The city's 421-a negotiable certificates, which are used by market-rate residential developers to increase the size of their projects when purchased from affordable housing developers, are declining in value as a result of the current financing freeze.

The certificates provide property tax breaks for the market-rate developers but according to an article by Adam Pincus in today's on-line edition of therealdeal.com the certificates "which were purchased at prices close to $40,000 last year, have dropped to as low as $12,000, brokers aid."

The article said that Extell Development had reportedly bought about 3,000 such certificates over four years ago from the Atlantic Development Group and that Extell used them for its Avery, Lucida and Rushmore developments. The article said that Extell has as many 1,000 certificates left and that the Witkoff Group has dozens that they are not using.

According to the article, the city's Department of Housing Preservation and Development said "it has granted 3,586 certificates through nine agreements with affordable housing developers between January 1 and December 27, 2006. There were an additional 10,585 certificates created through 20 agreements signed between December 28, 2006 and December 27, 2007. By law, no more certificates could be created after December 27, 2007."

Steven Spinola, president of the Real Estate Board of New York, told therealdeal.com that based on an informal survey of his member, "there are about 5,000 existing certificates controlled by either affordable housing or market-rate developers." He said his organization is asking city and state officials to revamp the program's rules and extend the time that the developers have to complete projects from three to four years.

Certificates created before December 28, 2006, informally known as 2006 certificates, give a full tax abatement while those created after that date only cover up to the first $65,000 in assessed value. The newer ones are known as 2007 certificates.