Real-estate bigwigs who dumped hundreds of thousands of dollars into Gov. Kathy Hochul’s campaign last year are set to win big if her proposed budget gets the green light.
That’s because the Hochul-backed budget aims to give housing projects until 2030 – rather than 2026 under existing law – to finish work in order to qualify for the lucrative 421a tax abatement program as long as existing projects had work started by last June.
That proposed tweak would seemingly benefit at least a dozen developers who gave her campaign $564,000 amid ongoing uncertainty about the future of 421a and whether it would get extended in a way that allowed their own projects to move forward, public records show.
But critics say the governor ought to be careful.
“The Governor should be distancing herself from any appearances of pay-to-play, especially considering recent controversies with donors and state contracts,” Assembly Minority Leader William Barclay (R-Fulton) told The Post while alluding to other instances when official decisions by her administration benefitted her political supporters.
“As the state budget takes shape, it will be obvious if the tax dollars going out have been influenced by the donations coming in. This is the business-as-usual approach that Albany has become notorious for.”
In her State of the State speech last month, Hochul vowed to seek renewal of the 421a, which incentivized developers to set aside units in new buildings for affordable housing before it expired in June.
Luxury developers Taconic Partners, Rockrose Development, Fetner Partners, Moinian Group, Charney and Midtown Equities are touting a range of amenities in buildings qualifying for the affordable housing tax break – including a pet spa and stroller parking at 200 Montague Street in Brooklyn.
Michael McKee, treasurer of the left-leaning Tenants PAC, vehemently opposes the proposed extension.
“This tax money that we’re not collecting, could be used for all sorts of purposes. It could be used for education. It could be used to expand healthcare. It could be used to build affordable housing,” he said. “So we oppose it. We oppose this extension entirely.”
Progressives succeeded in shooting down an extension of 421a last year despite efforts by Hochul to replace it with another program that she argued would boost the share of affordable units in approved projects.
Roughly two dozen other people tied to past 421a projects involving firms like Related Companies and Silverstein Properties gave at least $1 million to Hochul amid efforts to extend the controversial abatement.
A spokesperson for the Cayler family connected to 200 Montague Street said the family “never discussed” the property tax break with Hochul, though it donated $415,000 to her campaign, according to public records.
Hochul also got political backup last year from members of the political left like McKee, who wants to end 421a once and for all.
“It’s a huge waste of money,” McKee said while noting “we held our nose” by reluctantly supporting Hochul’s election against Republican Lee Zeldin, who she defeated 53% to 47% in the closest gubernatorial race in a generation.
“It’s just crazy. It’s just utterly nuts,” McKee added.
Some 421a critics like Democratic socialist state Sen. Julia Salazar (D-Brooklyn) say they are fine with Hochul’s budget proposal, along with conservatives like Barclay. But he said he nonetheless has qualms with how Hochul is presenting the issue considering she raised a record-smashing $60 million amid controversy.
The Real Estate Board of New York, which represents developers in New York City, has given its stamp of approval to the budget proposal as well.
“The Governor’s call for extending the 421a completion deadline is critical for ensuring that tens of thousands of badly needed rental apartments, including thousands of below market-rate units, get built,” said Basha Gerhards, senior vice president of planning at the Real Estate Board of New York.
Hochul is hoping to spur the construction of 800,000 housing units over the next decade through the budget by leaning on a variety of approaches that include overriding local zoning laws near transit hubs while imposing growth targets on municipalities – ideas that have attracted fierce criticism from suburban Republicans.
Downstate localities must boost housing by 3% per year or else Hochul wants the state to allow developers to get a streamlined regulatory process to build despite local resistance.
The governor, however, has not included a proposed replacement for the expired 421a subsidy for new projects while saying she is willing to work one out with state lawmakers.
Deadline for the state budget is April 1.
Hochul spokeswoman Hazel Crampton-Hays said the proposed extension of the 421a deadline for existing projects was a “common-sense solution” that would help deliver 32,000 out of the 800,000 units Hochul says could get built over 10 years if her budget gets approved.
“As we have always said, campaign donations do not have any influence on government decisions and we reject any implication otherwise,” Crampton-Hays said.
Representatives for state Senate Majority Leader Andrea Stewart-Cousins (D-Yonkers) and Assembly Speaker Carl Heastie (D-Bronx) – who recently said he is boycotting The Post in response to criticism from its editorial board – did not provide comment Friday about whether they supported the proposed 421a extension.
https://nypost.com/2023/02/12/real-estate-donors-to-gov-hochul-could-soon-see-421a-tax-breaks/
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