Developers eyeing legal challenge to 421a labor deal

Legal experts say the state is handing unprecedented power to the private sector

New York /
Jul.July 02, 2015 09:01 AM

In response to a compromise on 421a that requires the Real Estate Board of New York and labor unions to reach a deal on wages by January 2016, some developers are considering taking legal action against the government.

Real estate insiders are predicting court actions, according to Crain’s. Lawsuits could challenge the fact that an important aspect of the law – the wage requirement for construction workers on buildings over 15 units that are receiving the tax abatement – has been left in the hands of the private sector.

During negotiations over the renewal of 421a, Mayor Bill de Blasio argued that a prevailing wage requirement would slow the construction of affordable housing, while Governor Andrew Cuomo made the prevailing wage requirement a top priority.

“It’s unusual for government to delegate authority to the private sector,” said Randy Mastro, a partner at Gibson Dunn & Crutcher who has sued the state and local governments many times. “I’m not aware of New York state doing that ever before.”

Many developers are hesitant to make plans to build rentals until they can be sure that 421a will exist past January of next year. [Crain’s] — Tess Hofmann


Related Articles

arrow_forward_ios
From left: Joseph Strasburg, Jay Martin, and Jim Whelan (Getty)
Real estate’s wish list: Industry’s priorities for 2023
Real estate’s wish list: Industry’s priorities for 2023
A photo illustration of Governor of New York Kathy Hochul (Getty)
Gov. Yimby? Hochul promises housing blitz next year
Gov. Yimby? Hochul promises housing blitz next year
Mayor Eric Adams and Governor Kathy Hochul with Innovation QNS (Getty, Innovation QNS)
Will Innovation QNS happen without 421a?
Will Innovation QNS happen without 421a?
(Getty)
Developers went on permit palooza before 421a expiration
Developers went on permit palooza before 421a expiration
Pink Stone's Richard Ohebshalom with 180 Nassau Street (Rich Ohebshalom, Google Maps, Getty)
Pink Stone faces foreclosure on DoBro rental building
Pink Stone faces foreclosure on DoBro rental building
Kathy Hochul, Lee Zeldin, elections, Real estate and Politics, 421a
Industry hopes Hochul’s win sparks changes to rent aid, 421a
Industry hopes Hochul’s win sparks changes to rent aid, 421a
From left: Landlord attorney Sherwin Belkin and Housing Rights Initiative executive director Aaron Carr (Getty, NYC Department of Finance, Housing Rights Initiative)
Tenants predict wins in 421a overcharge suits. Landlords beg to differ
Tenants predict wins in 421a overcharge suits. Landlords beg to differ
From left: Arch Companies’ Jeff Simpson and Dan Saklakov with 1351 Dekalb Ave (Loopnet, Saklakov, Getty, Arch Companies)
Arch Companies resurrects troubled 421a projects in Bushwick
Arch Companies resurrects troubled 421a projects in Bushwick
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...