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Industry worried by ‘flawed’ wage bill

BY AL BARBARINO

CITY SPEAKER CHRISTINE QUINN

The city’s real estate board is condemning “flawed” legislation passed by the city council this week to raise private-sector wages.

“Legislation imposing wage mandates increases costs on employers and raises the risk of less jobs, investment and tax revenue for the City of New York,” said REBNY president Steven Spinola.

“We appreciate Speaker [Christine Quinn’s] efforts to balance a series of interests. Such types of legislation, however, are flawed because of the precedent it sets.”

Quinn had earlier applauded her council colleagues for passing living wage legislation which directs recipients of at least $1 million in government financial assistance pay their employees a wage of $10 an hour with health care benefits or $11.50 an hour without.

The bill also establishes a goal of providing a living wage for 75 percent of all hourly jobs on economic development projects, including retail tenant jobs.

“When we invest in economic development, we should expect that the jobs that are created are good jobs – ones that will protect and grow the middle class. This bill does that and does so in a way that will not overburden businesses,” said Quinn.

The legislation has rattled the city’s real estate community, which has spoken out about the prospect of a future Mayor who would support government meddling in the private sector.

ROBERT LAPIDUS

“I’m personally petrified,” said Robert Lapidus, president of L&L Holding Company, speaking at a Commercial Real Estate Summit hosted by Massey Knakal Realty Services last week. “We are going to be building a new building on Park Avenue in a couple years and we are going to get all of the approvals during the Bloomberg administration.”

 

Two other mayoral hopefuls — Public Advocate Bill de Blasio and Comptroller John C. Liu — issued statements supporting the bill.

“I don’t think they are business-friendly — any of the candidates,” Lapidus said.

The prevailing-wage bill would raise wages for building service workers in buildings that receive government subsidies or where the city is a major tenant; the living-wage bill would raise wages for a broader range of employees.

The prevailing wage legislation would raise pay for service workers at buildings that receive city tax breaks. Their salary increases would be determined by the City Controller, not the going rate, creating “all kinds of market distortions that cost taxpayers money,” Bloomberg said during a prepared speech.

“Those bills,” the Mayor said, “are a throwback to the era when government viewed the private sector as a cash cow to be milked, rather than a garden to be cultivated.”

He lauded New York City for beating the odds — having gained 185 percent of private sector jobs lost during the recession while the nation as a whole gained back only 42 percent — but warned that the bills would make it difficult to encourage job creation and business growth.

He referenced the Kingsbridge Armory, a landmarked Bronx building the city wanted to turn into a mall that flopped after tenants refused to commit to a living-wage requirement; and FreshDirect’s expansion into the Bronx, made possible only in the absence of such a bill.

“The prevailing and living wage bills would create a tiered minimum wage that would favor some businesses over others – and some industries over others,” he said.

The bills would hinder construction efforts and the growth of affordable housing, while discouraging retailers from opening in a development that has received government benefits, some real estate executives said.

“It’s important that we have a mayor who… understands that the underpinning for the health of the city comes in no small part through the commercial restate industry,” said Bruce Mosler, chairman of Cushman & Wakefield, at the CRE Summit.

BRUCE MOSLER

“This is a very finely-balanced, finely-tuned machine. Press too much and the cost of doing business becomes too great and you can see people consider alternatives.”

At least two unions are backing the bills. “We agree with the mayor about the need to protect taxpayers,” said Mike Fishman, president of the service workers’ union 32BJ. “But workers are taxpayers.”

Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union, blasted the mayor: “Over the past decade, City Hall has expanded government’s role in the market through billions in subsidies to companies and developers, but doesn’t want taxpayers to get a decent return on their investment,” he said. “That’s unacceptable.”

The legislation will be implemented prospectively, and does not apply to deals where financial assistance has already been approved. Unless the City or the Economic Development Corporation provides a project with additional financial assistance, only then would the law cover an existing project.

“The City has negotiated living wage requirements on individual deals in the past, and I believe that we must continue this work to provide as many living wage jobs as possible on subsidized projects,” said Quinn.

“With this bill, we are fulfilling our duty to New Yorkers to make sure that taxpayer dollars are used to provide the maximum public good. By providing a high quality of life, attracting the best talent and protecting our middle class, we will remain the greatest city in the world.”

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