expired in January 2016 because an unusual labor-business policymaking gambit failed, was restored by the state legislature over the weekend as part of the overtime budget talks.

421-a—which refers to a provision in the state’s Real Property Tax Law—reduces the property taxes on a parcel when it undergoes residential development. At properties that qualify for the break, the property owner for several years pays property taxes only on the original value of the property, not the value it gains after a new residential building is built there. After this full tax exemption ends, there has usually been a period of years during which the full tax bill phases in.

The 421-a exemption was created in the 1970s when New York was desperate for development. At the outset, it did not include any provision for affordable housing. During the 1980s new provisions were added that required developments receiving the exemption in parts of Manhattan to either include income-targeted units or pay into a fund to support affordable housing elsewhere. A decade ago, the requirement for affordable housing was applied to more areas of the city to reflect development trends.

Fans of 421-a argue it is an essential lubricant for the real-estate market in New York City. Given the high costs of land and construction, they say, developers need 421-a to make even market-rate projects break even in all but the very hottest neighborhoods. Without the tax break, these fans content, the housing supply would fail to track population and the jobs generated by residential construction would dry up.

Opponents believe 421-a does more harm than good—that it costs the city more than a billion in tax revenue, is unnecessary to stimulate market-rate development and is a poor tool for creating affordable housing. They argue that, among other impacts, 421-a inflates the price of land, therefore hampering affordable development citywide.

In 2015, as 421-a neared its expiration date, Mayor de Blasio proposed reforms of the program that were backed by the Real Estate Board of New York. These created a citywide affordability requirement, gave owners a range of affordability mixes to choose from including lower and higher incomes than under the previous version of the law, and extended the tax break period from 25 to 35 years.

Those provisions were largely adopted by the state legislature in June of 2015. But Gov. Cuomo insisted on an unusual provision: labor leaders and the development industry were charged with coming up with rules governing when prevailing wages must be paid for construction work on 421-a projects. When the two sides were unable to cut a deal, the tax break ceased in January 2016.

Now it’s back—with the Cuomo prevailing-wage requirement (and a longer full tax exemption) essentially layered on top of the de Blasio income mixes. Apartments created with the exemption stay in their affordability tiers for 40 years, a slight uptick over previous laws.

Here are the options that developers now have under the new version of 421-a, which is dubbed the “Affordable New York Housing Program”:

Option A: For developers of rental housing anywhere in the city of more than 6 but fewer than 300 units. 25 percent of apartments are income targeted: 10 percent at 40 percent of AMI (“area median income,” 40 percent of which is $36,240 for a family of four), 10 percent at 60 percent of AMI ($54,360 for a family of four) and 5 percent at 130 percent of AMI ($117,780 for a family of four). Projects under this option can use tax-exempt bonds and low income housing tax credits for financing. A 25-year full exemption followed by a 10-year phase-in period before full taxation is reached.

Option B: For developers of rental housing anywhere in the city of more than 6 but fewer than 300 units. 30 percent of apartments are income targeted: 10 percent at 70 percent of AMI ($63,420 for a family of four) and 20 percent at 130 percent of AMI. Projects under this option can use any forms of subsidy the city makes available. A 25-year full exemption followed by a 10-year phase-in period before full taxation is reached.

Option C: For developers of rental housing anywhere in the city except below 96th Street in Manhattan involving more than 6 but fewer than 300 units. Thirty percent of apartments are income targeted, all at 130 percent of AMI. No additional subsidies may be used. A 25-year full exemption followed by a 10-year phase-in period before full taxation is reached.

Option D: For developers of homeownership housing anywhere in the city except below 96th Street in Manhattan involving more than six but fewer than 35 units. Requires that initial assessed value is $65,000 or less. Fourteen years of full exemption followed by a six-year phase-in period before full taxation is reached.

Option E: For developers of rental housing in the “enhanced affordability area” (which is Manhattan south of 96th Street and parts of Community Districts 1 and 2 in Brooklyn and Community Districts 1 and 2 in Queens) of 300 or more units. 25 percent of apartments are income targeted: 10 percent at 40 percent of AMI, 10 percent at 60 percent of AMI and 5 percent at 120 percent of AMI ($108,720 for a family of four). Projects under this option can use tax-exempt bonds and low income housing tax credits for financing. A 35-year full exemption. Average construction wages must equal at least $60 an hour in Manhattan and $45 an hour in Brooklyn and Queens. Sites located outside the enhanced affordability area that have 300 or more units can opt in and must pay the Brooklyn/Queens wage.

Option F: For developers of rental housing in the “enhanced affordability area” of 300 or more units. Thirty percent of apartments are income targeted: 10 percent at 70 percent of AMI and 20 percent at 130 percent of AMI. Projects under this option can use any forms of subsidy the city makes available A 35-year full exemption. Average construction wages must equal at least $60 an hour in Manhattan and $45 an hour in Brooklyn and Queens. Sites located outside the enhanced affordability area that have 300 or more units can opt in and must pay the Brooklyn/Queens wage.

Option G: For developers of rental housing in the “enhanced affordability area” except below 96th Street in Manhattan involving 300 or more units. Thirty percent of apartments are income targeted, all at 130 percent of AMI. No additional subsidies may be used. A 35-year full exemption. Average construction wages must equal at least $60 an hour in Manhattan and $45 an hour in Brooklyn and Queens. Sites located outside the enhanced affordability area that have 300 or more units can opt in and must pay the Brooklyn/Queens wage.

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