Stringer Calls for Tax Reform to Combat ‘Serious Housing Affordability Crisis’ in City

NEW YORK CITY—New York City Comptroller Scott M. Stringer has released a report that calls for a “fundamental realignment” of the city’s current housing plan.

Stringer proposes the elimination of the city’s mortgage recording tax and in its place institute a real property transfer tax that he says will reduce the cost of purchasing a home for middle-class families and fairly tax all-cash buyers that currently skirt the mortgage recording tax.

The City Comptroller states that in 2016, all-cash purchases accounted for more than 80% of Manhattan condo purchases for properties priced at more than $5 million, and over 90% of Manhattan townhouse purchases of properties sold at more than $5 million.

The new real property transfer tax called “NYC for All,” if enacted, would treat all residential transactions equally, regardless of how a home is purchased, by implementing a single progressive real property transfer tax that rises as the price of the property rises.

The report cites an example of an all cash buyer of a $500,000 city residence who would pay an RPTT of $10,038. Meanwhile, a buyer who got a mortgage to finance 80% of the house would pay the same $10,038, plus an additional MRT of $9,750. Under the current plan, middle class New Yorkers are penalized for financing their home, the report states.

The City Comptroller’s report notes that the proposed in “NYC for All” would save the average middle-class New Yorker more than $5,700 on a purchase or refinancing.  It would also raise up to $400 million in additional revenue annually that could be earmarked to further finance affordable housing and reduce homelessness in the city.

Another key proposal being forwarded by Stringer is the tripling the homeless set-aside to 15% for new construction.

“We are in the middle of a serious housing affordability crisis in this city and we cannot let a $2-million condo become the cost of entry. This crisis is having the greatest effect on the people who are the backbone of New York City—like home health aides, childcare workers, taxi drivers, and so many others—and we’re failing them.”

He adds, “We have to face this crisis head on and build units for people with the greatest need. This isn’t our first housing crisis, and in the past, the city put effective plans in place to meet those challenges—today we need real solutions to face the real need,” said Comptroller Stringer.

The report found that, while the city has experienced significant economic growth over the past 10 years, working New York families faced stagnant wages, insufficient new housing stock, and rising rents that leave 580,000 households to face severe housing cost pressure. Two-thirds of those households make less than $28,000 per year for a family of three and another 20% make less than $47,000 for a family of three.

The report states, “Given the ever-increasing burden of meeting the rent, it is not surprising that homelessness has soared and remains stubbornly high, with some 60,000 people sleeping in homeless shelters every night.”

Stringer’s report notes that while the goal of building or preserving 300,000 units by 2026 under the current Housing New York 2.0 plan is the most ambitious housing initiative in decades in the city, the plan does not address the actual housing need. The report states that only 25% of planned housing starts under the current plan are directed toward the 88% of low-income households.

“Failing to target the city’s affordable housing resources toward the greatest need will not ‘move the needle’ in the long run,” the report states. Stringer recommends that the city direct a greater portion of its affordable housing investments toward those in greater need. That reallocation of resources on the estimated 85,000 new construction units remaining to be added under the current plan would require an additional $375 million in funding per year for the life of the plan, which calculates out to an approximately 60% increase in the current capital budget for new construction.

Stringer also calls for the creation an operating subsidy program to help make existing apartments more affordable for extremely and very-low income households. The cost of this program would involve approximately $125 million in funding each year.

He also renewed his call for the city to work with non-profit developers to build affordable housing on vacant or city-owned lots. He estimated that the more than 600 vacant lots could accommodate at least 20,000 new units if the city undertook a land trust/land bank model in partnership with not-for-profits.

“Our proposal not only provides new units for some of the lowest income households and sets aside more housing for homeless families, it funds it through a new and progressive tax overhaul that makes it easier for middle class families to purchase a home,” Stringer says.