How Much Do Yesterday’s 421-a Tax Exemptions Cost Us Today?

When representatives of the real estate industry and construction unions failed to reach an agreement over wages in January, the 421-a tax benefit program came to a halt for the construction of new multifamily housing. This meant the program, which provided property tax exemptions with benefit periods ranging from 10 to 25 years depending on when and where a building was constructed, was no longer available for new projects. But just because the program was suspended does not mean the city is off the hook for previously granted tax breaks. In 2017, the current fiscal year, the city will forego $1.4 billion in property tax revenue due to exemptions granted in prior years—in some instances two decades ago. The last of the properties awarded 421-a benefits before the program’s suspension are not expected to fully return to the property tax roll until 2044.

While state and local policymakers are seeking ways to resuscitate the program or create a new variation, IBO has tracked how long ago the exemptions that result in tax expenditures in a given year were granted.

  • The overwhelming majority of 421-a tax expenditures in any given year are for properties that have been awarded benefits in prior years. Since fiscal year 1998, only 16 percent of the total tax expenditure awarded each year on average is attributable to newly exempted properties.
  • For the 2017 tax roll, $94.2 million in new 421-a tax expenditures were added, the largest volume increase since 2013 and $14.2 million greater than the 20-year average.
  • Of the 2017 tax expenditure, $547.5 million is due to exemptions that started in fiscal years 2007 through 2011, the latter being the year with the most-new exemptions granted (in nominal terms) in the history of the program.
  • Buildings that started construction after 2008 are subject to a cap on the amount of value exempted regardless of appreciation. However, for older buildings the value of the exemption can continue to grow as properties appreciate. This results in an increasing share of the tax revenue in recent years coming from exemptions that were granted more than 10 years ago. In recent fiscal years there has also been some shift in the share granted 1 to 5 years earlier to the the share granted 6 to 10 years earlier as the bulge in exemptions granted in 2010 through 2012 age.

Prepared by Geoffrey Propheter
 New York City Independent Budget Office

Print version available here.

SOURCE: Department of Finance

New York City By The Numbers

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Which Sections of the City Generate the Most & Least Complaints to Graffiti-Free NYC?

Graffiti-Free NYC is a city program that removes graffiti at no cost to the owners of residential, commercial, or industrial buildings. Anyone can report graffiti on any property by calling 311. The program is run jointly by the city’s Economic Development Corporation, Department of Sanitation, and the Community Affairs Unit of the Mayor’s office.

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  • Since fiscal year 2011, Graffiti-Free NYC has received an average of 14,916 complaints a year. But the numbers of complaints citywide are declining, from 15,393 in 2011 to 13,415 in 2016.
  • In 2016, the heaviest concentrations of complaints were in Central and Southwest Brooklyn and in Lower Manhattan. Complaints have been largely down in the rest of the city since 2011, particularly in the South Bronx and Queens.
  • In 2011 through 2013 it took an average of 67 days from receipt of a graffiti complaint for Graffiti-Free NYC to send a team to clean the site. In 2014 and 2015 it took an average of 114 days for a response (data is not complete for 2016).
  • The increased response time may mean owners or neighbors are taking matters into their own hands. The percentage of complaints that resulted in graffiti removal has declined from 84 percent in 2011 to 62 percent in 2015 as cleaning crews responding to complaints increasingly find no graffiti at the reported location.
  • The budget for Graffiti-Free NYC from fiscal year 2011 through fiscal year 2016 has averaged $1.9 million annually, with the majority of the funding in recent years coming from a federal grant program. While the federal funding is no longer available, the Mayor has increased the city funding for the program to $2.5 million in 2017.

Prepared by Daniel Huber
 New York City Independent Budget Office

Print version available here.

SOURCE: IBO analysis of Department of Sanitation data
NOTE: Map divisions are based on City Council districts.

New York City By The Numbers

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