Albany lawmakers have floated changes to a key state subsidy for rent-stabilized apartments that could stop the building of thousands of badly needed units amid New York’s housing crisis, The Post has learned.
New eligibility requirements for a 421a exemption proposed by the state Senate during recent budget negotiations would bar any building facing legal challenges from qualifying, according to interviews and a memorandum seen by The Post.
Sources said the provision, if enacted, seemed tailor made to nix construction of controversial housing projects like the South Street Seaport housing tower — which sits in the district of Housing Committee chair Sen. Brian Kavanaugh (D-Manhattan), and dozens of other projects.
“This idea that Brian Kavanaugh doesn’t like it, so you engineer a program to block it — it doesn’t work like that,” said one person briefed on the proposal. “You’re going to lose thousands of units.”
In an interview, Kavanaugh declined to discuss what new regulations he’d support imposing on the subsidy, but denied he was targeting any specific project, including the Seaport tower planned for 250 Water Street.
“My opinions about whether to grant this exception are not driven by any particular project in my district or otherwise,” he said. “I’m not going to comment on the specific terms of any agreement the Senate, the assembly and the governor might come to.”
“In several years of discussion in lower Manhattan, I’ve never supported or opposed the project at 250 Water Street,” he added.
The 421a program had allowed breaks for developers on a building’s property tax provided they’d put a certain percentage of units into rent stabilization.
It expired in 2022 after years of complaints from Albany progressives who branded it as a developer giveaway since builders were allowed in several circumstances to include units priced at market rates provided future rent hikes were capped.
Gov. Kathy Hochul and state lawmakers are currently debating if buildings in the pipeline before 421a expired should be able to join the program — a proposal known as an extender.
The main lobbying group for developers in the Big Apple — the Real Estate Board of New York — said earlier this year failing to extend the program could mean projects with an estimated 33,000 apartments get left on the drawing board.
One of those developments is the Seaport Tower — a 26-story, 399-unit building the Howard Hughes Corporation wants to build on a former industrial site now used as a parking lot, a plan currently tied up in litigation.
Roughly a quarter of the building — 90 apartments — must be rent stabilized and set aside for lower income New Yorkers: A family of three making $31,000 annually would pay $775 a month for a two-bedroom in the building.
Another 10 apartments would be set aside for middle income families; for example, a household of three making $93,000 annually would be eligible to rent a two-bedroom for $2,350.
But the development is fiercely opposed by nearby residents — many of whom enjoy pristine East River views the new tower would block — for a litany of reasons, including claims it would disturb chemicals left in the ground from an old thermometer plant.
A representative for Howard Hughes Corporation declined to comment.