Secret NYC Tax Break Deal Hands Brooklyn Developer Millions

BROOKLYN, NY— A last-minute provision in New York’s state budget will allow a politically connected Brooklyn developer to secure millions of dollars in property tax breaks for a delayed luxury housing project on the Williamsburg waterfront.

Gov. Kathy Hochul and state lawmakers agreed to revive an expired version of the controversial 421a tax incentive program for the River Ring development, a sprawling waterfront complex planned by Two Trees Management.

Subscribe

The measure, tucked into the state’s estimated $268 billion budget housing package, extends a deadline that would have otherwise disqualified the project from receiving the tax break.

Under the 421a program, developers receive steep property tax reductions in exchange for including affordable housing units in new residential projects.

Two Trees said the extension was necessary because the company will miss the original 2031 completion deadline.

“We’re pleased that the River Ring project now has a clear path to completion,” company spokesperson David Lombino wrote in a statement to the Gothamist.

The River Ring project, approved by the New York City Council in 2021, will rise along the East River between North 1st and North 3rd Streets in Williamsburg. Plans call for two towers standing 710 feet and 560 feet tall above a circular waterfront boardwalk, public beach and park space.

The development will include roughly 1,200 apartments, with about 30 percent designated for low- and middle-income renters, according to Lombino.

The first tower is not expected to open until 2033.

The project also includes a new YMCA facility and a $31 million contribution from Two Trees to help finance senior housing elsewhere in northern Brooklyn.

The 421a tax program expired in June 2022 after years of criticism from progressive lawmakers and housing advocates who argued the subsidy enriched developers while failing to generate enough affordable housing.

Critics also said the incentive cost New York City at least $1 billion annually in lost tax revenue.

Lawmakers replaced 421a in 2024 with a stricter program known as 485x, which requires deeper affordability levels and higher construction wages.

Projects already underway before the expiration remained eligible for the older tax break if developers completed construction before 2031. The new budget language removes that deadline in a way lawmakers acknowledged was designed specifically for River Ring.

“In order for the project to go, they didn’t think they could make it in the time, so they asked us for an extension,” Assembly Speaker Carl Heastie said. “An agreement was worked out between the developer, the YMCA was involved and the local member supported it.”

Assemblymember Emily Gallagher, whose district includes Williamsburg, said she supported the extension after negotiations involving labor unions and the developer.

Gallagher said Two Trees agreed to pay construction workers above-average wages.

“I decided to sign off on it because there was a lot of collaboration between labor and the developer,” she said.

Gallagher also pointed to the project’s affordable housing component, waterfront improvements and overall scale.

“It’s a really big project,” she said. “There is a need for new housing, but we have to make sure all of us are willing to come to the table to negotiate hard for what we need.”

The Real Estate Board of New York, the city’s largest real estate lobbying group, backed the measure, lawmakers said.

Jed Walentas, a principal at Two Trees, also serves as chair of Real Estate Board of New York.

Kelvin Elkins, representing the Carpenters Union, said the agreement would create union jobs and raise wages for workers.

“Our number one goal is to create good union jobs for our members,” Elkins said. “This agreement will do that.”

The state budget remained seven weeks overdue as lawmakers prepared to continue voting on spending bills ahead of the Memorial Day recess.

Negotiations stalled for weeks over disputes involving climate policy mandates and car insurance reforms.