The Real Deal New York

Construction groups have some big concerns with 421a

HPD proposes rule change on wage requirements to tax exemption program
By Kathryn Brenzel | July 17, 2017 02:15PM

From left: An NYC construction site, President of the Building and Construction Trades Council Gary LaBarbera and President of the New York City District Council of Carpenters.Steve McInnis

Construction groups are concerned that the city’s implementation of the new 421a doesn’t adequately protect wage requirements on certain projects.

As part of the newly revived program and a rule change proposed by the department of Housing Preservation and Development, developers can’t apply for 421a until after their project is completed. They also don’t need to prove that construction workers were paid required wages until then.

The Building and Construction Trades Council testified on Monday that this arrangement presents an “insurmountable obstacle” for workers to enforce compliance. Santos Rodriguez, who spoke on behalf of BCTC president Gary LaBarbera, noted that the new rule defeats the purpose of requiring minimum wages on certain projects, which is to assure workers get “paid appropriately while they are working.”

“The proposed rule delays compliance efforts until long after the workers, the contractors, are gone from the site, which will only serve to increase confusion, non-compliance, fines, penalties and findings of deficiency in the wages,” he said.

Daniel Walcott, a representative for the New York City District Council of Carpenters, echoed Rodriguez’s concerns, adding that the city should create a mechanism for enforcing minimum wages throughout construction.

The new version of 421a requires wages for large Manhattan projects (300 rental units or more) south of 96th Street at an average of at least $60 an hour. For projects on the Brooklyn or Queens waterfronts, the average is $45 an hour. The enforcement of wages is just one area where the law is murky. It’s also unclear how the city will assess condo projects and how the lack of a preliminary certificate of eligibility will impact lending practices.

Last month, HPD proposed a rule change that will prevent developers who are receiving 421a from generating off-site inclusionary air rights.