Photo: Jerry Ferguson/Flickr
After a year of negotiations, New York State’s controversial 421-a affordable housing program was given an extension by the Building and Construction Trades Council of Greater New York (BCTC) and the Real Estate Board of New York (REBNY) yesterday. The extension came after the program lapsed in January of this year and New York State Governor Andrew Cuomo had urged developers and construction labor unions to negotiate a new deal that included wage requirements for construction workers.
The 421-a program dates back to 1970 amid the fiscal crisis and gave developers a 10-year property tax exemption for building a multi-unit residential project on vacant land. It was intended to encourage new residential development as officials were concerned about construction declines resulting from residents moving to the suburbs.
The program has been altered several times over the last 40 years, most recently to include the provision that developers could only receive tax breaks if they built affordable housing units on-site or off-site.
Opponents of the program — that include both developers and housing advocates — have argued that building affordable housing units under 421-a is too expensive and doesn’t contribute enough affordable housing units despite the tax breaks. Housing advocates argue funding would be better spent going directly to the creation of a more efficient affordable housing program, citing a 2015 report by the Association for Neighborhood Housing and Development that found only roughly 8 percent of units built under the program in 2013-2014 were actually affordable housing units.
Under the new agreement reached yesterday, eligible buildings in Manhattan would pay construction workers on average an hourly wage of $60, which includes wages and benefits, and $45 for construction workers on eligible buildings in Brooklyn and Queens. This agreement applies to buildings with 300 or more rental units in Manhattan south of 96th Street, and in Brooklyn and Queens Community Boards 1 and 2 within one mile of “the nearest waterfront bulkhead.”
It’s worth noting that buildings that have 50 percent or more affordable housing units are excluded from the wage and benefits agreement.
Any projects that began prior to the effective date of this new agreement, and meet the eligibility criteria, could opt-in to the program if they wish, according to the release.
Also of note in the newly hashed out deal is that new affordable housing units would be “kept in place for 40 years.” These buildings would also receive a 100 percent property tax exemption benefit lasting 35 years.
“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. We would like to thank Governor Cuomo for his leadership on this critical issue,” said REBNY Chair Rob Speyer.
“The agreement 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,” President of the Building Trades Gary LaBarbera said in a release.
“While I would prefer even more affordability in the 421-a program, this agreement marks a major step forward for New Yorkers,” Governor Cuomo added. He urged Legislature to return to Albany to pass more affordable housing.
According to Cuomo, until the agreement was finalized, the State Legislature would not release $2 billion in state affordable housing funds.