Well, so much for that agreement on the 421-a tax break program. Less than a week after news emerged that developers and construction workers had reached an agreement on the expired program, things aren’t looking that great, again.
It all seems to be a misunderstanding over the period of the tax exemption. When the Real Estate Board of New York (REBNY) and the Building and Construction Trades Council of Greater New York (BCTC) released a joint press release last week it appeared that the tax exemption would be extended to 35 years on all buildings, up from the existing 25.
Governor Cuomo’s office had a different understanding of it however, Crain’s reports. A representative for the office told the publication that the extended exemption only pertained to buildings that were providing the newly agreed upon wage rate, and not all buildings.
Under the new law, developers with buildings that have 300 or more apartments would have to pay construction workers $60/hour if it’s a project located in Manhattan below 96th Street, and $45/hour for projects on the Brooklyn and Queens waterfronts.
The official in Cuomo’s office told Crain’s that while extending the exemption might prompt the creation of more affordable units, it would be a boost for developers and burden New York City taxpayers in exchange. The administration’s understanding is that if the higher wage requirement is not met, then the tax exemption will be the same 25-year period that prevailed when the previous version of 421-a was active last year.
REBNY argued for the broader application of the tax break saying affordable units at these new buildings would not have rent increases for 40 years, up from the previous term of 35 years.
The State Legislature appears to be in no hurry to move forward on this item, and it seems unlikely that they will call a special session to make a decision on the matter. The new law does not go into effect until they sign off on it, and it appears that it won’t take place until the regular session resumes in January.
UPDATE: REBNY seems to be falling in line with Governor Cuomo’s understanding of the deal. Jamie McShane, the senior vice president of the organization issued the following statement:
“There was a misunderstanding between the parties regarding the 35-year provision of the 421-a agreement announced last week. The REBNY Executive Committee agreed today that, in the interest of getting legislation passed that will reinvigorate the production of new rental housing, including a substantial number of affordable units, the 35-year tax exemption should only apply to those projects that participate in the wage and benefit agreement.”
- Cuomo and REBNY already disagree about last week's 421-a agreement [Crain’s]
- Legislators cool to special session for 421-a deal [Politico]
- Developers, construction industry finally reach agreement on 421-a tax program [Curbed]