The real estate industry has tried to persuade the Bloomberg administration to enhance the 421-a tax incentives that expired in December "but has been rebuffed" and the industry "is now shifting its focus to property taxes," according to an article yesterday at crainsnewyork.com by Greg David.

"The system has long been rigged," the article noted, "to hold down taxes on single-family homes. In recent years, pressure from owners of condos and co-ops have led politicians to reduce their burden as well. Commercial properties pay the biggest bills, but rental buildings - whether luxury or affordable - pay far more than their fair share, too. The Independent Budget Office has done extensive work on the disparities. It estimates that single-family homes account for 49% of market value and pay 15% of property taxes, while multifamily rental buildings, such as 800 Fifth, represent 24% of value but pay 40% of the taxes."

"The unfair burden is important now," the article continued, "because of its connection to the city's 421-a program, a tax incentive designed to spur residential construction. The program was drastically overhauled in 2007 amid protests that it provided unfair breaks....Under the revisions, a builder can receive the program's decreasing 20-year property tax exemption in Manhattan and many parts of Brooklyn only by building so-called 80/20 housing, which sets aside 20% of a project as affordable units."

"Under the New York City's tax policy, a rental building pays 33% of gross rent in taxes," the article said, "or about 50% of income after operating expenses - which do not include debt, by the way. Their tax bill is so high, developers argue, that they won't be able to build 80/20 projects even if the 421-a program is revived. Worse, some landlords say, buildings whose 20-year exemption is ending will have to be converted to condos because they won't be economically viable. No fewer than 18 buildings are on a list of 80/20 sites that could be converted."

The article noted that the rental building at 800 Fifth Avenue "pays twice as much in taxes as its neighbor at 810 Swanky 810 Fifth Avenue..., a cooperative containing 10 full-floor apartments, is home to well-known businesspeople such as Peter Peterson and Charles Bronfman. A duplex apartment there sold for more than $30 million in 2007. This year, the co-op will pay real estate taxes of $10.91 a square foot. Next door is 800 Fifth Ave. The taxes on that 208-unit luxury rental building will be $22.62 a square foot, twice as much as its neighbor's."