Wage Disputes and Tenant Protections Stall Albany Housing Deal

The first issue on the table has plagued housing politics in New York for two years and counting: whether and how to replace a controversial tax break that spurred housing construction in New York City for decades before it expired in 2022.

The tax break, known as 421-a, slashed property taxes for developers who included below market-rate housing in their buildings and paid project workers a higher minimum wage.

Renewing it is a top priority for Governor Kathy Hochul and the real estate industry, who say that the high costs of building and operating housing in New York City make it an essential ingredient for new rental construction. But the powerful Building and Construction Trades Council, which represents about 100,000 unionized construction workers and wields considerable influence over legislators, is opposed to renewing the break in its prior form. They want any new version of the benefit to come with significant wage boosts for construction workers — union and non-union — on qualifying projects.

Without their approval, the tax break likely won’t get replaced this year. In her budget proposal, Hochul assigned the task of working out wage levels in a replacement program to the Building Trades and the Real Estate Board of New York, the main industry group for New York City’s developers and landlords. So far, despite extensive talks over the last few months, the two sides have made little progress, with labor leaders accusing REBNY of negotiating in bad faith.

REBNY declined to comment for this story.

There have been two exceptions to this impasse. The Mason Tenders District Council labor union, which represents construction laborers and is a member of the Building Trades, has struck a deal with REBNY to secure a minimum wage of $40 per hour for their members in a potential 421-a replacement. The union is pushing for lawmakers to set the $40 minimum wage for all construction workers, union and non-union, on developments that receive the tax break.

Other construction unions have criticized this deal, pointing out that the $40 wage floor, which would take effect in 2026, would include the value of benefits like health insurance — so the cash pay could be as little as $25 an hour. That’s several dollars lower than the current average wage for construction laborers, according to the most recent data from the federal Bureau of Labor Statistics.

“A minimum hourly wage would have to be higher than the $40 per hour offered to the laborers to be acceptable,” said William Nagel, political director for two unions representing bricklayers and tile setters, both of which are members of the Building Trades. Nagel said that the unions he represents would be amenable to a minimum wage closer to $72 per hour, a figure also cited by Kevin Elkins, political director of the carpenters labor union, also a member of the Building Trades.

Outside the Building Trades, another powerful union has a deal in place with REBNY: 32BJ SEIU, which represents building service workers such as supers and doormen, has publicly supported a replacement for 421-a.

“We have agreements with our industry,” said Candis Tall, the vice president and political director of 32BJ. “We have talked very regularly to REBNY and they understand the importance of having strong jobs with good worker standards.”

Their deal would require that workers in buildings that receive the tax break be paid the official “prevailing wage” for their occupations, a figure determined by the New York City comptroller, Tall said. The wage varies according to an employee’s specific title and duties, but is around $43 in pay and benefits for porters and doormen, for example.

The two unions that have struck deals with REBNY represent some of the lower paid workers in the housing industry. While their deals could represent significant wage boosts for their members, those wage levels wouldn’t do much for higher paid professions like steamfitters, who build heating and cooling systems, or ironworkers. They and some other construction professionals generally have higher average wages than those agreed to by the Mason Tenders and 32BJ, especially among unionized workers.

That means that despite the deals with two unions, there’s no indication that an overall compromise between REBNY and the Building Trades is close while the remaining dozen-plus Building Trades unions hold out.

“I haven’t heard of any changes on either side,” since talks reached an impasse last week, said Brett Thomason, political director of the steamfitters union, also a member of the Building Trades. “It really all comes down to the wage rate.”

If the labor unions and REBNY manage an agreement, the next roadblock to clear will be measures to increase protections for tenants around the state — a longtime goal of progressives and something that the leaders of both legislative houses have said is a must-have in the final budget.

Many liberal and progressive legislators want this to take the form of a proposed law known as good cause eviction, which would give most tenants statewide the right to renew their leases and require landlords to justify large rent increases.

Hochul maintains a close relationship with REBNY, which opposes good cause eviction, and has repeatedly argued that New York’s renter protections are already the strongest in the nation and don’t need to be boosted.

But her team seems more willing to reach a compromise this year, said Tall, the political director for the 32BJ union. “I think they absolutely are open to discussions on how we improve tenant protections,” she said.

Hochul’s office did not respond to a request for comment.

This year, according to three sources familiar with negotiations, REBNY has indicated openness to a watered-down version of good cause eviction — but only if paired with a significant weakening of tenant protections that currently exist. The group has discussed a version of the law that would potentially include measures like exempting landlords who own a small number of apartments, requiring towns and cities to opt in to the law, or exempting newly constructed buildings.

A final deal will likely include some exemption to the law for small landlords, but how to define that term is still a subject of contentious negotiations, according to a source familiar with negotiations.

REBNY has also been pushing for changes to allow landlords of the more than 1 million rent stabilized apartments statewide to raise rents significantly following renovations.

Since 2019, landlords of stabilized apartments seeking to recover the costs of renovations can increase rents by no more than $89 a month and can’t recoup more than $15,000 in renovation costs from their tenants. Two sources said that REBNY has proposed boosting this amount as high as $150,000.

While legislators and tenant advocates have signaled that they’re open to modest adjustments to the price hike rules, more dramatic increases are unlikely to get far, key legislators have indicated.