By Maria Rocha-Buschel
City Comptroller Scott Stringer unveiled an affordable housing plan at the end of last month targeting middle-income New Yorkers who don’t qualify for affordable housing under the city’s current plan, proposing to fund it by eliminating advantages for all-cash home buyers.
The new tax model proposed in Stringer’s plan would eliminate the Mortgage Recording Tax (MRT). When buyers purchase a home in New York City or elsewhere in the state, the Real Property Transfer Tax (RPTT) is imposed and is based on the price paid, but only those who borrow to purchase their home or who refinance to pay for the home pay the MRT, which often means they end up paying twice as much in taxes as all-cash buyers.
Stringer’s plan would eliminate the MRT entirely and would treat all transactions equally, regardless of how a home is purchased. A report from Stringer’s office that the plan is based on predicts that the tax proposed in the plan would save middle-class New Yorkers more than $5,700 on a purchase or refinancing, and would raise up to $400 million annually.
“Paying all cash means that you pay less,” Stringer said. “There’s a penalty you pay for being middle class, but under our plan, all home purchases would be taxed the same. If we keep the rate low, we can make ownership more affordable for the middle class. This is good policy and would raise enough to fully fund our plan.”
The proposal from Stringer’s office also calls for increasing the capital budget for new construction by $375 million annually and repurposing 85,000 new units under the current plan for households with the greatest need, in addition to a new operating subsidy of $125 million to ensure that buildings have the revenue to meet maintenance needs.
The proposal additionally calls for tripling the number of newly-constructed units set aside for homeless families. The current affordable housing plan sets aside five percent of all new units for homeless New Yorkers, but only one percent of units have actually gone to homeless families, as of last November. Stringer’s proposal calls for setting aside 15 percent of new construction for homeless New Yorkers to combat the city’s homeless crisis.
The report from Stringer’s office found that working families in the city face stagnant wages and insufficient housing, as well as rising rents, resulting in significant rent burdens for almost 600,000 New Yorkers. Of these households, two thirds make less than $28,000 per year for a family of three and another 20 percent make less than $47,000 per year for a family of three.
The report found that of 540,000 New Yorkers paying more than half their income in rent, 88 percent of those households are extremely low income, earning less than $28,170 per year or very low income, earning less than $46,950 per year, but only 25 percent of the units under the current affordable housing plan are made available for these tenants.
Stringer acknowledged that the changes would have to come from Albany but was optimistic that such change is possible since the Democrats have gained a new majority in the State Senate. Stringer said that the first step is to begin the conversations with legislators and he’s confident that the plan will make progress because of “like-minded people” in Albany.
“It used to be the question was asked, ‘Who’s the Republican sponsor?’” he added. “But we will have two Democratic sponsors on this proposal.”