The New York Independent Budget Office (IBO) has released a revised report on the impact prevailing wage requirements would have on affordable housing projects built with the 421a property tax break.
The 421a tax credit had been the subject of extensive negotiations in the past months. In Jan. 2016, the parties involved announced they could not reach a compromise, killing the tax credit and jeopardizing Mayor de Blasio’s plans for 80,000 affordable housing units for New York City residents. The agency had initially estimated that prevailing wage requirements would add $2.8 billion to the initiative’s total, but the agency says that figure was low as a result of data errors. After receiving additional information from the Department of Housing Preservation and Development, IBO now estimates prevailing wage requirements would cost the city an additional $4.2 billion, increasing affordable housing construction costs by 23 percent or $80,000 per unit.
The announcement came a day after Gary LaBarbera, president of the Building and Construction Trades Council of Greater New York, stated in an email, “After careful consideration, we believe it is very clear that absent a prevailing wage requirement, the 421a tax abatement program should not be renewed under any circumstances.” LaBarbera was hand-picked by Gov. Cuomo to be the primary labor representative during the tax break renewal negotiations. Other organizations have criticized LaBarbera for his stance on the issue, with the New York State Association for Affordable Housing stating, “Construction union leaders need to understand that low- and middle-income New Yorkers need new affordable housing, not political posturing.”
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