Press Release Archives #011-97 Tax Incentives to Encourage New Housing Construction

Archives of the Mayor's Press Office

FOR IMMEDIATE RELEASE
Date: January 7, 1997

Release #011-97

Contact: Colleen Roche (212) 788-2958 or Dwight Williams (212) 788-2972

MAYOR GIULIANI SIGNS LEGISLATION EXTENDING TAX INCENTIVES TO ENCOURAGE THE PRODUCTION OF NEW HOUSING CONSTRUCTION

Remarks by Mayor Rudolph W. Giuliani at a Public Hearing on Local Laws

The next bill before me is Introductory Number 847, introduced at my request by Council Members Spigner, Pagan and Stabile. This bill would amend the administrative code of the City of New York, as amended by Local Law 106 of 1993, in relation to area eligibility limitations on benefits pursuant to the Real Property Tax Law.

The New York State Real Property Tax Law authorizes local governments to provide real property tax exemptions for newly constructed multiple dwellings if certain criteria are met. The City Council may restrict the availability of benefits by local law. This bill will extend for an additional three year period, through October 1, 1999, the provisions of the Administrative Code which will authorize 421(a) tax benefits under the Real Property Tax Law for certain new residential development in areas zoned for maximum Floor Area Ratios (FAR) of 15 or greater. The affected areas encompass the Lower Manhattan Business Improvement District and the Midtown Central Business District. The extension of 421(a) benefits in these areas will encourage construction of market rate and affordable low income housing units. In view of the current vacancy rates in commercial buildings in the City, it is clear that we should utilize tax incentives to encourage the production of new multiple dwellings in high density areas, as new commercial development is unlikely in the immediate future.

This program is a component of my Administration's ongoing effort to encourage new housing construction in the City. As the local economy continues to improve, we expect renewed interest in providing financing for multi-family housing projects. Given the high cost of development in Manhattan, the City must use every tool at its disposal to encourage financing for new residential projects and maximize the number of potential housing sites eligible for benefits.

The City would gain newly constructed market rate housing and additional affordable housing units since projects in the eligible areas require developers to build affordable units. The addition of residential space would add diversity to these neighborhoods and would be especially welcome in lower Manhattan. Further, the new construction spurred by these incentives will result in broader economic activity and additional job creation.

Finally, the potential tax loss to the City would be negligible since the tax exemption would only apply to the increase in assessed value resulting from the new housing construction. The statute and rules also require on-going payments during the exemption period equal to the tax on the assessed value of the tax year preceding the commencement of construction. As a result, the City would continue to collect taxes on the value of any original structure which might have been demolished as much as two and a half years prior to construction.

I will now turn to the bill's sponsor; next to any other elected official wishing to speak.

I will now turn to the general audience. Is there anyone wishing to speak in favor of this legislation? Is there anyone wishing to speak in opposition?

There being none, and for reasons previously stated, I will now sign the bill.