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State may cough up cash to salvage 421-a tax program

Governor Cuomo last week offered up a wage subsidy program for developers and union officials in an effort to revive the expired 421-a tax abatement program, a program that has become a crucial component for building in New York City.

In a memo sent to developers and union leaders, and obtained by the New York Times, Cuomo’s plan is similar to a last-minute bill that was submitted by the State Senate’s Rules Committee just before the end of the last legislative session in June.

Photo by Diana Robinson/ Flickr
Photo by Diana Robinson/ Flickr

That bill, 421aa, called for an average minimum wage of $55 per hour for construction workers at projects south of 96th Street with more than 300 apartment units. The bill did not include a wage subsidy, and failed to be passed.

Cuomoʼs bill proposal would set a two-tiered minimum wage for government-assisted projects of 300 apartments or more in Manhattan and on the waterfront in Brooklyn and Queens.

In Manhattan, any projects south of 96th Street seeking a 421-a tax abatement would have to pay an average wage of “no less than” $65 an hour, including benefits.

Developers of projects on the East River in prime areas of Queens and Brooklyn would have to pay $50 an hour in wages and benefits, and 30 percent, or $15 an hour, would be reimbursed by New York State.

Developers would also be required to allot 25 or 30 percent of the units in a project for below-market rents.

The memo did not say how the wage subsidy, which the Times estimated could run into the tens of millions of dollars, would be financed or how the program would be managed.

The proposal came after “secret talks” over two weeks with with Bill Mulrow, Cuomo’s secretary, REBNY president John Banks, and Gary LaBarbera, president of the Building and Construction Trades Council, according to the Times.

On Monday, Cuomo spoke at the New York State AFL-CIO 33rd Constitutional Convention, a federation of building trades unions, in Midtown.

Discussing badly-needed infrastructure repairs that the state is focusing on, such as the planned upgrades to JFK and LaGuardia airports, and track upgrades for the Long Island Rail Road, he pivoted to the 421a program, acknowledging that the struggle over agreeing to a new 421a plan was all about union wages.

“That’s what this fight on 421a is all about, and they try to make it complicated, but it’s very, very simple,” said Cuomo at the gathering. “I have two problems with the program, first, it’s an affordable housing program, but it doesn’t provide the affordability for long enough.”

He also took issue with the city’s 421aa proposal “not paying union wages.”

‘Why? Because the developers don’t want to be forced to use union labor, because if they are left on their own they want to use non-union labor, and at one time, in this city, you would never dream of building non-union construction. Ask Gary LaBarbera,” said Cuomo.

“ I want to pay more so we have union jobs because government shouldn’t pay a poverty wage, that’s why I want to pay more.”

LaBarbera told the Times that it is now up to REBNY to agree to the proposal.

“We feel this is a viable resolution of the issue,” said LaBarbera. “The ball’s clearly in their court.”

In a column for REW earlier this month, REBNY president John Banks spoke about the need for an agreement to be made over 421a, but also casted doubt on union construction requirements.

“Numerous studies have shown that imposing a union construction requirement on the 421-a program will either dramatically increase the cost of the program or result in the production of much less affordable housing,” said Banks in the column.

“One major hindrance to restarting the program is determining what the cost of construction labor should be on sites that use 421-a. Given the failure to put a new 421-a program in place, and the current cost of land, construction and property taxes, the production of new affordable rental units in many areas of the City will grind to a halt.”

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