Deadline for 421-a Deal Expires, Along with Program

The 421-a tax abatement program, which grants subsidies to developers who offer low-income units in new buildings, has expired. The program’s future depended on negotiations between the Real Estate Board of New York (REBNY) and the Building and Construction Trades Council of Greater New York over wage requirements for construction workers at 421-a sites.

The 421-a program briefly expired in June after lawmakers in Albany failed to reach an agreement over an extension, only to be renewed nine days later, until Jan. 15, 2016. The expiration is a setback to Mayor de Blasio, who pledged to create or preserve 200,000 low-income housing units.

New York’s state legislature approved a 421-a extension in June 2015 with significant changes to the program, but Gov. Andrew Cuomo added a provision that REBNY and labor groups first reach an agreement over whether developers should be required to use union contractors to qualify for the abatement.

From the unions’ perspective, the mayor’s ambitious goal of building or preserving 200,000 units in 10 years could be a big benefit for workers. But a report issued by union-backed Real Affordability for All in November documented labor abuses ranging from stolen wages to unsafe working conditions on low-income housing construction sites throughout the city.

The real estate industry, on the other hand, would face significant production cost increases if wages were raised. A report recently released by the city’s Independent Budget Office found that union-level wages on housing projects would increase the construction costs associated with the mayor’s housing plan by $2.8 billion.

In response to the 421-a program expiring, the mayor issued a statement: “‎It is deeply disappointing that these reforms were not enacted. We are facing an unprecedented crisis of affordable housing, and we must employ every tool at our disposal to confront it. We will continue to move forward with our partners at all levels of government as we implement the City’s plan to preserve and create 200,000 affordable homes.”