In late 2006, Mayor Michael Bloomberg and a diverse group of city officials, non-profit and for-profit real estate developers, financers, advocates and intermediaries on the task force began reevaluating the city’s 421a tax abatement program for new development. The abatement program was set to expire June 30th, 2008, whereupon we were not certain that the New York State Legislature would renew the program. The program, which allows buyers of 421a-funded housing to save thousands in monthly taxes for up to 25 years, was to greatly increase the sales and worth of residential real estate. With this uncertainty as to exactly when this incentive was to expire, developers strongly felt time was of the essence to preserve an important benefit as to the value vacant land and future projects.
In early 2007, developers began to take immediate steps in trying to procure the necessary financing, filings, zoning calculations, and construction plans to utilize the property to return the highest profit margin it could. Architects were retained to design plans & consultants were employed to obtain the necessary NYC Building Department approvals to commence construction.
Many projects with the intent to build up whatever vacant land was left, were stalled. Within the city’s timeframe of the deadline, it became close to impossible to secure the necesary financing to fund the projects. In result, many jobs were lost and began a drastic decrease to the Real Estate market especially in the areas where the revised benefit of the 421-a tax abatement program was implemented.