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What is the latest on the NY 421-a Program?

A few weeks ago, The Real Estate Board of New York (“REBNY”), the Construction Trade Council of New York (“BCTC”) and the Governor’s office announced an agreement on 421-a wages paving the road for revival of the tax exemption. According to REBNY’s press release[1], “[t]he agreement calls for eligible buildings in Manhattan to pay an average of $60 (includes wages and benefits) for construction workers based on all hours worked. Eligible buildings in Queens and Brooklyn will be required to pay $45.  These new requirements will apply to “buildings with 300 rental units or more in Manhattan south of 96th Street and in Brooklyn and Queens Community Boards 1 and 2 within one mile of the nearest waterfront bulkhead”. In addition to the geographic exceptions, the new wage and benefits requirement does not apply to  buildings with 50% or more affordable units or buildings where developers have entered into project labor agreements with unions. Developers will be required to hire independent labor monitors to enforce the age and audit payrolls.[2] According to various sources[3], the full tax exemption would run for 35 years (up from a full 25 year exemption plus a partial 10 year exemption) and the income restrictions would remain in place for 40 years.

 

            What remains unclear is when the state legislature is actually going to pass the bill. While they could hold a special session in December, it looks like we may have to wait until January. According to an article by Politico[4], State lawmakers are not going to rush back to pass the statute until they have a chance to “pore over [the] details of [the] recent agreement”. The delay in passing the 421-a statute will further delay the long awaited memorandum of understanding between the Governor and the legislative leaders detailing the $2 Billion in funding to advance the creation of affordable and supportive housing.  

 

            It is also unclear what form this new agreement will take. Will it be a complete rewrite of the 421-a statute passed in June of last year[5] or will it just be an amendment of certain provisions? Looks like to find out we are just going to have to wait until the new year.


[1] https://www.rebny.com/content/rebny/en/newsroom/press-releases/2016/Agreement_Reached_on_Extension_of_421-a_Affordable_Housing_Program.html

[2] https://www.6sqft.com/rebny-and-construction-trades-council-agree-to-move-ahead-on-governor-cuomos-revised-421-a-plan/

[3] http://therealdeal.com/2016/11/14/lawmakers-in-no-rush-to-finalize-421a-deal/ and https://www.rebny.com/content/rebny/en/newsroom/press-releases/2016/Agreement_Reached_on_Extension_of_421-a_Affordable_Housing_Program.html

[4] http://www.politico.com/states/new-york/albany/story/2016/11/legislators-cool-to-special-session-for-421-a-deal-107301

[5] See my blogpost on the amended statute here: http://web20.nixonpeabody.com/ahrc/Lists/Posts/Post.aspx?ID=729&Title=The+421-a+Tax+Exemption+is+Extended

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