NY mayor seeks 'mansion tax', cap on property-tax break

New York

NEW York Mayor Bill de Blasio plans to call for changes to a state property-tax abatement law that would force housing developers to create more affordable units.

The proposal, which would need approval from the New York Assembly and Senate, would require builders to set aside as much as 30 per cent of a project's apartments for low and moderate-income tenants in order to be eligible for a property-tax exemption, according to an e-mailed statement.

Mr De Blasio, a self-described progressive who ran for mayor in 2013 seeking higher taxes on the wealthy, also will propose a 1 per cent surcharge on the transfer tax in sales of homes over US$1.75 million. The "mansion tax" would impose another 1.5 per cent marginal tax rate on sales proceeds over US$5 million. The city already has gets an additional 1 per cent transfer levy on residential sales of more than US$1 million.

"This can't be a city of just penthouses and luxury condos," Mr de Blasio said in the statement. "We are turning the page, and making sure the same pressures that have pushed New Yorkers out of their neighbourhoods are harnessed to build the next generation of affordable housing."

The proposals, announced the same day as the mayor's annual budget request to the City Council on Thursday, are intended to further Mr de Blasio's signature goal to create or preserve 200,000 units of affordable housing by 2025.

More than 600,000 residents spend more than half their income on rent, said Judi Kende, New York-based vice-president of Enterprise Community Partners, a national advocacy group for affordable housing. "We laud the city for seeking to tackle the crisis," Ms Kende said in a prepared statement.

The Real Estate Board of New York, the industry's lobbying arm, which sought a continuation of the old law, backed Mr de Blasio's plan, saying that it would create more affordable and market-rate housing. Developers would benefit from an extension of the tax break to 35 years instead of the current 25.

"We are strongly committed to continuing our work with the administration and other elected officials to address the city's housing needs," Steven Spinola, board president, said in an e-mail.

The Alliance for Tenant Power, a New York organisation that advocates on behalf of renters, said the tax breaks should end entirely.

"The programme primarily funds luxury housing for the wealthy elite while fuelling gentrification and displacement," Delsenia Glover, the organisation's campaign manager, said in a news release. "It yields little actual affordable housing and does more harm than good."

The de Blasio administration estimates that its proposal would double the number of affordable apartments created under the programme to 25,000 from 12,400 over the next 10 years, according to the statement from the mayor's office.

City budget officials calculate that the mansion tax could generate as much as US$200 million in revenue, enough to produce 37,000 subsidised apartments. Bloomberg