New York CIty Council Member Ben Kallos

ConstructionDive Details emerge of prevailing wage deal between union, NYC on housing projects by Kim Slowey

Details emerge of prevailing wage deal between union, NYC on housing projects

Dive Brief:

  • A prevailing wage deal between New York City officials and Service Employees International Union, Local 32BJ (32BJ SEIU) guarantees member workers' employment at affordable housing projects in 15 rezoned neighborhoods, Crain’s New York Business reported. 
  • Within each rezoned area, most projects with more than 30 units and that receive some sort of public subsidy must pay building workers prevailing wages for at least 10 years. Critics of the 2017 agreement point to the union’s public support of the rezoning without mentioning the agreement, particularly since some union officials called for a wage requirement without disclosing they already had one. Some developers are complaining they purchased land for their housing projects before being informed that they would have to pay prevailing wage rates to service employees, leaving them with unanticipated extra costs.  
  • City and 32BJ SEIU officials maintain that the deal was never a secret and that city officials, developers and other parties to the housing projects in question were part of the discussion before the agreement was finalized, although none could provide evidence of any public exchange to Crain's.


Dive Insight:

This could create some additional friction between building construction unions and New York City Mayor Bill de Blasio since he was a vocal critic of paying skilled trades like carpenters a prevailing wage during the dustup over the 421-a tax break back in 2015 and 2016. The 421-a rule gave developers big incentives to build housing, but it expired at the end of 2015 when developers and unions could not reach an agreement about paying prevailing wages.  

At the time, the de Blasio administration said that paying prevailing wage rates would add almost $3 billion to the mayor’s affordable housing plan and would result in fewer units being built. 

The number of residential permits plummeted after the tax incentive’s expiration but increased again after New York Gov. Andrew Cuomo implemented the Affordable New York initiative, which gives tax breaks to developers who build residential projects of 300 units or more in certain areas of the city and who pay a minimum wage of either $60 per hour or $45 per hour, depending on the project location.

But the conversation around the prevailing wage and the New York City construction industry is far from over. Last month, New York City Council Member Ben Kallos proposed legislation that would require construction companies to pay their workers the prevailing wage on many projects subsidized by the city, even if those companies do not have a direct contract with the city. If they don't pay the prevailing wage, they would risk the loss of financial assistance for the project and fines of $10,000 a day for noncompliance. The new regulation would apply to projects that receive subsidies of at least $1 million, are 100,000 square feet or more in size or, for residential developments, have more than 50 units per building.


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