Almost four months after the expiration of the 421a tax break, real estate representatives and labor unions are starting to forego civility, trading barbs as they occupy separate sides of a chasm.
“There’s a lot of acrimony going on,” Gary LaBarbera, the president of the Building and Construction Trades Council of New York, said during a panel discussion at the Crain’s Real Estate Conference on Monday.
The acrimony reached its peak at the suggestion that co-existence between 421-a and a prevailing wage is unworkable. Ron Moelis, the CEO and founding partner of L+M Development, said that this was the case when projects reach $1,000 per s/f and labor costs amount to 15 percent of the total. “You’d almost have to get the land for free to make a rental housing project work with 421a and prevailing wage,” he said.
“Don’t you all feel bad for the guy because it’s so hard to build rental? It’s impossible,” La Barbera replied. “So you want us to believe that all these developers that are in the rental market are doing it out of the goodness of their heart? I don’t think so.”
LaBarbera, who said that developers are making money “on the backs of workers who are underpaid and exploited,” then took aim at the Real Estate Board of New York, which he blames for the stalled talks. “We’re ready to make a deal. We’ve put very, very reasonable proposals on the table. We’re waiting to hear back from REBNY,” he said.
“Really, I don’t think there’s a lot of time for posturing at this point. They’re saying that they’re committed to affordable housing but the only way that they can build affordable housing is with the 421a abatement? Well, if you’re so committed to it, let’s make an agreement that can work for everyone.”
REBNY President John Banks responded by suggesting that the Building Trades’ proposals tilted in one direction. “Gary has put a number of proposals on the table and we’re here without a deal. So that should tell you how I feel about his proposals,” he said.
“He wants to make a deal under his proposal. We are not ready to make a deal under his proposal.”
The only thing Banks and LaBarbera can agree on is that they are nowhere near closing a deal. When asked how close they are to a resolution, they had the same answer. “We’re far apart,” both men said, echoing each other’s statements word for word.
Governor Andrew Cuomo gave the two sides seven months to reach a deal on the tax break. According to Banks, they were close to a agreeing on a framework. However, Albany killed the pact because extending the tax break to condominiums was seen as politically volatile.