Jackson Avenue, Long Island City. Once such a quiet and sleepy neighborhood until the mid-to-late 80s. That’s right around when One Court Square, aka the Citibank building, was completed. There it stood for years, with only Citylights (aka 4-74 48th Ave.) to keep it company. That all changed in the mid-2000s, when a spate of development, which continues unabated, flooded LIC with dozens of tall, mixed use buildings. RentCement toured Jackson Avenue, where part one of our series on Long Island City focuses on a major, in-progress developments: 5 Pointz.
Now check this shit out. Remember 5 Pointz, like, the real 5 Pointz? Once upon a time, Long Island City didn’t have a construction boom like it has today, and 5 Points was a kick-ass pre-war building with loaded with street art and graffiti. It was a living monument of art for everyone, particularly those who toured the site on the 7 train. But don’t get me wrong, street level visits were just as impressive. Check out Google Street View from 2009.
As we know by now, the old 5 Pointz is gone after a controversial move by the owners to whitewash, and then demolish, the building in order to construct the “new” 5 Pointz. Ultimately, since the property does belong G & M Realty L.P., the end result was going to be the same, barring some hail-Mary intervention. And don’t be too quick to dismiss the current artist’s lawsuit against the developers, it may end up costing the owners over $6 million after surviving the latest owner appeal. Despite this, the owners are throwing a true roll of the dice, if not their unfettered confidence, in the Long Island City housing market. And perhaps their perseverance in court. But one has to wonder if 5 Pointz would have followed the same transition plan if they had foresight into their current legal predicament.
And one has to wonder, because 5 Pointz, as it turns out, is smack in the middle of a 421-a Geographic Exclusion Area (GEA). Essentially, a 421-a GEA prohibits owners from receiving a 421-a tax abatement and/or exemption unless the owners complies with “Affordable New York’s” (the revised 421-a) affordability requirements. Let’s take a look at the specific language regarding acceptance of tax benefits, cited from RPTL 421-a(7)(b):
“Notwithstanding any provision of this section or any local law to the contrary, the benefits of this section shall not be available for new multiple dwellings located in a geographic exclusion area which commence construction after December twenty-eighth, two thousand seven unless they comply with the provisions of this subdivision for thirty-five years from completion of construction of the building receiving benefits pursuant to this section…”
That language is key. There is a misconception that just because a residential tower is built in a GEA, the owner must provide an affordability component. That is not the case. There is only an affordability requirement IF the owner elects to accept 421-a tax benefits. And as it seems, G&M Reality are simply not interested – at least before the latest stinging $6 million defeat in the courts. Our research into ACRIS for a regulatory agreement found nothing of the sort. A further search of DOF (Department of Finance) property tax records shows no tax benefits that would confer affordability. Thus, the only conclusion left to make is that G&M have absolute faith in the housing market, and/or their faith of their legal team, and that market rate apartments will win the day.
At the end of the fiscal year, G&M will endure $3.6 million in property taxes. With a 421-a benefit, depending on which benefit the owners applied for, would have eviscerated much of that cost. Considering the grand volume of the buildings, 48 and 41 stories and 1,115 units, the developers likely took a gamble that sheer numbers will win the day. However, the owners are worried about the $6 million – otherwise why fight so hard? Besides, that’s two years of property taxes and untold fortunes if invested. Whether the investment pans out, we’ll see. Success won’t come easy.