The Real Deal New York

End times for 421aa? NYC remains without the tax break

But the Senate session continues to drag on

June 17, 2016 12:40PM
By Kathryn Brenzel

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As the legislative session continues to drag to a close, New York is still without 421a.

A replacement tax abatement — 421aa — was proposed late on Monday but has languished in the Senate Rules Committee, sponsor-less and without a navigable path to the governor’s desk. The new program closely resembles its single-a predecessor, with a few changes involving construction wages and condominiums eligible for the abatement. The measure calls for a minimum wage of $15 an hour at most construction sites and an increased in the assessment value of condos that can be built under the program from $65,000 to $75,000.

This didn’t go over well with the Building and Construction Trades Council, whose president Gary LaBarbera called the bill “offensive” and “in bad form.” The BCTC and the Real Estate Board of New York spent months trying to negotiate a new program, based on a directive from Albany to come to an agreement over a prevailing wage requirement. Though the groups have said they came close to a deal — one option that involved including condos in the program — negotiations ultimately failed. Gov. Andrew Cuomo has said that he won’t support a tax break that doesn’t feature a prevailing wage component.

Given the bill’s timing and its political implications, 421aa’s chances seemed paltry from the start. Still, other forces have also reportedly been at play. Senate Republicans linked the future of $2 billion earmarked for supportive housing to discussions about 421a, Politico reported. News also surfaced that only $150 million of that sum would be freed up to begin construction of housing for the homeless. The future of these funds remains unclear.

An analysis by The Real Deal earlier this week showed that only 2,700 new apartments in projects with 10 or more units were approved for construction through May of this year, compared to the 20,700 greenlit during the same period in 2015.

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