State authorities are moving forward with a plan to revive the lapsed 421-a tax incentive.
On Monday, Governor Andrew Cuomo advanced a replacement plan negotiated by the Real Estate Board of New York and the Building and Construction Trades Council of Greater New York, promising more affordable homes and fair wages for construction workers.
As part of the initiative, the 421-a program will be rebranded as âAffordable New York.â Under the new plan, residential developers can qualify for the tax abatement under three conditions: they must have projects located in designated areas of Manhattan, Brooklyn and Queens, they set aside rental units that will stay affordable for 40 years, and they pay âenhancedâ wages and benefits to construction workers.
âThis agreement will help fulfill the real need for more affordable housing in New York City while recognizing the work of the employees who build them,â Governor Cuomo said in a statement.
âThis agreement will expand housing opportunities for low-income individuals by lowering income eligibility requirements, and extend affordability for projects created with 421-a for an additional five years. This is a major step forward in our efforts to provide affordable housing in New York City and ensuring benefits and fair wages are paid to hardworking men and women.â
The legislation retained provisions from the agreement between REBNY and Building Trades. That deal, which was announced in November, required developers to pay an hourly wage of $60 per hour to construction workers in Manhattan projects south of 96th Street. Meanwhile, workers in the areas of community boards one and two in Brooklyn and Queens, who are located one mile from the East River, would get an hourly wage of $45 per hour.
In an interview on Cats Roundtable with John Catsimatidis, Cuomo said that the new version of 421-a is an improvement compared to the programâs previous iteration. âIt will create about 2,500 units per year of affordable housing, about 9,000 units total, and itâs actually, in my opinion, a better program than the old 421-a. This has increased the length of affordability 40 years, and itâs actually made it more affordable for people to qualify.â he said.
The legislation has now been elevated to the State Legislature, and lawmakers are refusing to simply sign off on the current version of the plan.
âEarlier 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. 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,â Assembly Speaker Carl Heastie said after the REBNY-Building Trades deal was announced.
Nonetheless, there is optimism that a deal is imminent. According to REBNY President John Banks, barring any surprises, a replacement may be delivered in a few weeks. âI assume that, at some point in the very near future, weâll have 421a legislation that will pass the state,â he said. âWeâre working diligently to finalize the negotiations and, you know, I would say itâs probably anywhere, if Iâm optimistic, six weeks to eight weeks away from getting done.
âBut that doesnât take into consideration what happens in Albany. On any given moment, on any given day, something can change that dynamic.â
Banks said that negotiations have gone past sticking points. Whatâs left is legal grunt work. âThereâs nothing significant thatâs sticking. This is where the lawyers have to do the work, and thatâs where we are,â he said.
The 421-a tax abatement program expired in January of last year as REBNY and Building Trades, which were tapped by Cuomo to forge an agreement over construction worker wages, failed to reach a deal. The impasse evaporated in November, with both sides retreating from pessimistic pronouncements about the programâs revival. Nonetheless, there were signs that interest in New York City projects waned during the 10-month period when the tax incentive was dormant. According to a previous report from the Commercial Observer, the number of Department of Buildings applications that were approved from January to June last year dropped 34 percent in Brooklyn and 14 percent in Manhattan.
Banks: 421a deal may be weeks away : Real Estate Weekly
