December 14, 2016
By Stephanie West
New York, NY – The New York City Department of Finance has sent letters notifying owners of 3,103 multi-family rental buildings, with 37,141 apartments, that their 421-a tax benefits will be suspended if they don’t comply with the requirements of the 421-a program.
This is the latest action coming out of a multi-agency enforcement effort to ensure that property owners receiving valuable 421-a benefits are in full compliance with the law. If these buildings were not getting 421-a benefits, their owners would pay $304 million in property taxes to New York City this year alone.
“It’s outrageous that property owners accept tax breaks and then simply choose to ignore their legal responsibility. Enough is enough. Building owners who fail to comply will lose the benefit,” said Mayor Bill de Blasio.
The enforcement action targets rental projects that have received 421-a benefits for at least five years but have not yet filed a required Final Certificate of Eligibility (FCE) with DOF. The letters give owners notice that the tax exemption will be suspended unless they submit their FCE. Buildings that do not comply within the 13-month deadline will have their benefits revoked by HPD, where appropriate. Approximately 173,000 units received 421-a tax benefits, worth $1.2165 billion in forgiven taxes, in fiscal year 2016.
“The City is committed to ensuring that owners who accept valuable tax benefits are complying with their obligations,” said HPD Commissioner Vicki Been. “Most building owners do the right thing, but we will not allow anyone to flout the law. We will continue to cooperate across levels of government to use all of our enforcement powers to crack down on those who would abuse the system.”
For many years, benefits were administered through a two-stage application process because the 421-a statute allowed a developer to apply to HPD for a Preliminary Certificate of Eligibility (PCE) once construction started, and again for an FCE when construction was complete. Even so, many owners, especially in smaller buildings with less than 100 units, failed to complete the FCE process.
“It is very important for landlords who have been receiving the 421-a tax benefit to file the necessary paperwork with our agency and to pass on those benefits to the tenants,” said DOF Commissioner Jacques Jiha.