Lower Manhattan Legislators Want to Roll Back Tax on Affordable Units
State Senator Brian Kavanagh and State Assembly member Grace Lee (both of whom represent Lower Manhattan) are sponsoring a proposed law that, if enacted, would eliminate the “shelter rent” tax on middle-class, income-restricted homes in the Mitchell-Lama program, which supports 105,000 units of affordable housing throughout the State in the forms of both rental and cooperative apartments.
“Shelter rent” is a form of alternative tax paid by buildings in the Mitchell-Lama program that amounts to between 15 and 20 percent of regular property taxes. This is the chief form of government subsidy for these properties, and is meant to help defray the costs of continuing affordability.
Mr. Kavanagh and Ms. Lee’s bill goes further than a plan announced by Governor Kathy Hochul in her January State of the State address, which would cut the existing “shelter rent” levy by half. Mr. Kavanagh and Ms. Lee’s proposed law would eliminate the tax entirely.
“The Mitchell-Lama program has been a lifeline for moderate income and middle-class New Yorkers for decades, but the shelter rent tax on these affordable units places an unfair burden on residents and housing providers,” Senator Kavanagh said. “Reducing this tax, and perhaps ultimately eliminating it entirely, will help keep housing costs stable, preserve affordability, and ensure these vital homes remain accessible for the people who built our communities and make them thrive.”
“Our Mitchell-Lama developments are struggling to stay affordable as rising costs make it harder to maintain and operate these buildings,” said Assembly member Lee. “Our proposal will provide significant financial relief, allowing buildings to reinvest hundreds of thousands of dollars into necessary repairs and long-term sustainability. We must get this done in this year’s budget.”
The benefits to multiple Mitchell-Lama developments in Lower Manhattan would be significant, with three – Confucius Plaza, in Chinatown; Gouverneur Gardens, in Two Bridges; and Masaryk Towers, alongside the Williamsburg Bridge – projected to save more than $1 million in the first year alone.