Hochul tax break brings 18 Gowanus projects “back from the dead”

Nothing promotes a new property tax break quite like a biblical zombie reference and politicians pretending to shovel dirt.

At a groundbreaking Friday, Gov. Kathy Hochul announced that 320 and 340 Nevins Street, along with 16 other projects in Gowanus, will receive an alternative to the property tax break 421a.

Hochul said the program will revive 5,300 apartments imperiled by 421a’s expiration “like Lazarus brought back from the dead.”

The alternative, a program that involves payments in lieu of taxes to mimic the benefits provided under the expired tax break, frees the developers from a make-or-break 2026 deadline. For now, this option is only available to Gowanus projects that in theory could still qualify for 421a.

A rendering of 320 & 340 Nevins (Fogarty Finger)
A rendering of 320 & 340 Nevins (Fogarty Finger)

During her announcement, Hochul indicated that she is not keen to expand this approach to other parts of the city.

That will come as a disappointment to developers, but the governor apparently does not want to give the state legislature an excuse not to extend the 421a construction deadline as well as craft a new tax break to replace it. She urged lawmakers to do both.

“I don’t want to piecemeal this all over,” she said of the Gowanus pilot program.

The state will take over the Brooklyn sites and rent them back to the developers through a long-term ground lease. The owners will make payments in lieu of taxes, or PILOTs, at a discount to what they would normally pay in property taxes.

Hochul launched this PILOT program in July after the legislature declined to extend the construction deadline for 421a, which expired in June 2022. To qualify for the old tax break, projects needed to have foundation footings in place by June 15, 2022, and to be finished by June 15, 2026.

Last year the governor pitched extending that deadline four years, but the proposal died alongside several other housing measures in the final days of the session. In her executive budget this year, Hochul proposed extending this deadline to 2031 and laid out a framework for replacing 421a with a program dubbed 485x.

As of December, the state had received 19 applications for the 421a alternative from projects promising 5,500 apartments. The numbers released Friday show that only one application was not approved.

The Nevins Street groundbreaking was at a full-block site acquired by Tavros Capital and Charney Companies from Property Markets Group in 2022 for $102 million. It was one of the first deals after the City Council approved the rezoning of Gowanus, which paved the way for multifamily construction in an 82-block area that had been largely zoned for manufacturing.

The two-building project is expected to create 660 apartments, with 165 rented at below-market rate. Hochul indicated that the developers are on track to finish by June 2026. Although that is the construction deadline for the expired 421a program, many lenders required an even earlier completion because delays that cause projects to miss out on the tax break would undermine their financial viability.

The 421a alternative, administered by the state’s Empires State Development, is part of a broader strategy by Hochul and Mayor Eric Adams to pursue housing policies outside the legislature’s control. Technically, however, projects in the Gowanus pilot need approval by the Public Authorities Control Board, which includes representatives of the Assembly and Senate.

Both the mayor and governor are seeking proposals for subsidized housing on government-owned sites. The Adams administration has also pitched a new housing subsidy, though only projects with mostly affordable units are eligible.

Adams, like Hochul, is asking the state legislature to replace 421a, lift the city’s cap on residential floor-area ratio, allow more office-to-residential conversions and authorize the city to legalize basement apartments.

At Friday’s ceremony, elected officials lamented the results of the latest New York City Housing and Vacancy Survey, which showed the city’s vacancy rate fell to 1.4 percent in early 2023, with only 33,000 apartments available for rent.

“We don’t have a housing shortage at all. We have a housing crisis on steroids,” Hochul said. 

Here are the other projects approved for the 421a alternative: 

175-225 Third Street 

477 Smith Street 

395 Carroll Street

325 Bond Street 

463 Smith Street

563 Sackett Street 

155 Third Street 

192 Douglass Street 

251 Douglass Street 

545 Sackett Street 

577-581 Union Street 

450 Union Street 

167-174 Fourth Avenue 

52 Fourth Avenue 

209-215 Third Avenue 

491 Baltic Street

224 Third Avenue 

Source link

About The Author

Scroll to Top