178 Buildings Getting Tax Breaks Are Flouting Rent Regulation Rules: City
(DNAINFO) Amy Zimmer | November 25, 2016 — Owners of 178 buildings could lose their 421-a tax breaks as part of the city crackdown, officials said.
The city’s Department of Housing Preservation and Development has sent out letters warning owners of 178 residential buildings that their 421-a tax benefits will be revoked retroactively if they don’t comply with the tax abatement program’s requirements.
The Tuesday announcement from Mayor Bill de Blasio, Attorney General Eric Schneiderman and Gov. Andrew M. Cuomo — which affects buildings with a total of 1,400 rental apartments and could mean landlords have to pay back up to $4.5 million doled out to date — is the latest action from the Real Estate Tax Compliance Program, a joint initiative of the Attorney General, HPD and the Governor’s Tenant Protection Unit.
Under the tax break program, owners must register apartments as rent-regulated units, and the apartments are subjected to limits on annual rent increases — whether they are units set aside for low-income renters or whether the units command market-rate rents.
“The 421-a tax program is a two-way street: landlords who receive these lucrative tax benefits must afford their tenants rent-stabilized leases and protections,” Schneiderman said in a statement. “But investigations conducted by my office have found that some landlords are flouting these requirements and instead, using the tax break to simply increase their profits.”
State lawmakers will soon be voting on whether to approve a new, expanded version of the now-suspended 421-a program, which currently costs the city roughly $1.2 billion in foregone taxes and might swell to $2.4 billion, according to advocates.
The enforcement letters sent to building owners on Monday gives them 90 days to comply. The 178 buildings were co-ops and condos that receive 421-a benefits but have been operating as rental buildings without fulfilling the requirements, including having their rent rolls approved by HPD and registering their units as rent-regulated with the state’s Division of Homes and Community Renewal.
The vast majority of these buildings have less than 50 units and are located in all boroughs except Manhattan, with the majority in Brooklyn and Queens. Officials did not name individual properties or landlords.
“This is the latest shot across the bow at landlords who don’t play by the rules,” HPD Commissioner Vicki Been said in a statement. “We will not stop until every property is brought into compliance.”