Publications
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The Latest Legislative Reform of the 421-a Tax Exemption: A Look at Possible Outcomes
This report explores the possible impacts of the new 421-a legislation on residential development in New York City’s neighborhoods. The legislation has set in motion three possible outcomes; the outcome should be determined in December 2016. Through financial modeling, this study details the effect each outcome will have on production of housing in different parts of the city. We find that the expiration of the 421-a benefit would likely lead to a disruption in the supply of housing by market rate builders, while a revised program without any increase in construction costs could result in the development of more rental units in many parts of the city compared to what the existing 421-a program would have created.
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The Latest Reform Proposal for the 421-a Program
This report analyzes the potential impact of the most recent reform proposal for the 421-a program on housing development in New York City, which is currently under consideration by the New York State Legislature. In evaluating the proposal, the report finds that the proposed 421-a program’s increase in tax exemption exceeds the additional affordable housing benefit by $2.6 to $5.7 million for a 300-unit building. The report also finds that the higher tax break for developers may support a 10-18% rise in hard construction costs without affecting long-term financial returns.
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The Legal Salience of Taxation
Many tax enforcement regimes incorporate taxpayer-initiated administrative procedures for adjusting tax liabilities. Using a novel dataset, this article examines the property tax appeals process in New York City and finds that the salience of the property tax (its visibility or prominence to taxpayers) has a large effect on the probability of appealing. I find that differences in salience across property owners, unwittingly induced by government policy and private actors, effectively shifts the property tax burden toward certain mortgagors, who are more likely to be racial minorities, foreign-born, and working families with children.
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The Role of 421-a during a Decade of Market Rate and Affordable Housing Development
The purpose of the 421-a tax exemption program, known in its most recent iteration as “Affordable New York,” is to encourage new housing construction by alleviating property taxes on the added value that comes with new development. Affordable New York will sunset in June 2022, and its future has been a source of much public debate. This brief takes a close look at development under various versions of 421-a during the last decade. It also examines the housing stock created under the current iteration of the program, Affordable New York. In addition, it examines the take-up of 421-a, the geography of development, and the types of units created with 421-a according to affordability and number of bedrooms. Understanding the recent impact of the program over the last decade is important for policymakers, stakeholders, and advocates as they consider the future of the program.
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The Role of Cities in Providing Housing Assistance: A New York Perspective
In recent years, the federal government has increasingly relied upon states and cities to create and administer social policy. This paper examines available theory and evidence regarding the appropriate role of different levels of government, focusing in particular on the role of cities. Exploring the case of New York City, the paper also offers new empirical evidence on the extent to which investments in affordable housing can help to eliminate externalities and rebuild inner city communities. The authors conclude that although cities should play a major role in administering housing programs, they should only fund them under a limited set of circumstances. Redistribution of income, a major objective of most housing subsidy programs, should generally be paid for by the federal government, not cities. In contrast, cities should consider funding housing production programs when they are part of a comprehensive strategy either to remove negative externalities or to generate positive spillovers. The authors' empirical analysis of New York City's investment in new housing suggests that housing programs can generate significant external benefits to their neighborhoods. Thus, the results point to a potentially important role for cities, based upon the spillover effects of housing construction and rehabilitation in distressed neighborhoods.