Brooklyn Boro

OPINION: Prevailing wage will stifle affordable housing

May 11, 2015 By Jolie Milstein For Brooklyn Daily Eagle
NYSAFAH President & CEO Jolie Milstein. Photo courtesy of NYSAFAH
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Albany lawmakers should resist efforts to tie the renewal of the 421-a program with demands for higher wages on affordable housing projects, as it will curb the production of new housing just when New Yorkers need it most.

The 421-a property tax exemption has been one of the most successful tools to promote affordable housing programs in New York City since its inception nearly forty years ago. The program now faces expiration on June 15 unless renewed by the State Legislature. While we are confident the program will be extended, we are concerned about calls to link the program’s future to a new mandate to pay prevailing wages.

Such a mandate would drive up costs at affordable housing projects. Prevailing wage rates are out of line with the average wage paid on New York construction sites. For example, the state’s prevailing wage for carpenters, $45 an hour, is nearly one and a half times what an average carpenter makes in New York City, which itself far outpaces the city’s living wage, the standard that allows workers to support their families and afford their basic needs.

These higher costs will require greater government subsidies — or smaller projects. The result will inevitably be fewer units built, fewer construction workers hired and fewer affordable housing options for the residents of Brooklyn.

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There is no debate that New York City and Brooklyn need more affordable housing. Too many New Yorkers are rent-burdened, affordable housing lotteries are inundated with applications and the city’s homeless population continues to grow. In addition, higher construction costs and land prices make housing more difficult than ever to build.

In this environment, we should be doing all we can to promote and build affordable housing. The 421-a program has been one of the most effective programs in the creation of affordable housing. It offers property tax abatements of between 10 and 25 years for new rental buildings, encouraging the construction of new multi-family housing that would otherwise be impossible to build given the city’s high tax rates on rental buildings.

Over the last three decades, the program has led to the creation of more than 70,000 affordable housing units, helping revitalize neighborhoods throughout the city. It is the only as-of-right tax abatement available for mixed-income affordable housing.

But this success would be drastically undermined if prevailing wage rates were required on 421-a projects in Brooklyn and across the city.

Moreover, a prevailing wage mandate would make it more difficult for affordable housing developers to hire local workers and keep wages in the community — an important issue that impacts many Brooklyn neighborhoods with high unemployment.

A prevailing wage mandate will substantially raise the cost of affordable housing in the city and hurt economic growth. We should renew 421-a without undermining the goal of creating more affordable housing for the residents of Brooklyn and all of New York City.

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Jolie Milstein is president and CEO of the New York State Association for Affordable Housing.

 


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