Another Year, Another Surge
By Frank Fortino
As we move into 2016, the patterns of the last few years seem to be holding up. The pace of development in NYC keeps accelerating – project teams forge ahead with new plans, and the DOB greets the industry with newer, faster and better systems to handle the workflow. Over time we expect to work harder and work better to stay with the pace of our industry. At the same time, we notice certain triggers and milestones that cause, at least temporarily, an even larger surge in the work flow.
These surges follow a pattern – for example, the switching over to a new Building Code will always accelerate projects in development. Rather than wrestle with the unknowns, developers set aggressive deadlines to file their projects before the Code turns over. These moments, we expect and plan for.
This year we had another major change to deal with – the expiration of the 421-a tax abatement – and this change trickled down to all of us. The program typically grants tax abatements to developers whose buildings are at least 20% affordable. In a revision to the program, the Mayor floated a plan to increase this number of affordable units up to 30%.
You can imagine the concern among developers. In a City where prices continue to surge, every foot of sellable space matters. If you need to carve out an extra 10% of your property for affordable units, the entire equation changes.
The proposed change hit some head winds – the Legislature for one didn’t love the concept. In the subsequent negotiations, all parties agreed to a six month extension on the overall program. This agreement came together in June of 2015, so we are now in the limbo at the end of the extension.
As expected, the last six months gave us a surge in filings from developers intent on beating this deadline. With tens or hundreds of millions of dollars on the line for their projects, you can’t blame them. What’s left unknown is if this surge will lead to a lull – if all of the projects in the que were pushed forward to beat the deadline, are there any left?
Time will tell – legislative battles tend to take time. In the meantime, we have a slate of new projects in the system, all pushed past the starting line. If we’ve learned anything over the time, it’s that we should prepare for another busy year.