The Building and Construction Trades Council of Greater New York and the Real Estate Board of New York have reached an agreement to extend the lapsed 421-a tax exemption program.
The agreement will require eligible buildings in Manhattan to pay an average hourly wage of $60 (including wages and benefits) for construction workers. Meanwhile, eligible buildings in Brooklyn and Queens would have to pay an average hourly wage of $45.
“The deal reached today between these parties provides more affordability for tenants and fairer wages for workers than under the original proposal. While I would prefer even more affordability in the 421-a program, this agreement marks a major step forward for New Yorkers. The agreement extends affordability for projects created with 421-a for an additional five years – bringing affordability for these units to 40 years. It also allows lower-income individuals to qualify as it lowers the percentage of area median income needed to apply,” Governor Andrew Cuomo said in a statement.
Building and Construction Trades Council President Gary LaBarbera, who once said that 421-a should not be renewed “under any circumstances,” was similarly effusive, suggesting that the agreement may serve as a template for worker compensation in the city.
“We applaud Governor Andrew Cuomo and his administration for bringing all parties together to finalize an agreement on an important public policy that will allow for the development of critical affordable housing, and establishes wage standards for construction workers in New York,” LaBarbera said. “The agreement, which was overwhelmingly approved by the Executive Board of the BCTC, will preserve traditional worker standards and benefits and create opportunities for new categories of workers which will ensure our long-term competitiveness in the industry.”
“We are pleased to have reached an agreement that will permit the production of new rental housing in New York City, including a substantial share of affordable units, while also ensuring good wages for construction workers,” added REBNY Chair Rob Speyer.
The wage and benefits requirement applies to buildings with at least 300 rental units in Manhattan, Brooklyn and Queens. In Manhattan, the agreement covers the areas south of 96th Street. In Brooklyn and Queens, it covers the areas of Community Boards 1 and 2 that are within one mile of the nearest waterfront bulkhead.
Buildings with 50 percent or more affordable units are excluded from the wage and benefits requirement. The agreement is also retroactive, allowing eligible projects that started prior to the effective date to opt-in to the program. To enforce the wage requirements, developers will be required to hire “independent monitors” to audit payrolls. The independent monitors will be required to gain certification from the NYC Department of Housing Preservation and Development.
The agreement, which ends a deadlock that lasted for ten months, received approval from some affordable housing advocates. Jolie Milstein, the president and CEO of the New York State Association for Affordable Housing, called 421a “an important tool for providing much-needed affordable rental housing across New York City.”
“We are very pleased that an agreement has been reached to renew the 421-a program,” she said. “With record funding for housing programs in this year’s State budget, Governor Cuomo has again demonstrated his strong leadership in addressing New York’s housing crisis and supporting low- and middle-income families, and we applaud his continued commitment. With an agreement on 421-a, the path is now clear for state officials to sign the MOU to release $2 billion in new statewide affordable housing funds.”
“Over more than four decades 421-a has evolved to meet the city’s changing housing needs. This latest iteration expands the affordability requirement, increases production, and implements policies to make the program more efficient and effective,” added Rafael Cestero, the president and CEO of Community Preservation Corporation.
Under the agreement, newly created rental units with income limitations would be kept in place for 40 years. The buildings that fall under this category will also receive a 100 percent property tax exemption benefit for 35 years, according to REBNY.