Cuomo veto spares condos, co-ops from paying prevailing wage

The real estate industry just scored a quiet victory in Albany.

Gov. Andrew Cuomo pocket-vetoed a bill that would strip a popular property tax abatement from condominium and cooperative homeowners in larger buildings that failed to pay building service workers prevailing wage.

The legislation, which was backed by building service workers union 32BJ SEIU, was not delivered to the governor’s desk until Dec. 30, and therefore died when he failed to sign it within 30 days.

The bill targeted buildings where units’ average assessed value exceeded $60,000. It would have made them ineligible for a 17.5 percent reduction on their annual property tax bill unless they certified in an affidavit that doormen and other such employees working at least eight hours a month were paid prevailing wage. Less valuable buildings were exempted.

Of the 620,146 co-op and condo units in the city, 303,037 receive the abatement, according to the Department of Finance. A breakdown by assessed value was not available.

The sponsor of the bill in the Senate, as it happens, hails from the real estate industry: Manhattan Democrat Brian Benjamin. Before his election in 2017, he was a managing director at Genesis Companies. He did not respond to requests for comment.

Real estate interests opposed the bill, arguing that smaller condos and co-ops could struggle to pay prevailing wage, which can be several times higher than what would be paid without such a mandate.

“It doesn’t surprise me that the governor didn’t sign it,” said Erica Buckley, partner of Nixon Peabody’s co-operatives and condominium practice. “We want to take care of workers but it really shouldn’t be at the expense of smaller condos or co-ops.”

Attorney Leni Morrison Cummins said the bill had “very deeply concerned” co-op and condo boards, which felt that by either committing to pay prevailing wage, or forgoing the abatement, could hit homeowners’ wallets. She called Cuomo’s veto “a huge victory.”

Other lawyers disagree. Stuart Saft, a partner at Holland & Knight, said “it’s really meaningless because most condos and co-ops weren’t going to be affected,” given that workers at the larger, wealthier buildings tend to be unionized and are paid prevailing wage. Saft is the chairman of the Council of New York Cooperatives and Condominiums, which lobbied against the bill last year and represents around 1,000 condo and coop buildings throughout the city.

But the bill was certainly important to 32BJ, one of the country’s largest property-service workers unions and an influential player in New York politics. Its members, who work in 3,500 apartment buildings in Manhattan, Brooklyn, Queens and Staten Island, held a rally in October urging Cuomo to sign the bill.

Kyle Bragg, the union’s president, said in a statement that 32BJ is “working closely with the governor” to ensure “luxury apartment owners and the wealthiest New Yorkers are paying building-service workers a fair wage with family-sustaining benefits.”

It is unknown what, if any, reason Cuomo provided to lawmakers for not signing the bill. The governor’s press office did not respond to requests for comment.

Buckley said the condo and co-op tax abatement has long been “targeted” because it is a tax break with no strings attached.

Saft agreed. “I think something like this bill is going to be enacted,” he said, noting that he could even see the abatement being wiped out entirely.

“By eliminating the abatement … they raise a lot more money without actually raising taxes. It’s actually a very interesting stealth attack,” he said.

The abatement was originally passed because co-ops and condo owners complained that their property taxes were much higher than those of single-family homes, relative to their market value.

Write to Erin Hudson at ekh@therealdeal.com