A real housing victory is in reach: Fix NYCHA by closing luxury tax breaks
By Rachel Fee

After decades of rent laws which allowed for rapidly escalating rents and deregulation of 150,000 apartments favoring landlord profits, one million households living in rent-stabilized housing are, fingers crossed, about to win big in Albany. While reforms have not yet been finalized, it is all but certain that changes will demonstrate a clear shift in priorities to favor renters.

This shift is more than symbolic, and it will keep housing more affordable for hundreds of thousands of New Yorkers. But lawmakers shouldn’t stop there. NYCHA is in crisis and Albany can help at the same time that they reform the rent laws.

Scheduled to sunset in June with the rent laws is a little-known abatement called the Cooperative and Condominium Property Tax Abatement. It provides outsized benefits to luxury owners, and it is ripe for reform.

The abatement reduces real property taxes for owner-occupiers by 17.5% to 28.1%, depending on assessed value. For most homeowners, this means a discount on their property taxes of about $1,900.

But for luxury owners, who don’t need tax relief, top benefits can reach as high as $44,000 annually. Compare that figure to $24,000, the average annual income of a public housing resident. This resident may live in an apartment plagued by mold or laden with lead or invested by vermin as indicated in the federal complaint against NYCHA.

This resident, who pays 30% of their income towards rent, has undoubtedly heard the many claims made at each level of government that there is not enough funding to bring NYCHA housing up to decent standards.

But there is money. It’s just being given to owners of luxury real estate.

Reform legislation for the coop-condo real estate tax abatement has been introduced in the Assembly by Robert Rodriguez with a companion bill in the Senate sponsored by the housing committee chair Brian Kavanagh. This bill renews the abatement for the vast majority of homeowners but eliminates unnecessary tax breaks for the top 10% of luxury coops and condos. The taxes formerly abated are redirected to pay for NYCHA’s capital repairs.

With this simple reform, $170 million in tax revenue will be collected each year. This annual revenue can support $3.3 billion in bond financing for the Housing Authority. It will make a significant impact on critical capital repair needs to help bring NYCHA into compliance with federal regulations protecting tenants from health hazards such as mold, lead and vermin. A dedicated revenue stream will also provide steady and predictable funding to supplement federal funds, which have been insufficient for decades.

This reform bill not only addresses the gross inequity of insufficient NYCHA funding, but it also safeguards against escalating costs for New York City.

This abatement is NYC’s second largest tax expenditure. In the past year alone, it has increased by 17%, driven in part by luxury condos previously developed under an abatement known as 421-a. This trend is expected to continue in upcoming years as those abatements expire on more than 53,000 apartments, many of which are high-end, luxury real estate.

If costs aren’t contained, this growing expenditure will hamper the city’s ability to provide NYCHA with the funding it needs in the future.

The expiring abatement can be reformed to help honor the state’s responsibility to NYCHA’s 400,000 residents. The state budget passed in April left that small city within a city out. While the progressive Legislature allocated a minimum of $250 million for NYCHA, somehow the issue of state capital was punted to June.

NYCHA funding must not be pitted against the rent laws in upcoming negotiations. Rent stabilized tenants and NYCHA residents can both be winners.

As rent laws and the coop-condo tax abatement sunset, Albany must reset housing policy, with a dramatic shift in priorities away from luxury real estate and towards affordable housing. This is a reform that makes eminent sense. Let’s do it.

Fee is executive director of the New York Housing Conference, a statewide affordable housing policy and advocacy organization.