Uncertain Future For 421-A Program Triggers Construction Rush In Clinton Hill And Elsewhere
The potential sunset of the city’s 421-A property tax exemption program has many real estate developers putting a rush on construction projects in an attempt to capitalize on the program’s benefits — a reduction in real estate taxes for new projects for up to 25 years — if the City Council doesn’t renew it — on June 15.
This means that at least one Clinton Hill project, at 551 Waverly Avenue — the former site of Beigel’s Bakery — might break ground in the next few months. As Crain’s New York Business reported:
Joshua Zegen, co-founder of real estate investment and development firm Madison Realty Capital, has accelerated efforts to break ground for an eight-story building with 191 apartments that he plans to put up on Atlantic Avenue in Brooklyn’s Clinton Hill. He hopes to start work on the 171,000-square-foot property’s footings within the next month.
At stake for Mr. Zegen is not just a tax break, but also a potential bonus that will allow him to add square footage over what would normally be permitted on the site. In return, Madison Realty Capital must reserve 20% of the building’s units for affordable housing.
City officials, including Deputy Mayor Alicia Glen, have suggested that developers should either be barred from taking advantage of both benefits simultaneously or be forced to create more affordable housing.
If Madison Realty Capital sounds familiar, that’s because they are also developing 504 Myrtle Avenue, where the old Pratt Station Post Office sits.
Ten blocks away on Myrtle Avenue, Mr. Zegen’s firm is rushing work on another apartment house. There, however, the project sits in a geographic zone where it receives 421a abatements as of right, meaning that no affordable housing has to be delivered to get the benefit.
