After nearly a year in limbo, 421-a might be back–if the state legislature approves a deal announced Thursday by the developers and unions who were given unprecedented sway over the crafting of a public policy. But Speaker Carl Heastie isn’t signing off on the idea yet.
The tax break was launched in the 1970s to spur development when New York was bleeding people and investment. Over the years its terms grew increasingly out of step with the evolving real-estate market, providing expensive subsidies for developers while asking little in the way of affordable housing. In 2015, when the break was set to sunset, Mayor de Blasio and others proposed reforms to modestly increase the affordability requirements. Governor Cuomo sided with unions who also wanted prevailing wages required in any 421-a funded project, a move developers resisted.
While adopting some of the de Blasio-backed reforms, the legislature in June of that year approved an unusual arrangement under which trade unions and developers had six months to come up with a wage plan that suited both sides. When that clock expired last January, the tax break ceased to exist for new projects, creating what some analysts believed was a major obstacle to de Blasio’s affordable-housing plan.
Last night the Real Estate Board of New York and Building and Construction Trades Council of Greater New York announced a deal under which certain 421-a buildings in Manhattan would pay on average an hourly wage of $60, including wages and benefits, for construction workers while those in Brooklyn and Queens would pay $45. The terms would apply to buildings with 300 or more rental in Manhattan south of 96th Street and in Brooklyn and Queens Community Boards 1 and 2 within one mile the waterfront. Buildings with 50 percent or more affordable units are excluded from wage rules. But it appears that all 421-a buildings would receive a longer tax-exemption.
Praise for the deal came from Rafael E. Cestero, who heads the Community Preservation Corporation.
“In a city where more than half of our renter household are rent burdened, it is imperative that we put 421-a back to work to get affordable housing production moving and create new housing opportunities for hardworking New Yorkers,” he said. “While far from perfect, the 45 year old program has been critical to making rental development financially feasible, creating mixed-income communities, and spurring low- to moderate-income housing production in the outer boroughs.”
Rachel Fee of the New York Housing Conference said her organization hoped to see “speedy adoption by the New York State Legislature as well as immediate action on signing a Memorandum of Understanding with Governor Cuomo to spend $2 billion in a 5-year statewide affordable housing plan.” That separate issue of the MOU has been a point of tension for the governor and some housing advocates all year.
But Heastie, in a statement, did not seem likely to rush. “There has never has been a stronger champion of affordable housing in New York than the Assembly Majority. Earlier this year the Governor presented us with a proposed memorandum of understanding with no notice and demanded that it be signed immediately with little or no review. That said, we are close to an agreement with the Governor,” he said. “Similarly, the Governor has now presented us a proposal to renew the 421-a housing program, and we will review it to ensure that it meets our goals of providing badly needed affordable housing for our citizens and respond appropriately.”