Superblock Tax Break Passes
New York developers get millions despite lack of affordable housing in plans
Published: December 12, 2012
The City Council passed a tax break worth tens of millions of dollars for the developers of the ever-coming west side “superblock,” despite the lack of a formal contract for lower-income housing in the huge and long-stalled redevelopment proposal.
“We felt inclusionary housing should be part of it” and the developer agreed, 12th District Councilman Carl Stokes, who chairs the Taxation, Finance, and Economic Development committee, told the council on Dec. 3. But after 1st District Councilman James Kraft asked specifically about inclusionary housing and a still-to-be-negotiated “profit sharing” arrangement with the city, Stokes admitted that both items are “outside the statute.”
But, Stokes continued, “the profit-sharing letter will be part of the agreement with the Board of Estimates. The housing part is a commitment by the developer, on the record, before the committee.”
With that, the full council advanced the bill and passed it on again at its Dec. 6 meeting.
The deal is expected to get Board of Estimates approval and Mayor Stephanie Rawlings-Blake’s signature before year’s end. Its value has been estimated anywhere from $17 million to $45 million.
Called a PILOT or “payment in lieu of taxes,” the break will go to Lexington Square Partners, a consortium of mostly New York-based developers chosen to develop the $153 million mixed-use project in 2007. Supposedly, there will be 296 apartments and a 650-space parking garage at the corner of West Fayette and North Howard Streets. Another part of the project not covered by the PILOT includes 217,000 square feet of retail space. Under the PILOT deal, the developers will pay just 5 percent of the property tax increase their development would have otherwise required. The 95-percent-off sale lasts 15 years. In years 16-20, the tax rates are to be racheted up to 80 percent of what a nonfavored developer would pay.
The developers also expect to get almost $16 million in historic tax credits, plus a tax credit for being inside an “Enterprise Zone.” Some 652 retail jobs are expected to be generated at an average salary of $20,800, according to a planning study—far less than what will be needed to rent the apartments there.
The developers promised 12 of the 296 apartments would be set aside for low-income tenants. The city’s inclusionary housing law would have required 59 units, but that law also requires the city itself to subsidize construction, allowing for an exemption if the city could not afford the additional dough. In a September memorandum, Housing Commissioner Paul Graziano opined that his agency “believes that the Housing Commissioner must exempt Lexington Square from the requirements of the Inclusionary Housing law.”
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