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NYC Mayor, Labor Want to Reform Tax Program that Hurts Wages, Stifles Affordable Housing

image via Up4NYC

image via Up4NYC

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An alliance of labor unions and contractors calling themselves Up4NYC have begun a major push to overhaul the 421-a tax abatement program so that it can provide more affordable housing and guarantee higher wages for construction workers.  The launch of the lobbying campaign comes as the state legislature begins debate over tax abatement and rent stabilization laws, which are set to expire on June 15th.

The 44-year-old 421-a tax program was created during a lull in New York City’s economy to help stimulate construction.  It has been tinkered with over time, but generally speaking requires developers in certain parts of the city to set aside 20 percent of development for affordable housing in exchange for tax abatement.  Last year alone, nearly 150,000 apartments in the city qualified for the abatement, resulting in $1.06 billion in forgiven property taxes.  

Worker representatives have issues with the arrangement, however. Up4NYC is seeking to find a middle ground to protect workers from the low wages often associated with these constructions, and to ensure that the 20 percent housing mandate is complied with (it frequently is not).  Paul Fernandes, Executive Cirector of the New York City and Vicinity Carpenters Labor Management Corporation, said in a statement:

“It is not acceptable for developers to get a billion-dollar-a-year tax break while paying workers low wages and creating little to no affordable housing.  These are public dollars, and we need to demand much better accountability and results.”

As part of the campaign’s launch, Up4NYC released the following commercial, “Roof Over Our Head”:

The video concludes: “If developers are getting a break, working families should too. Tell Albany, public funds come with public responsibilities.”

412-a has also faced corruption issues and is at the center of one of the recent corruption cases involving legislative leaders, NYT writes:

…the State Legislature has been thrown into chaos recently, with Sheldon Silver, a Democrat and the former leader of the State Assembly, being indicted on corruption charges. Dean G. Skelos, a Republican from Long Island and the leader of the State Senate, was arrested on Monday, also on charges related to corruption. Among the accusations is that Mr. Skelos voted for 421-a and rent-stabilization bills that would benefit a major New York City property owner that was employing Mr. Skelos’s son, Adam, who also was charged.

The indictment was seized upon by tenants’ groups. “The case against 421-a couldn’t be any clearer,” Delsenia Glover, campaign manager for the Alliance for Tenant Power, said in a statement. If the governor and lawmakers let the tax break live on, Ms. Glover wrote, “corruption will continue.”

Developers argue that high taxes, land and construction costs mean they can either build more affordable housing or pay higher wages, not both.  But New York City Mayor Bill De Blasio is strongly in favor of reforming both the 421-a tax abatement program and rent stabilization laws and is expected to provide detailed legislation this month.  He is joined by a coalition of community groups including the Community Service Society, whose senior housing policy analyst Vincent Bach told The New York Times that 421-a “is a relic of a past time, costing the city an enormous amount of lost revenue while contributing very little affordable housing.”


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