Despite a recent display of flexibility in regards to 421-a guidelines, the cityʼs affordable housing logjam seems no closer to a resolution.
Calling the 421-a tax program “dead” and suggesting that it should not be renewed “under any circumstances” barring the inclusion of a prevailing wage mandate, Gary LaBarbera, president of the Building and Construction Trades Council of Greater New York, has opposed the currently expired affordable housing initiative.
Deputy Mayor Alicia Glen, meanwhile, has said that the construction of affordable housing outweighs the need to employ union workers.
Addressing the City Council this summer, Glen pointed to the prevailing wage price tags that come with union labor as a serious deterrent to developers who are already accepting revenue cuts in the form of sub-market rate units.
In a recent interview with Real Estate Weekly, LaBarbera gave robust support for the unions and insisted that many developers desire to work with prevailing wage talent due to the higher “quality of work” and a safety record that is “far superior.”
He echoed that support on Monday saying, “We need a new, comprehensive approach that builds needed affordable housing citywide, while also offering construction workers good middle-class wages with benefits.”
But local developers desire to work with union laborers may make the mayor’s affordable housing goals impossible to achieve.
A report revised earlier this week by the New York City Independent Budget Office found that prevailing wage raises affordable housing construction hard costs by 28 percent.
If the entire supply of 80,000 new affordable units — De Blasio’s target number — was to be built via union labor, the undertaking would require approximately $4.2 billion in additional public subsidies.
“The IBO’s updated report goes further in validating what we have been saying for years — more prevailing wage mandates mean less affordable housing for low- and middle-income New Yorkers,”said Jolie Milstein, president & CEO of the New York State Association for Affordable Housing.
“As New York City faces an affordable housing crisis, the IBO’s updated report further shows that construction union leaders are adding to the problem by pushing for new prevailing wage mandates that compromise affordable housing development,” Milstein continued.
“The hard-line position held by Gary LaBarbera and other union leaders is irresponsible and it is directly hurting efforts to increase the production of affordable housing.”
LaBarbera is equally critical of the IBO’s altered findings.
“The release of a second version of this report by the Independent Budget Office (IBO), which reaches conclusions that are dramatically different from those in the first version, raises serious questions about the quality and integrity of this research,” Labarbera said via statement. “As it now stands, these questions render the report useless as a document to inform public policy until they are answered.”
Calling the matter “deeply troubling,” Labarbera continued his criticism saying that, “Any report of this kind must be able to be reviewed by qualified peers in economic analysis to confirm its validity. The Department of Housing Preservation and Development, which provided source materials and data used in this report, apparently provided this information to the IBO under the condition that it remain confidential. That is not only completely inconsistent with basic research principles, it may violate the law, and certainly violates the principles of an open and transparent government.”
LaBarbera added that, “The IBO report was, prior to this unusual occurrence of issuing a second version of it, research that had been criticized by reputable economists for its omissions and methodology. In fact, the vast majority of research across the country on the fiscal effects of prevailing wages has come to completely different conclusions. To fully review the IBO report’s seemingly biased conclusions, we must have a measure of transparency from HPD that is now lacking. That lack of transparency taints the debate on this issue and must be corrected immediately.”
Earlier this week, Glen revealed that, in lieu of subsidies for developers, the administration would consider lowering the amount of units needed to be designated as affordable.
The maneuver would require that a higher number of remaining affordable units go to tenants who are making less than 60 percent of the household median income.
The change would make fewer apartments available for the marginally better off and would also require a smaller unit-by-unit commitment by developers who would now have more residences to sell off at market rates.
“Policymakers have a clear choice,” said Jamie McShane on behalf of REBNY while summarizing the current deadlock. “They can choose to pay iron workers more than $235,000 per year and carpenters more than $195,000 each year to build affordable housing. If so, there will be less affordable housing built or taxpayers will be asked to pay an exponentially larger tab.”
REBNY’s stance is firmly opposite of LaBarbera’s wage-oriented priorities.
“The need to produce more multi-family, rental housing, particularly at below-market, or affordable rents, is one of the most pressing issues facing New York City,” said REBNY President John Banks.
“Imposing a construction prevailing wage requirement on the new 421-a program will simply result in much less affordable housing so that certain segments of the construction industry can be paid well above middle class wages. We remain committed to working with stakeholders to implement a program that will result in much more affordable housing throughout New York City and ensure construction workers are treated fairly.”