421-a Renewal Appears Off The Table As State Blows Budget Deadline

The future of the Affordable New York tax break, commonly referred to as 421-a, remains uncertain, with New York City Mayor Eric Adams' administration's push to have it included in the state budget said to have come to nothing.

A dozen Adams staffers went to Albany this week — although the mayor himself didn't — to ask lawmakers to include the break, which is due to expire in June, in the budget, The City reports. He was also requesting the extension of mayoral control of the city’s school system. His requests were not met, and a 421-a extension in the budget is unlikely, The City reported.

The state legislature's deadline to approve to budget was midnight Thursday, but both the Assembly and Senate adjourned until Monday, The New York Times reported, ensuring a late passage.

The future of the tax abatement is a major issue for New York developers, who have been fretting over its future for well over a year now. Uncertainty over whether the program will be allowed to expire or be replaced has slowed down deals and developments, developers say, and letting it expire would bring housing production to nearly a halt. 

Progressive critics have called it a tax dodge that fails to do anything for the city except bolster profits for developers; New York City Comptroller Brad Lander released a fresh analysis last month that found the program will cost New York City $1.77B in tax revenue this year. 

The program is not dead yet, as the legislative session does not end until June. However, it means the real estate industry is under more pressure to lobby for a program. A temporary extension of the program is also possible, The Real Deal reports.

Gov. Kathy Hochul released a proposal in January, called Affordable Neighborhoods for New Yorkers, that would largely leave the program in place, while increasing affordability requirements.

Adams’ and Hochul’s strong working relationship has been touted as a boon for the city and the real estate industry, after years of infamous feuding between former Mayor Bill de Blasio and former Gov. Andrew Cuomo. MAG Partners CEO MaryAnne Gilmartin said at a Bisnow New York City forecast event in January that Hochul and Adams were a breath of fresh air for the industry — but could only do so much with the makeup of the legislature.

“The governor, in my view, has been tremendous to the real estate community in the same way Mayor Adams is recognizing the contribution that the industry makes to the city in a way that I think is quite obvious, but has been overlooked, unrecognized and ignored for far too long,” Gilmartin said at the time. “Unfortunately, on 421-a, I'm not as optimistic because the governor's program, which I think is a solid proposal, doesn't change the dysfunction of the legislature ... We all know that this happens not in New York City, but in Albany, and that the governor's ability to impact the outcome of this incentive program is on the margins and at the end."