New York City building projects need to continue to keep the economy moving in the right direction; however, the 421-a tax abatement program that was encouraging building in New York City has expired. Governor Cuomo is offering union officials and developers a wage subsidy program to help revive the program. This plan is somewhat similar to the bill that was submitted to the Senate at the end of the legislative session, but that bill did not include a wage subsidy.

Trying to Keep Construction and the Economy Healthy

A bill, called 421-A, was submitted right before the end of the legislative session in June, but it failed to pass. In the bill, it detailed a $55 per hour average minimum wage for construction workers who were working on projects located south of 96th Street, which included more than 300 apartment units.

The wage subsidy program has a two-tiered wage for government-assisted projects of over 300 apartments on the waterfront: one tier for Queens and Brooklyn and another for Manhattan. For example, in Manhattan, a project south of 96th Street asks for a 421-a tax abatement would be required to pay at least $65/hour minimum wage, including benefits. Meanwhile, in Queens and Brooklyn, the wages would be at least $50/hour, in both wages and benefits. New York State would reimburse or subsidize 30% of the wages. Additionally, a developer would need to allot a percentage of the units for below-market rents.

The issue that many people are worried about is where the money is going to come from. After all, this subsidy could run into the tens of millions of dollars. Also, how will the funds be managed?

Thoughts from Governor Cuomo

During a speech at the New York State AFL-CIO 33rd Constitutional Convention, Governor Cuomo discussed the much-needed infrastructure repairs the state needs, including upgrades to the Long Island Railroad and JFK and LaGuardia airports. He then mentioned the 421-a program, admitting that this plan was largely about union wages. “That’s what this fight on 421-a is all about, and they try to make it complicated, but it’s very, very simple. I have two problems with the program; first, it’s an affordable housing program, but it doesn’t provide the affordability for long enough.” His second issue was with the city not paying the union wages. “Developers don’t want to be forced to use union labor, because if they are left on their own they want to use non-union labor, and at one time, in this city, you would never dream of building non-union construction. I want to pay more so we have union jobs because the government shouldn’t pay a poverty wage, that’s why I want to pay more.”

Keeping the economy moving in the right direction means keeping everyone working, and for construction workers, this means that they need projects to work on. This wage subsidy program is meant to keep them working at a wage that will allow them to take care of their family and their financial commitments. In addition, it offers more affordable housing for others, so they can move into the state, get jobs, and contribute to the economy. All in all, it works to help everyone. 

Worried about how the 421-A bill could effect your business? You can protect yourself with sufficient insurance protection. Contact Skyline Risk Management, Inc. (718) 267-6600 to voice your concerns.