The legislative session in Albany is set to close tomorrow, and sources tell The Real Deal that no one should be expecting any magically-negotiated replacement for the long-gone 421a developer tax exemption before then. But a quick look at the most up-to-date construction permit data shows that developers are missing the numerically-named tax cut dearly.
In April, we showed you that new apartments permitted for construction during Q1 of 2016 were at less than a third the amount of the same time period in 2015. And in the two months since, residential developers haven’t gotten much busier.
Just over 2,700 new apartment units have been greenlighted for construction through the end of May of this year, according to a TRD analysis of Department of Buildings issued initial permits data for projects of at least 10 units.
While the middle months of last year saw a surge in permit activity, as developers worked with the DOB to get their projects approved before the 421a expiration deadline of June 15, 2015, this year it looks like no one is in much of a hurry. By contrast, more than 20,700 new apartments in projects of at least 10 units were initially permitted to begin construction by the DOB during the same period last year.
The largest residential building to receive permits so far in 2016 is set for land owned by former Ursuline Bedford Park Convent in the Bronx, where senior housing facilities currently exist. The 184-unit development, which is going up at 2848 Bainbridge Avenue, will likely be some similar sort of supportive housing project.
The second largest building permitted so far this year is for increasingly prolific Flushing developer Jiashu “Chris” Xu’s 183-unit condo at 88-08 Justice Avenue in Elmhurst, Queens. No residential project of 200 or more units received their initial building permits through May of this year.
Despite the lack of 421a, developers are still submitting new applications to the Department of Buildings, although not in very impressive amounts, as TRD previously reported. Whether these developers are planning to do rentals or go condo—and whether they are counting on a replacement for 421a by the time they want to start construction—is unclear.
The 421a developer tax exemption, which existed from 1971 to 2016, officially expired in January after the real estate lobby and labor unions failed to negotiate a policy on prevailing wage rules for projects that benefit from the program. The current legislative session for the State of New York is set to close on Thursday evening, but could potentially be extended temporarily though an order by Gov. Andrew Cuomo.