The stars have, literally, aligned: Gov. Cuomo and Mayor de Blasio finally agree on something, and the leaders of the Legislature are behind them. New York City seems ready to follow other global cities like London, Paris and Vancouver in instituting a pied-á-terre tax in this year’s budget, applied to homes worth $5 million or more that are not the buyer’s primary residence.
What’s less clear is how the estimated $650 million per year in tax revenue would be spent.
This is a question on which there should be no debate. This is a housing tax, assessed on incredibly wealthy owners buying second homes in a city where hundreds of thousands of families struggle to pay the rent, much less afford to own. Its revenues must support housing. The New York City Housing Authority, which provides affordable public housing for nearly one in 14 New Yorkers and faces an unprecedented funding deficit, should get the funds generated.
The public-housing crisis unfolded in the media over the last year, but its challenges have been building for years as federal funding has never kept up with the need. NYCHA is the nation’s largest landlord, and it manages by far the largest source of housing affordable to extremely low-income New York City families. This is a lifeline for 400,000 people and families who live in developments, many of whom help the city to run: The largest employer of NYCHA residents — who serve as teachers, NYPD employees, and so much more — is the city itself.
After a major federal investigation and settlement related to its handling of lead and other serious hazards, the agency has come up with a plan to raise $24 billion of the $32 billion to satisfy its capital needs and put it back on track. With increased federal oversight, NYCHA will expand its use of the Rental Assistance Demonstration to convert some homes to permanently affordable housing, accelerate new construction to create more apartments and mixed-income buildings, and sell air rights at certain sites to generate revenue for repairs.
The pied-á-terre tax could be a major step toward closing the remaining $8 billion gap.
Cuomo estimates that with the revenue from this tax, the state could raise $9 billion in bonds. Even directing just half of that toward NYCHA would make fully funding the agency’s capital needs a realistic possibility — a light at the end of the tunnel for residents and administrators alike.
People who own properties in New York City but live elsewhere take up housing units and do not contribute to our economy on a regular basis. They infrequently shop at small businesses or eat at local restaurants, and they pay no local income taxes. The pied-á-terre tax makes up for that lack of participation in the local economy and benefits the people whose homes hang in the balance.
The plan to save NYCHA using the tools the agency has now is comprehensive, but the reality is that there is no secret shortcut to overcoming its $32 billion deficit. What’s needed now are funds.
The wealthiest among us who want to own homes in New York should have to contribute to the economy, and that contribution should support homes for other New Yorkers with a wide range of incomes and backgrounds. New York must not let this opportunity to save NYCHA pass us by.
Kende is the vice president and New York market leader of Enterprise Community Partners. Fee is the executive director of the New York Housing Conference.