421-a tax exemption program goes to NY legislature with controversy about MWBE provisions

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2030

An agreement between the Building and Construction Trades Council of Greater New York (BCTC) and the Real Estate Board of New York (REBNY) to extend the lapsed 421-a tax exemption program is going through the state legislative approval process, but there are snags as some elected leaders believe the agreement has not gone far enough in providing opportunities for minority and women business owned enterprises.

The November agreement calls for eligible buildings in Manhattan to pay on average an hourly wage of $60 (includes wages and benefits) for construction workers based on all hours worked. Eligible buildings in Brooklyn and Queens would pay on average an hourly wage of $45 (including wages and benefits).

The wage and benefits obligation applies to buildings with 300 rental units or more in Manhattan south of 96th Street and in Brooklyn and Queens Community Boards 1 and 2 within one mile (5,280 ft.) of the nearest waterfront bulkhead. Buildings with 50 percent or more affordable units are excluded from the wage and benefits obligation. Projects that have started prior to the effective date of this agreement and meet the eligibility criteria may opt-in to the program.

“We are very disappointed that, amongst many other things, the inclusion of (MWBEs) was not mentioned in the agreement that is being put before the New York state Legislature, especially given a stated commitment by REBNY and the BCTC for all, and to raise the bar for (MWBE) inclusion,” state assemblywoman Rodneyse Bichotte and state Sen. Kevin Parker wrote in a Dec. 2 letter to Gov. Andrew Cuomo’s office.

A spokesman for the trades told Crain’s New York Business that the two parties were tasked with hashing out a wage-floor agreement for workers at certain sites—at the urging of the governor—and that other additions to the policy, such as requiring developers to hire women- or minority-owned businesses for construction work, were beyond the scope of those talks.

Earlier, the trades, REBNY and Cuomo indicated satisfaction with the agreement.

“We applaud Governor Andrew Cuomo and his administration for bringing all parties together to finalize an agreement on an important public policy that will allow for the development of critical affordable housing, and establishes wage standards for construction workers in New York,” said Gary LaBarbera, president of the 100,000 member BCTC. “The agreement, which was overwhelmingly approved by the executive board of the BCTC, 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.”

“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,” RENBY chair Rob Speyer said in a statement. “We would like to thank Governor Cuomo for his leadership on this critical issue.”

Other aspects of the agreement include:

  • The now suspended 421-a program would be amended citywide. Newly created rental units with income limitations would be kept in place for 40 years. Such buildings would receive a 100 per cent property tax exemption benefit for 35 years.
  • Regarding enforcement and compliance of the wage and benefits obligation, developers will hire independent monitors to audit certified payrolls. The independent monitor would certify to the NYC Department of Housing Preservation and Development (HPD) within 120 days of the receipt of the final Certificate of Occupancy that the required average wages and benefits based on all hours worked have been paid.
  • Developers may enter into a Project Labor Agreement (PLA) at the developer’s discretion. If a developer chooses to enter into a PLA, then it may opt out of the 421-a wage agreement requirement in its entirety and still be eligible to fully participate in all other provisions of the 421-a program.

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