It appears that a number of luxury housing owners in New York City, including Yankees’ star Alex Rodriguez, are getting a major real estate tax break. While this is creating a stir, there is more to this story: these luxury units are getting a tax break because the developers have promised to build affordable housing elsewhere in the city.
Rodriguez and all the residents of his posh high rise will get tax breaks for 10 years under the city’s 421A tax abatement program. Luxury developers get tax breaks in exchange for making sure affordable units get built elsewhere. Rodriguez is one of some 45,000 New Yorkers who have scored the tax break.
“I think it’s outrageous,” Lewton said.
When Rodriguez’s moves into his $6 million, five-bedroom penthouse his tax bill will be $1,150. In contrast, Stephen and Phyllis Franciosa pay $3,100 in taxes one their one-family home in the Pelham Bay section of the Bronx…
The councilman said the law needs to be changed because this year alone the program will cost the city $900 million in lost revenue.
A-Rod’s taxes are so low that if he paid the going rate his tax bill would be 50 times higher. He should get such a break when he faces the Red Sox pitching staff.
City officials claim the tax breaks on Rodriguez’ building helped build over 575 units of affordable housing in the Bronx.
This is not an uncommon tactic for communities to encourage affordable housing: grant some tax breaks in exchange for the builder or developer constructing some units of affordable housing. It is often a struggle to get developers and builders to construct affordable units on their own as profit margins are lower. So communities have searched for incentives that would still allow builders to make their money while also providing for the public good.
In the long run, will this story simply be commentary about how the rich and famous get to play by different rules (and New York loves to pick on A-Rod) or can there be a reasonable discussion about how cities go about promoting affordable housing? I am guessing that the first option will easily win out. Why can’t New York news organizations go to those 575 units of affordable housing in the Bronx and talk to the other people who benefited from this tax break?