Tax break for affordable housing set to expire as unions, developers fail to reach deal

The law awards developers huge decades-long breaks on property taxes, in exchange for which they must build a percentage of affordable apartments.

A generous property tax break that’s crucial to Mayor de Blasio’s push for affordable apartments died Friday, killed when builders and unions couldn’t agree on how much the workers who build them should be paid.

The law, called 421-a, awards developers huge decades-long breaks on property taxes, in exchange for which they must build a percentage of affordable apartments.

Many of the developments that de Blasio has cited in his effort to build or preserve 200,000 affordable units by 2024 were built under 421-a, and he’s called the tax break essential to his campaign.

Construction unions wanted to make developers of all 421-a projects pay union-scale wages, but the Real Estate Board of New York (REBNY) wanted no part of that.

REBNY claims prevailing wage will make building affordable apartments unaffordable, hiking costs 30% to 50% (a city Independent Budget Office study this week tagged the figure much lower at 13%).

The law was set to expire in June with both sides at odds. Faced with the looming dissolution, Gov. Cuomo offered a compromise: Extend the law through Jan. 15, and let the titans and hard hats work out a deal.

On Friday it became clear that did not happen, and as a result, 421-a was set to expire at the stroke of twelve.

"Unfortunately, despite a good faith effort by all parties, REBNY and the Building Trades were unable to come to a final agreement on the renewal of a 421-a program that would provide good wages to construction workers across the city,” said Gary LaBarbera, president, Building and Construction Trades Council of Greater New York.

REBNY President John Banks lamented the failure to reach agreement, stating, “Without a program like 421-a, one can't build multi-family rental housing with a significant below-market, or affordable, component on a scale necessary to address the City's needs.”

Both the unions and REBNY said they’re committed to trying to work out a deal in the coming year, but for now the city can’t offer any new tax deals until the law is reinstated.

How this affects de Blasio’s plans remains to be seen. On Monday while both sides were negotiating, mayoral spokesman Wiley Norvell stated, "We will continue to push for prevailing wages in affordable housing projects wherever it's feasible."

Source: NY Daily News