Hochul’s NY Housing Plan Hangs on Higher Pay for Building Trades

Construction unions want to secure higher pay before supporting Gov. Kathy Hochul’s latest push to boost affordable housing in New York City.

Only one major union—32BJ SEIU, representing people who work in completed buildings—has publicly backed the plan she unveiled Tuesday to allow projects already underway to qualify for a tax break for affordable housing. Her proposal is modeled on the controversial 421-a tax provision that expired last year and gave developers a tax break for constructing residential buildings that include a certain number of affordable units depending on the size of the building project.

Opposition from other unions, represented by the Building and Construction Trades Council of Greater New York, threatens Hochul’s efforts to boost affordable housing months after progressive legislators blocked an expansive housing plan that included a similar 421-a renewal.

A letter from the Council to the governor outlines a possible compromise.

The letter, reviewed by Bloomberg Law, argues construction workers—unionized or not—should get paid enough to afford to live in the buildings they help construct. That would mean higher wages for carpenters, electricians, and others, but their pay wouldn’t be as high as the “prevailing wage” for state-funded construction work. That hourly rate is set annually by the Office of the New York City Comptroller based on existing pay rates within different occupations.

Hochul unveiled the housing project this week with two prominent components. The first would prioritize certain state funding initiatives for “pro-housing” localities. The second would create quasi-421-a tax break for existing projects in the Gowanus area of Brooklyn that would provide thousands of new units if built.

“When the state legislature let the 421-a tax incentive program expire, it effectively killed thousands of housing units right in this neighborhood, and they brought all this great momentum, all this energy, all this excitement to a screeching halt,” Hochul said at a press conference. “We’re not going to let that happen any longer. Not on my watch.”

‘Disappointment’

Her announcement provoked a fierce response from some of the 15 unions affiliated with the Building Trades Council, like the United Brotherhood of Carpenters as well as the International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers.

Some of these same groups and their legislative allies clashed with the governor earlier this year over her thwarted effort to nominate Brooklyn state appellate Judge Hector LaSalle to lead the state’s highest court.

“I would say my disappointment in Kathy Hochul is shared throughout the industry,” said James Mahoney, a member of the Iron Workers District Council of New York who sits on the executive board of the Council in an interview.

“This is a moneymaker for developers,” he added.

State Senate Chair Jessica Ramos (D) also criticized Hochul for acting unilaterally. “I think the state would benefit greatly from a much more collaborative approach where all these stakeholders are at the table before at an announcement, instead of stakeholders learning about this through the media when everything has supposedly been decided,” she said.

Both Assembly Speaker Carl Heastie (D) and state Senate Majority Leader Andrea Stewart-Cousins (D) didn’t directly comment on Hochul’s announcement, but in separate statements for Bloomberg Law they reiterated their past comments that any plan to create affordable housing should include new “tenant protections” and opportunities for “home ownership.”

A Hochul spokesman noted that existing rules provide developers financial incentives if they pay workers more.

‘Can’t Do Both’

Construction unions want to make higher pay mandatory, and their outspoken opposition to Hochul’s announced plan places pressure on Building Trades Council President Gary LaBarbera, a longtime ally of the governor and her predecessor Andrew Cuomo. The letter approved by the Executive Council at his behest is an effort to mediate the dispute between the governor and her labor critics.

Boosting pay for all construction workers involved in a revived 421-a program would make organized labor more competitive against non-unionized workers. And that could undermine Hochul’s ongoing effort to create affordable housing at a relatively low price.

“The construction trades could just find a better way to deliver a service at a more competitive price,” Ken Girardin, a fellow at the Empire Center for Public Policy, said.

“Governor Hochul can do housing or do a construction workers jobs program. History has shown government can’t do both,” he added.