Thursday, November 02, 2006

Meier's On Prospect Park: Your Tax Dollars at Work

On Prospect Park West

After we mentioned Richard Meier's "On Prospect Park" building in our chat with Metro earlier this week as an example of a building that fits the scale of its surrounding and is nicely designed, a fellow blogger emailed to remind us that the building was a beneficiary of the (largely vile) 421-a tax abatement program.

What's a 421-a, you say? For those that don't know, it's a 35-year-old New York City tax break that dates to the days of the city's death spiral--fiscal crisis, Son of Sam, South Bronx on fire, muggers on every corner, etc. Back when 421-a was enacted Soho was a very edgy place to live and the city was desperate for development. The 421-a program was designed to encourage developers to build housing by offering a 10-year tax break that allows them to pay taxes on the value of the lot they're building on rather than the new property itself.

Over time, like most tax subsidy programs, it has run amok, and is routinely used to subsidize luxury housing. Beneficiaries of the huge tax break, as detailed in Metro by Patrick Arden in August include Derek Jeter (who saves $130K a year), Hideki Matsui (who only saves $26K a year), the Kingdom of Saudi Arabia (which pockets $114K a year). And then there's Calvin Klein ($152K annual savings), Ian Schrager ($40K a year savings) and big name chef Jean-Georges Vongerichten ($47K a year). Not to mention Natalie Portman ($26K a year) and James Gandolfini (a mere $6K a year in savings).

All told, the 421-a program costs the city $300 million a year. Mayor Bloomberg recently proposed the brave reform of requiring additional Manhattan developments and ones in Brooklyn Heights and Dumbo to include some affordable housing. (There are those who think 421-a should only go to developments that include affordable housing and some who think it should be put out of its expensive misery entirely and the money devoted to affordable housing.)

Which brings us to On Prospect Park, where apartments start at $1 million and where buyers will get a monstrous tax break courtesy of their fellow New Yorkers for ten years. This isn't the only Meier building in New York to get the break either. His West Village glass buildings have 421-a's too.

Brownstoner, which has been following the 421-a issue, summarizes a Pratt Center-Habitat for Humanity study of the tax break that was released earlier this year and concludes "Developers have made out like bandits." The study, among other things, found that the program has subsidized more than 100,000 units of housing -- only 8% of which are affordable or to low or moderate income New Yorkers. (You can find more about the study by clicking over to the Pratt Center's website or a PDF of the study by clicking here. It makes fascinating reading in a public subsidy for developers and the wealthy kind of way.)

On Prospect Park is still a pretty building, but hard to look at without thinking about those tax breaks.

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