City Hall warns Albany’s failure to replace controversial housing subsidy will cost apartments

Albany’s failure to renew a controversial subsidy for housing projects with apartments set aside for lower income New Yorkers could cost the Big Apple thousands of badly needed apartments, the Adams administration warned.

The figures from City Hall came as Mayor Eric Adams plans to tout a new initiative Tuesday — its Housing at Risk Task Force — that is speeding up permits and other approvals for an estimated 17,000 units so they can qualify for the existing program before it finally expires.

“With tens of thousands of New Yorkers applying for new affordable homes, a drop in new construction permits, and an explosion of demand for our ‘Housing-at-Risk Taskforce,’ the data is clear: we need Albany to act this session,” Adams told The Post in a statement.

The controversial state incentive program, known as 421-a, offers developers major discounts on the property taxes for new buildings in exchange for putting set percentages of the newly constructed apartments into rent stabilization.

City housing officials say the new program is boosting:

• 30 projects in Brooklyn that will have more than 9,700 apartments;
• Nine developments in Queens that will contain 4,700 apartments;
• 11 developments in Manhattan that could contain as many as 2,540 apartments;
• Two projects in The Bronx worth 310 units;
• One development in Staten Island with 393 units

Some of the Brooklyn developments are part of the larger controversial rezoning of the Gowanus neighborhood, which Gov. Kathy Hochul is using the state’s economic development authority to help get off the ground amid the continuing debate over reviving 421-a.

Officials declined to name the other projects as many are still seeking financing.

Department for City Planning data shows that applications for new housing developments plummeted by more than 80 percent when comparing the first six months of 2022 to the same time period in 2023 — with more than 62,000 unit permits sought then versus just 10,000 now. Typically, the city builds about 20,000-25,000 new units of housing in any given year.

City officials and developers chalk up the surge and the dramatic fall-off to developers racing to get their projects in the pipeline before the 421-a program officially expired last year.

Those projects then have to reach a second deadline — getting a shovel in the ground — to qualify for the credit by 2026, unless the program is renewed.

Experts say that higher interest rates have also contributed to the massive fall-off.

Albany lawmakers allowed the 421-a program to lapse in 2022, nixing a push by City Hall to continue the program and an effort by Hochul to reform it by imposing stricter rules on developers about what sorts of units could qualify.

Progressives had slammed the program, which essentially traded property tax rebates for subsidized housing, as a giveaway to developers and celebrated its demise at the time.

The slowdown in construction could not have come at a worse time. New York’s housing crisis across the five boroughs and its suburbs keeps getting worse — pushing rents into the stratosphere and pushing families and long-time residents to New Jersey or other far away locales.

A study from the respected RAND Corporation revealed that New York needed to build an extra 100,000 units during the 2010s to meet demand — as its housing shortage grew from roughly 245,000 to 342,000 homes and apartments.

The deficit deepened even as roughly 250,000 new homes and apartments were built, suggesting that 350,000 were needed to keep the crisis from worsening — and even more would be needed to turn the tide on the crisis.