Developers are grumbling, but they'll have to adapt. The tax breaks they have enjoyed for the past 35 years in exchange for building new housing units in NY will now come with more strings attached. Specifically, the new plan approved by City Council on Wednesday aims to create more affordable housing and staunch the flow of taxpayer subsidies toward luxury housing. The New York Times, which endorsed Speaker Christine Quinn's plan before it passed, has the scoop today.

Starting in 2008, this revision of the law known as 421-a, will:
- Expand the Exclusionary Zone, or area in which the construction of new market-rate housing requires the corollary construction of additional affordable units in order to qualify for the tax break. Newly added areas include Lower Manhattan and parts of Harlem, Brooklyn's Downtown and brownstone neighborhoods, plus swathes of Greenpoint, Williamsburg, and Bushwick.
- Raise the minimum proportion of affordably-priced units to one out of five. Up to now, a mere 8% of the 110,000 units benefiting from the program could be called affordable, according to a report cited by Gotham Gazette. "Affordable" is defined by the city as no more than 80% of the median household income, or about $57,000 for a family of four.
- Require that the lower-priced units be included within each building and not erected elsewhere in the city, as was previously allowed.
- Set aside $400M for an affordable housing trust fund in poor neighborhoods.

As welcome as the new policy may be to advocates of affordable housing, it remains unproven as a means of substantially ameliorating the city's housing crisis. It represents a type of public-private strategy that has evolved in lieu of direct public housing subsidies since free-market practitioners gained the upper hand in the late 1970s. Will private developers build affordable housing for New Yorkers given the right tax incentives and requirements? Can the new guidelines be consistently enforced?

Links:
Housing Here and Now!, which supported the plan and calls for further reforms.
Real Estate Board of New York, which opposed the plan.
Dec 19: Gothamist: Tax-free Housing for the Holidays
Dec 6: Gothamist: Quinn to Offer Revised Housing Tax Abatement Plan