421-a Reform

Make incentive fairer and more efficient

Existing 421-a benefits are complex, confusing, and cant keep up with the market

2

Inside GEA

Outside GEA

10 Year:

Manhattan below 110 Street only: No onsite affordability required but must purchase negotiable

certificates

N/A because Manhattan below 110 Street is only area eligible for 10 year benefit and is entirely within GEA

15 Year:

Manhattan above 110 Street and other boroughs: No onsite affordability required but must purchase negotiable

certificates Available, no affordability requirement

20 Year:

Manhattan below 110 Street only:

Substantial Government Assistance:

The benefit varies tremendously by neighborhood 2014 421a Expenditure by Neighborhood

(Benefit Year 1-5)

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

Example of GEA Inefficiencies

4

5

Production and Cost Projections

12,400

25,500

0

5,000

10,000

15,000

20,000

25,000

30,000

Current 421a Proposed 421a

Projected New Affordable Housing Units Created Over the Next Ten Years

$573,000

$391,000

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

Current 421a Proposed 421a

Projected 421a Subsidy per Affordable Unit

PresenterPresentation Notes; Feasibility Study (RFP for 1-year study released two weeks after SOTC) will determine development plan

6

Rentals: Proposed Menu of Options

421-a Rental Affordability Requirement

Option 1 Option 2 Option 3 CURRENT 421a

Units Income Affordability ($ for household of 3) Units Income Affordability Units

Income Affordability Units

Income Affordability

Low-Income Units

10% 40% AMI ($31,080) - - - - - -

10% 60% AMI ($46,620) - - - - 20%

60% AMI* ($46,620)

Moderate-Income Units - - 10%

70% AMI ($54,380) - - - -

Middle-Income Units 5%

130% AMI ($101,010) 20%

130% AMI ($101,010) 30%

130% AMI ($101,010) - -

Total / Blended

25% 66% AMI 30% 110% AMI 30% 130% AMI 20% 60% AMI Affordability Other Government

Bonds, 4% credits Bonds, credits, HPD/HDC discretion on direct subsidy No Bonds, credits, HPD/HDC discretion on direct subsidy Subsidy

Allowed?

PresenterPresentation Notes; Feasibility Study (RFP for 1-year study released two weeks after SOTC) will determine development plan

Neighborhood Examples -- Affordable Housing To Be Provided

Downtown Brooklyn

(currently inside GEA)

Astoria, Queens

(currently outside GEA)

Williamsbridge, Bronx

(currently outside GEA)

Current 421-a Program 20% at 60% AMI ($46,620) None Required None Required

Proposed 421-a Program

10% at 40% AMI ($31,080) 10% at 60% AMI ($46,620)

5% at 130% AMI ($101,010)

(25% overall averaging to 66% AMI)

30% at 130% AMI ($101,010)

10% at 70% AMI ($54,380) 20% at 130% AMI ($101,010)

(30% overall

averaging to 110% AMI; may seek direct City subsidy to provide more affordable

units and deeper affordability)

Note: All incomes given for a family of 3.

Neighborhood Examples: Affordable Housing To Be Provided

421-a ReformExisting 421-a benefits are complex, confusing, and cant keep up with the market Slide Number 3Example of GEA InefficienciesSlide Number 5Slide Number 6Slide Number 7