ALBANY—A tax break that gives lucrative benefits to New York City real-estate developers is likely to be extended temporarily in its current form by state lawmakers, Gov. Andrew Cuomo said Wednesday. The extension of the subsidy, known as 421-a, has angered Mayor Bill de Blasio, who has attempted to change its terms as part of his affordable-housing push. His aides were scrambling on Wednesday to revive the debate and generate opposition in the political, business and labor community to the governor’s comments. After making private calls to lawmakers, real-estate executives and the mayor’s office in recent days, Mr. Cuomo said Wednesday that there wasn’t enough time to change 421-a, which has proved Albany’s thorniest legislative issue this year. “The mayor put forth a plan. That plan had issues and didn’t have the political support to pass,” he said, adding that he wasn’t going to rush changes to the law because it is a “complicated beast.” The governor hasn’t devised a plan of his own. The legislative session is set to end June 17, though he could call a special session later. Mr. de Blasio’s proposed changes to 421-a include forcing developers who receive it to build affordable housing and increasing the mansion tax on the city’s priciest homes. Money from his proposed mansion tax would go toward building affordable housing. The subsidy has been investigated by a state ethics panel, largely because members of the city’s powerful real-estate industry are among its biggest benefactors and some of the state’s most generous political donors. It was designed decades ago to encourage development in New York and has prominently featured in the re-etching of the Manhattan skyline. City officials say the subsidy costs more than $1 billion in tax revenue a year and the city shouldn’t give such a valuable subsidy for luxury condominium buildings. Mr. de Blasio’s aides are making the case that with corruption arrests in Albany and ongoing investigations, lawmakers should want to change the status quo. By scoring the blessing of the Real Estate Board of New York, the mayor’s aides hoped to overcome the resentment of Senate Republicans for their proposal. At least two Senate Republicans said they weren’t a fan of ending the discussion over 421-a, even though they weren’t necessarily supportive of Mr. de Blasio’s plan. Martin Golden, a Brooklyn Republican, said the mayor had accomplished something by even forcing a discussion on 421-a, and he wanted to solve the problem by next week. But Mr. Cuomo “is the governor, and we have to respect that,” Mr. Golden said. “I don’t think Mayor Bill de Blasio has any huge fans among the Republican caucus,” said Sen. Phil Boyle, a Long Island Republican. “His political activities last year certainly didn’t help him.” A spokesman for the state Senate Democrats, who have sparred with Mr. Cuomo this year, said they would continue to push for the mayor’s plan as well as a prevailing wage provision for laborers. “Clearly 421-a needs to be reformed,” the spokesman said, “and we need to ensure that this program creates more affordable housing, reaches more people with lower incomes than ever before and increases the percentage requirement as Mayor de Blasio suggested.” But with progress stalled, the mayor’s aides have grown frustrated by Albany, and Mr. de Blasio has begun to call for ending 421-a if it isn’t amended. Unions, legislators and the real estate board all joined Mr. de Blasio’s office in saying Wednesday that they wanted discussions to continue. There is little chance of ending 421-a, the mayor’s aides privately concede. “We gave all of the different elements in Albany plenty of notice of the vision,” Mr. de Blasio said. “Obviously, it had a lot of support. So I’ve never bought into the notion there wasn’t time to get to the larger plan.” The mayor has faced a difficult year in Albany. His push for permanent mayoral control of schools has failed, with aides now saying they would be happy with a three-year extension. His push to raise the minimum wage didn’t even get a vote. He is trying to strengthen and extend rent regulations and change 421-a, and both issues have dominated discussion in the past few days. But political observers suggested Mr. Cuomo had little to gain by striking a compromise with Mr. de Blasio, or by doing the mayor any favors in the final days of the legislative session. “The first rule of politics for the governor is to not go into a solution you can’t control. He can’t control this discussion right now,” said Hank Sheinkopf, a longtime Democratic strategist. “It also sends a strong message to the mayor about who the boss is in New York state. What this is really about is about the governor exercising power.” Write to Erica Orden at erica.orden@wsj.com This article was originally published on The Wall Street Journal
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