Prevailing wage didn’t happen. The new rent law may be to blame

After the ink dried from the newly changed rent laws, state officials turned to address another key issue looming over the real estate industry: Prevailing wage requirements.

But a measure that would’ve changed wage rules surrounding projects that receive public funds didn’t make it into end of session bill known as the “Big Ugly,” as some had expected.

In the final days of the legislative session, the state Assembly introduced an amended version of the bill, which still defined “public works” as any project that was partially or fully funded by public financing and mandated that developers pay construction workers union-level wages on such projects. It included a list of exemptions, such as hospitals and nonprofit colleges. Gov. Andrew Cuomo also reportedly pushed for a temporary carveout for New York City, a year-long exemption from the law’s requirements to give local leaders a chance to plan out its impact. The bill, however, didn’t make it past committee.

Tracy Connolly, of lobbying firm Brown & Weinraub, who represented the state Building and Construction Trades Council, said the extent of the changes to the rent law likely played a part in the bill’s death this session.

“It made the prevailing wage bill a little harder to swallow because the real estate groups were opposed to it,” she said. “The trades will have to decide if that’s where they want to start next year or try something completely different.”

Scott Mollen, a partner at Herrick, Feinstein, said he thought part of the reason the public works bill died this session is that it would’ve interfered with individual agreements construction unions have made with developers in the past few years in a bid to compete with a rising tide of nonunion contractors.

“The real estate industry recognizes that it’s important to pay fair wages, but there’s a difference in developing market-rate rentals and truly affordable housing,” he said. “I believe that there are union leaders who are anxious to see new affordable developments built, who are open to discuss compromises that would provide work for their members at a development that makes economic sense.”

Noticeably missing from the negotiations was a major ally of Cuomo, New York City Building and Construction Trades Council president Gary LaBarbera, who has traditionally been vocal on the issue of prevailing wage. The push for the legislation was led by the state BCTC, and LaBarbera said he has not been part of talks with lawmakers in how to shape the bill.

Some close to the negotiations indicated that LaBarbera didn’t support the legislation, which he called “ridiculous.”

“I have always supported the pinnacles of prevailing wages,” he said.

But LaBarbera recently reached a deal with the Related Companies to end a fight over the developer’s use of non-union labor, though the terms of that agreement have not been made public. The deal followed two others made with the carpenters’ and iron workers’ unions independently. As part of the BCTC deal, Related dropped two lawsuits against LaBarbera and agreed to be open to future negotiations with individual unions — but it came with no guarantees that they’d choose union labor.

During an interview, LaBarbera said he served as a consultant on how the proposed legislation would impact the New York City market, including on deals like the one made with Related. He said he’d heard rumors about the city being excluded from the bill but didn’t think it would happen.

Back in December, the AFL-CIO— the parent organization of the BCTC — floated a version of the bill that would’ve specifically applied prevailing wage to Hudson Yards. A campaign run by the BCTC, #CountMeIn, declared at the time on Twitter that the bill had the governor’s support, though he never publicly advocated for the legislation.

While a prevailing wage mandate would perhaps give construction unions an edge in the New York City market— since nonunion firms could no longer tout lower price tags on projects receiving public money— real estate groups have argued such a requirement would halt building altogether. That, if it were to come to fruition, would potentially put both union and nonunion workers out of the job.