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Land Use, Housing & Zoning
30 East 31st Street, 31st Street Zef LLC, application for 421-a partial tax exemption
WHEREAS, 31st Street Zef LLC (the “Applicant”) is seeking a partial tax abatement under New York Real Property Tax Law § 421-a, 28 R.C.N.Y. § 6 and other relevant rules and regulations (“the Law”) for a 40 story, 42-unit new construction luxury condominium at 30 East 31st Street in Manhattan (the “Building”) on Block 00860, Lot 0057 (the “Lot”); and
WHEREAS, The Law generally provides that 421-a tax benefits will only attach to units in buildings the Geographic Exclusion area (in which the Building is located) if 20% of the units on-site are set aside as affordable units and those buildings were constructed on sites that were “vacant, predominantly vacant, underutilized, or improved with a non-conforming use three years prior to the start of construction…”; and
WHEREAS, The Lot was technically underutilized as the previous building was constructed to 4.5 FAR whereas the maximum allowable FAR is 10; and
WHEREAS, The Applicant proceeded to a lot merger (tax lots 57 & 24), and transfer of development rights from the adjacent lot, bringing the current development to 479 feet high; and
WHEREAS, Although the Building will contain no affordable units on-site and Applicant will construct no new affordable units elsewhere in the City, the Building may nonetheless qualify for a 421-a abatement (subject to the Assessed Value Cap) given that the Applicant has purchased 42 Negotiable Certificates from projects that have already built affordable units elsewhere in the City; and
WHEREAS, Negotiable Certificates were available to developers who wish to build 100% market rate units but also wish to qualify for 421-a; and
WHEREAS, Negotiable Certificates allow developers to purchase units from low-income housing developers elsewhere in the city where each unit purchased affords the market-rate developer five tax-abatement certificates and where each certificate qualifies the market-rate developer for a ten-year exemption; and
WHEREAS, The City no longer allows for developers to use off-site affordable housing to avail themselves of 421-a tax benefits via negotiable certificates, and no new negotiable certificates since December 28, 2007 have been issued, the Applicant has purchased 42 of such certificates which were executed prior to the phase out (on October 19, 2000; April 28, 2006; and May 11, 2000), from developers who have constructed affordable units in the Bronx; and
WHEREAS, The developer is allowed to use negotiable certificates because the building construction at 30 East 31st street started prior to December 2016; and
WHEREAS, The tax abatement will gives unit owners a 100 percent exemption from any increases in their property taxes for the first two years and then taxes will be increased by 20 percent of the normal tax rate every two years for the remaining eight years; and
WHEREAS, Although the Applicant did not disclose the purchase price for the 42 certificates, according to the Applicant’s representatives, at the peak of the program, certificates purchase price ranged from $55,000 to $65,000 per certificate, while, still according to Applicant’s representatives, in today’s market certificates can be purchased for $25,000; and
WHEREAS, The current application had a modest impact on housing development in the Bronx and will generate no affordable housing in CB5; and
WHEREAS, The 421-a tax abatement fails to substantially stimulate affordable housing development in CB5; and
WHEREAS, According to a study by New York’s Independent Budget Office, over the past 11 years, the 421-a program has benefitted condo buyers in the form of tax breaks but failed to produce additional housing developments, while costing the city up to $2.8 billion in lost tax revenue; and
WHEREAS, The 421-a tax abatement program has been modified as recently as 2017 but still fails to address the needs for affordable housing, while causing enormous loss of tax revenue for the city; therefore be it
RESOLVED, Community Board Five recommends denial of the application for 31st Street Zef LLC (the “Applicant”) seeking a partial tax abatement under New York Real Property Tax Law § 421-a, 28 R.C.N.Y. § 6 and other relevant rules and regulations (“the Law”) for a 40 story, 42-unit new construction luxury condominium at 30 East 31st Street in Manhattan (the “Building”) on Block 00860, Lot 0057 (the “Lot”); and further be it
RESOLVED, Community Board Five urges the State of New York to repeal the 421-a tax abatement program as it currently applies in New York City.