The debate over 485x may have died down (for now), but the fight to expand prevailing wages for construction workers is far from over.
Nearly five years ago, lawmakers approved a measure that required union-level wages on private projects where public funds cover at least 30 percent of construction costs and such costs exceed $5 million. The requirements did not kick in until 2022, and the law imbued a 13-member board with the authority to raise these thresholds and to determine which programs count as public funding.
The Democratic majorities of the state Senate and Assembly want to get rid of that board and increase the number of projects that must pay construction workers prevailing wages. In their budget resolutions, both chambers called for reducing the threshold to 20 percent and eliminating the Public Subsidy Board. The Assembly has also floated new dollar thresholds.
Gary LaBarbera, who heads both the city and state chapters of the Building and Construction Trades Council, is on the board but agrees that it needs to go.
The board was tasked with hashing out what construction projects qualify and, more fundamentally, what constitutes “construction” under the law. That, by and large, didn’t happen, according to LaBarbera.
LaBarbera told The Real Deal that construction and business interests are pretty evenly split on the board, and as a result, they can’t reach a consensus. Of the 36 projects that have come before the board, the group found that prevailing wages were only required on six projects.
“We get together four times a year to review projects,” he said. “These are two- to three-hour meetings, and all it is is a debate.”
He believes the legislature needs to both clarify and broaden the requirements, and that the Department of Labor should take over for the board.
Developers have repeatedly opposed efforts to expand prevailing wage requirements, arguing that it drives up construction costs to the point of making projects prohibitively expensive.
The law spares housing projects where at least 25 percent of the units are affordable, excluding most 485x projects.
If prevailing wage requirements will be expanded, they’d add onto an already complex set of challenges facing developers, including stubbornly high interest rates and the prospect of tariffs driving up material costs.
Last month, New York’s Associated Builders and Contractors called on state lawmakers to adjust how it calculates prevailing wages, arguing that they are wrongfully inflated. The group also opposed the passage of the 2020 law, and on Wednesday an ABC representative warned that expanding these mandates would be “devastating” to the industry.
LaBarbera says securing changes to these wage requirements is his organization’s top priority this legislative session. The group has been working to build public support for these changes,
Last year, a BCTC-commissioned poll found that 77 percent of the 834 voters in New York surveyed believe developers should pay prevailing wages to construction workers on projects that receive $1 million or more in public subsidies. At the city level individual unions are also pushing to require prevailing wages on more city-funded projects.
What we’re thinking about: Global tariffs on steel and aluminum went into effect on Wednesday. How will these and other tariffs affect construction in New York? Send a note to kathryn@therealdeal.com.
A thing we’ve learned: The New York Housing Conference, along with more than 100 lawmakers, housing groups, developers and others, sent a letter to members of the New York Congressional Delegation, urging them to reject cuts to staffing and programs at the Department of Housing Urban Development. The letter also urges the officials to support legislation that would lift a cap on how many private activity bonds the state can issue to finance affordable housing and that would increase allocations of the 9 percent Low Income Housing Tax Credits.
Elsewhere in New York…
— Mayor Eric Adams faces an uphill battle to re-election, but he says he’s almost ready to start campaigning. Adams told reporters on Tuesday that he expects to begin campaigning “very soon,” Politico New York reports. “I’m a solid, solid campaigner. I know how to articulate a message that’s clear and crisp, and that’s what I’m going to do,” Adams said. “I’m going to enjoy every moment of selling my product to the people of this city.”
— More than two dozen elected officials in New York, including Rep. Alexandria Ocasio-Cortez, are calling on the Department of Homeland Security to release Mahmoud Khalil, City & State reports. Khalil, a green card holder, was arrested by Immigration and Customs Enforcement on Saturday for his involvement in pro-Palestinian protests at Columbia University. “The administration’s pattern of targeting the rights of students and immigrants to speak against injustice undermines democracy and makes everyone less safe,” the letter states. DHS agents told Khalil his green card would be revoked and his student visa canceled. A judge temporarily blocked his deportation on Monday,
— New York is testing raw milk for bird flu, the Times-Union reports. In January, the state issued a notice requiring monthly testing for raw milk, in addition to testing of raw milk intended for pasteurization. Bird flu has not yet been detected in cattle in New York.
Closing Time
Residential: The priciest residential sale Wednesday was $15.3 million for a 3,073-square-foot, sponsor-sale condominium unit at 217 West 57th Street in Times Square North. Kane Manera and Janet Wang of The Corcoran Group had the listing.
Commercial: The most expensive commercial closing of the day was $14.35 million for a development site at 103 East 29th Street in Kips Bay. Impact Equities purchased the property from Auevilla Holdings.
— Matthew Elo