Big league breaks
patrick arden
metro new york, AUG 30, 2006
Yankees’ slugger Derek Jeter was paid $19.6 million last year, but that wasn’t all he pocketed from playing in New York.
Courtesy of city taxpayers, Jeter got to deduct $135,825 from the 2005 tax bill on his posh digs high up in the Trump World Tower, where he looks down on the United Nations and the East River.
A 421-a tax abatement secured by the developer of that building dropped Jeter’s assessed property taxes last year from $205,798 to just $69,973, making his exemption worth almost twice what he finally paid in taxes to the city.
Jeter wasn’t alone: On five units on the 45th floor of his building, the Kingdom of Saudi Arabia realized tax savings of $114,103 in 2005. Yankee teammate Hideki Matsui paid $3 million to live on the 50th floor, far less than the reported $13 million price tag on Jeter’s palatial flat, but then Matsui’s property-tax break last year was only $25,929. This subsidy alone cut Matsui’s tax bill by nearly two-thirds.
The 421-a tax exemption was meant to stimulate development back in the 1970s, when the city wanted builders to venture north of 96th Street and south of 14th Street in Manhattan. Developers building inside that excluded zone, where the Trump World Tower stands, can still take advantage of the 421-a program, but only if they set aside affordable housing or purchase certificates generated through the construction of low-income housing elsewhere in the city.
Times, of course, have changed, and luxury housing is thriving outside the excluded zone. The incentive now benefits many developers and buyers of these high-end apartments without any contribution to affordable housing. This spring Mayor Michael Bloomberg convened a task force to study the program, which has been providing property-tax exemptions for 10 to 25 years and is set to expire in late 2007.
“We’re expecting the recommendations to be announced at the end of September or early October,” said Neill Coleman, spokesman for the city’s Department of Housing Preservation and Development. “It may be that one of the task force’s recommendations will be to expand that exclusion zone.”
