When Gov. Andrew Cuomo tossed a hand grenade into talks last year over a housing tax break, he saw it as a two-fer: a suck-up to unions and a blow to Mayor Bill de Blasio.
But there’s a price tag on Cuomo’s stunt: $4.2 billion.
That would be the extra cost to build 66,000 units under de Blasio’s “affordable housing” plan if Cuomo’s “prevailing wage” rule were in place.
The “421a abatement” basically bribed developers to build subsidized housing by offering them a tax break. Cuomo wanted to also force the builders to pay “prevailing wages” (i.e., union rates) on the whole project — a demand that sank the whole deal.
The $4.2 billion figure comes from the city’s Independent Budget Office, which last week updated an earlier projection of “only” $2.8 billion extra.
The IBO says Cuomo’s rule would jack up construction costs by 23 percent, or nearly $80,000 per unit.
Few builders would stand for that, on top of having to subsidize the “affordable” units. They’ve got to make a profit, after all.
How high are prevailing wages? Bureau of Labor Statistics figures from 2014 put annual “prevailing” wages and benefits for structural ironworkers at $235,248. For electricians, it’s $216,603. Carpenters, $195,478.
In other words, Cuomo killed the affordable-housing tax break by aiming to let construction workers join the 1 percent.
The good news is, most reasonable players understand the importance of building new housing, and efforts to reach a deal continue.
Producing more low-cost apartments “is one of the most pressing issues” facing the city, says John Banks, a spokesman representing developers.
But, he warns, Cuomo’s “prevailing-wage requirement . . . will simply result in much less affordable housing — so that certain segments of the construction industry can be paid well above middle-class wages.”
And this is Cuomo’s idea of being more “progressive” than de Blasio.