Does Cuomo Have the Answer to 421a?

“We want to create affordable housing,” Cuomo said yesterday on supermarket magnate John Catsimatidis’ radio show on WNYM-AM 970. “It has to be economically viable for the real estate community, obviously, to do it, and it has to pay a fair wage.”  

While the legislation still has to be voted upon, the rebranded program would effectively do away with the name “421a.” Under the most-recent terms of the program, which expired a year ago, developers would get a tax break in exchange for keeping a percentage of units affordable for 25 years. (A November 2016 agreement to reinstate the program initially extended that to 35 years.)   

Roughly 2,500 units are expected to be created annually under the program, according to the governor’s office—meaning about 9,000 units in total by the time the bill would expire on June 15, 2020. The legislation would also retroactively cover eligible projects that began in January 2016.

Affordable New York would extend the years in which an apartment is deemed below market, according to a press release issued from the governor’s office. Units will now be covered for 40 years instead of the 35 years under the earlier agreement.

Critics of the existing program took issue with certain caveats including the fact that luxury condominiums could sometimes be eligible for the break, as well as the length of time a unit was affordable.

“Albany needs to make good on the reforms we secured to the broken old 421a program: No tax breaks for luxury condos, reduced costs to taxpayers and no tax breaks without significant affordable housing in return,” a spokeswoman for Mayor Bill de Blasio said in an email.

It wasn’t immediately clear when the legislature might take up the bill. But a spokesman for Assembly Speaker Carl Heastie said: “Affordable housing has always been one of our top priorities, so we’ll review the bill with our members.”

A representative for State Senate Majority Leader John Flanagan did not immediately return a request for comment.

The real estate industry seems to have thrown its weight behind the new program. In a press release from the governor’s office, Real Estate Board of New York Chairman and Tishman Speyer Chief Executive Officer Rob Speyer endorsed Cuomo’s new plan, saying it would “lead to the creation of desperately needed rental housing, including many more affordable units, throughout New York City. It will also generate more well paid jobs for New Yorkers.”

But it will come at a cost to developers. Construction workers on projects south of 96th Street in Manhattan will get an average $60 an hour in pay, while those in waterfront areas of Brooklyn and Queens will be paid an average $45 an hour, according to the release. Large-scale developments of more than 300 units in other parts of the city can also qualify for the plan if the wage requirements are satisfied. They will also have to pay for independent monitors who will inspect whether the wage requirements are being enforced.

Those parameters were hammered out in a year and a half of negotiations between Cuomo, REBNY and the Building and Construction Trades Council of Greater New York. Survival of 421a was dependent on the two organizations agreeing on what salary workers should receive on big projects. The trade group and union came to an accord on wages near the end of 2016, nearly a year after 421a expired.

“This legislation will not only help spark the creation of desperately needed affordable housing in New York City, but it also will ensure that the construction workers who build it will receive good middle class wages,” Gary LaBarbera, the president of the union, said in a statement yesterday.

Coming to an agreement to build housing in New York City might also lead to $2 billion in statewide funding for development. A memorandum of understanding (MOU) was signed last year to earmark that money to subsidize low-income housing throughout the Empire State. But the state senate opted not to release the funds, because housing policy was unclear during the expiration of 421a.

The group representing low-income housing developers said the new agreement should mean the $2 billion MOU will finally see the light of day.

“With an agreement reached on 421a, the path is now clear for state officials to sign the MOU and finally release $2 billion in new statewide affordable housing funds,” Jolie Milstein, the president and CEO of the New York State Association for Affordable Housing, said in a statement via a spokesman. “We urge state officials to quickly take this next step, which would so greatly benefit low-income families and our state’s economy.”