Tuesday, June 25, 2013

"Luxe Builders" Chase Tax Breaks (City loses out)

The impossible proves porously possible. In January, State Senator Martin J. Golden, Republican of Brooklyn, and Assemblyman Keith Wright, Democrat of Manhattan, attached a gilded little 421-a “carve-out” to the underside of a much-needed housing bill for New York City. Everyone voted for it. Just like that, Mr. Barnett’s development earned a property tax exemption worth at least $50 million, maybe much more, over the next 10 years. NY Times

GOTHAM

Luxe Builders Chase Dreams of Property Tax Exemptions

Credit our plutocrats and the real estate developers who adore them with this: No financial advantage is too small for them to pursue.

The latest evidence that our developers scour sidewalks for pennies might be found at the 90-story ziggurat known as One57, with his-and-her bathrooms, super deep freeze, titanium-reinforced views that reach to the Arctic, or at least Putnam County. The Extell Development Company recently sold a 14,000-square-foot penthouse (but does it have enough closets?) to a hedge-fund billionaire for $90 million. Bargain flats are still to be found at $18 million.
Gary Barnett of Extell paid $1.3 billion or so to put up this obelisk on 57th Street and will emerge holding great sacks of profits. Yet none of this gave him pause in his pursuit of a 10-year property tax exemption — known as the 421-a program — for this same project.
Seven years ago, the New York State Legislature ruled out tax breaks for Midtown Manhattan developments unless they included affordable units; reformers noted reasonably that there was no shortage of construction cranes and fortunes to be had in that neighborhood. In all, 150,000 units in New York City receive the 421-a property tax abatements, for $1.1 billion in lost revenue for the city.
Whatever. A subsidy is like catnip for a developer; the more difficult the pursuit, the more glorious the catch.
Mr. Barnett and four princeling developers joined the Real Estate Board of New York last year, spreading a thick green carpet of cash for politicians, at least $1.5 million. (To peruse their donation lists is to glory in nonpartisan giving: the governor, the attorney general, the state party organizations that have proved so corrupt of late, and any politician, Republican or Democrat, who possessed the simple wit to create a “Friends of ... ” committee — all are awash in the developers’ cash.)
This is known as fertilizing a field. Spread manure and, voilà!
The impossible proves porously possible. In January, State Senator Martin J. Golden, Republican of Brooklyn, and Assemblyman Keith Wright, Democrat of Manhattan, attached a gilded little 421-a “carve-out” to the underside of a much-needed housing bill for New York City. Everyone voted for it. Just like that, Mr. Barnett’s development earned a property tax exemption worth at least $50 million, maybe much more, over the next 10 years.

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