The recent deal struck between Governor Cuomo, REBNY and the Unions on the 421-tax credit resulted in many questions from the industry. We are monitoring the situation closely and will provide ongoing information, as follows:
When can we expect the NYS Legislature to take this on?
Senator Flanagan and the Senate majority conference are meeting in Albany on Monday (tomorrow) to discuss the 2017 agenda. If 421a is taken up before the end of the year, it would be the outgoing legislature that would meet and finalize details. Governor Cuomo is urging the legislature to come back to Albany before session and begin working out the details.
How soon will 421a be approved?
That is dependent on when the State Legislature takes this on, how soon they can agree on a final draft of legislation and pass it, to then be signed by Governor Cuomo.
How soon will 421a funds be released?
As soon as the legislature agrees and signs a Memorandum of Understanding, $2 billion in affordable housing funds from the Governor’s housing program could be released.
New 421a vs. Old 421a:
- Average hourly wage of $60 (including benefits) for construction workers in Manhattan and $45 in Queens and Brooklyn.
- This applies to buildings with 300 or more apartments. In Manhattan, projects must be south of 96th street. In Brooklyn & Queens, projects cover parts of Community Boards 1 & 2 in these boroughs, that are within a mile from the nearest waterfront bulkhead.
- New 421a would not require the use of union contractors, but it is assumed that at the wage levels aforementioned, construction unions will compete for the work.
- If a development offers more than 50% of its units as affordable, it can opt out of the minimum wage and benefit requirement, and still participate in 421a.
- This agreement is retroactive. Projects that are already underway under the previous 421a can opt into the new 421a when it becomes official.
- Old 421a allowed developers who offered more than 20% of a building’s apartments as affordable to receive a 20 year tax exemption. This has been extended. Now, buildings that offer 20% affordable will receive the 100% property tax exemption for 35 years. And, newly created affordable units will have to remain affordable for 40 years. Developers will be required to set aside units for lower-income New Yorkers, with details yet to be determined.
- Developers must hire independent monitors to audit payrolls to ensure that workers have been paid the proper wages. The monitor will certify compliance to the NYC HPD within 120 days of the CO being issued.
- Developers can opt for a “project labor agreement” and opt out of the 421a wage agreement requirement, and still be eligible to participate in other provisions of the program.
The wage is stated to apply to construction workers. Who will be categorized as a “construction worker”?
Board members from REBNY and affordable housing groups have come forward, each with members in support and critical of this proposal. We can expect changes to this current proposal of 421a in the legislature if, and when, they choose to take it on, whether that be pre-session or in the 2017 session, or at all.
Cahill Strategies is monitoring the 421a situation and here to get you the answers you need as quickly as possible. Please do not hesitate to contact us directly with additional questions.
Diane Cahill, Founder / CEO
Cahill Strategies, LLC.