Bloomberg backs plans for builders tax reform.

The creation and construction of affordable housing in the city received a major boost this week as Mayor R. Bloomberg endorsed much anticipated reforms to the 421-a property tax program that gives tax incentives to developers.

Some advocates salute the recommendations for the program, which has not been updated since it was first created in 1971.

"It is a complicated issue, but I'm glad the city was able to get everybody in a room and come up with a set of recommendations to move it all forward," said Abby Sigal, director of strategic initiatives for Enterprise, a developer of affordable housing in New York City.

Others believe the law has shortcomings. According to Local Local 32BJ, a labor union for security professionals in New York City, it's simply a Bandaid measure.

"While the Mayor deserves credit for bringing the decades-old 421-a program into line with today's economic realities, the reform will fall short if it fails to raise the number of good paying jobs and create affordable housing in rapidly gentrifying neighborhoods throughout the City," said a Union spokesman.

"Any reform of the 421-a program must require developers to pay building service workers prevailing wages and to add affordable housing in order to benefit from the tax break," he said.

Under the original 421-a program, developers within designated areas are given tax incentives to develop housing. The scheme has been hailed for helping create over 110,000 apartments in the city.

However, earlier this year, the mayor convened a 26-member task force to examine 421-a and suggest changes that would better align it with the current real estate environment that has seen an unprecedented amount of development of luxury condominiums throughout the city as the mayor himself pushes to create hundreds of thousands of affordable homes through his own $7.5 billion New Housing Marketplace Plan.

Among the major recommendations from the panel is the expansion of the area where developers have to include affordable housing in their development plans. Currently, the zones run from 14-96th street and the Greenpoint/Williamsburg waterfront. Under the new proposals, it would include areas with high rents, including Harlem, downtown, Brooklyn Heights, DUMBO and the waterfront in Brooklyn/Queens.

The panel also recommended a cap of $100,000 on the amount of benefits that a market rate unit could receive and suggested plans should now include at least six units of affordable housing--up from three units--in order to receive the tax benefits.

Under the new proposals, the trade of 421-a benefits would also be scrapped. Under the current program, developers are allowed to receive the tax benefits in return for purchasing certificates sold by the developers of affordable housing outside the zone.

Developers that exclusively provide affordable housing would receive maximum benefits for 25 years. Other developers that provide some affordable housing would receive 15 years of benefits.

"I think that these innovative recommendations strike the right balance to maintain a strong housing market while also providing funding for our aggressive plan to create affordable housing for 500,000 New Yorkers," Bloomberg said.

"The task force's recommendations will ensure that the property tax programs the City has developed to spur housing production are working in the most efficient way. Last year the City authorized housing permits for 31,599 new units, the largest number of permits since 1972. So far this year we are on target to beat that number again."

The recommendations are just the first step in hammering out details of 421-a. The changes proposed will require City legislation and the task force will continue to work with the administration as they consider legislation this fall. The administration will also work with the State as they consider renewal of the 421-a program, which will otherwise sunset on December 31, 2007.