Trade unions say REBNY is lowballing them in negotiations over 421-a replacement

Two prominent building and construction trades unions have rung the alarm bells over the proposal from the Real Estate Board of New York around a wage floor for a new affordable housing development tax break program. One called the pitch a “nonstarter,” and the talks seem to be going nowhere fast with the April 1 state budget deadline looming.

State leaders and lawmakers have so far taken a hands off approach to the creation of a new tax abatement program for developers to build affordable housing, which would replace the expired 421-a program, in order to allow unions and developers to agree to a wage deal. The talks have been ongoing behind closed doors, but with the budget due in roughly a week, some prominent unions involved in the talks have begun ringing the alarm bells about the Real Estate Board of New York’s proposal on the table.

Steamfitters Local 638 circulated a memo this week among state legislators and their staff, expressing their disappointment with the state of negotiations. The memo, a copy of which was  obtained by City & State, said that REBNY had proposed a wage floor for construction projects with rates below the existing prevailing wage rates in New York state for every union represented by the umbrella New York City Building and Construction Trades Council. 

“To demand that our members take a wage cut in order to support affordable housing will do nothing to change the real estate-driven narrative that pits a false choice between affordable housing and union wages,” said the union’s business manager Robert Bartels Jr. in the memo. He added that “good faith negotiation” regarding the wage floor should start at prevailing wage. “I urge labor's ally in the legislature to do what you can to ensure that we do not repeat the mistakes of the 421a era, and that we only settle for public policy that creates union jobs, provides affordable housing and regrows the middle class,” he said in the memo.

The unions have made clear that they will only support the creation of a new tax credit if it includes strong labor standards. Many have referenced the state’s “prevailing wage” laws, which set minimum rates of pay for workers on public work sites. It did not apply to projects built with the old the 421-a tax break. Different unions receive different prevailing wages. 

The New York City District Council of Carpenters also put out a statement blasting REBNY on Friday afternoon, calling the developer group’s proposal a “nonstarter” for its union and other trades. “Their proposal was based off of the same elements as the existing failed program – limited geographic regions that exclude the areas where development will occur, fraud-ridden average wage standard and enforcement mechanisms that lack any teeth,” said Joseph Geiger, the union’s executive secretary-president. He added that his union offered “significant concessions,” including lowering the prevailing wage. “It’s clear that (REBNY President James) Whelan doesn’t know how negotiations work or is intentionally sabotaging talks,” Geiger said. 

Brett Thomason, the Steamfitters’ political director, concurred with the Carpenters' statement and said that his own boss had also offered the prevailing wage compromise with REBNY. “In a perfect world, prevailing wage is what I think we all want,” Thomason told City & State. “But we can’t have a floor that’s so low that every unionized worker is getting a pay cut.” He referenced the recent wage floor deal that REBNY reached with the Mason Tenders District Council for workers to receive at least $35 an hour for wages and benefits on projects receiving the hypothetical new tax incentive. That would increase to $45 an hour over about the next decade. “The wage floor, it’s so low that it’s not going to help most of us in the trades,” Thomason said. Normally, prevailing wage splits hourly wages and hourly benefits. Under prevailing wage, construction laborers in New York City receive $44.50 per hour in wages plus $52.23 per hour in supplement benefits. The prevailing wage rates for steamfitters and carpenters are even higher.

REBNY did not provide specifics about its proposal when reached for comment about the ongoing negotiations. “REBNY is working with a broad range of stakeholders, including public officials, labor unions and other advocates to address the city’s deepening housing supply crisis,” the group's senior vice president Zach Steinberg said in a statement. He pointed to the recent agreement with the Mason Tenders District Council as “evidence of our commitment that good construction wages and benefits” are part of any new tax incentive program for affordable housing. “We look forward to continuing these discussions,” Steinberg said.

The Mason Tenders District Council expressed optimism about the broader negotiations as well, including their own wage floor agreed to with REBNY. “While no negotiation is perfect, we are glad that the $40 wage floor for the 421-a replacement program remains in place,” said the union’s business manager Dave Bolger in a statement. “These negotiations with REBNY have occurred in good faith under conditions of crisis in the housing market.” Bolger added negotiations will continue through the weekend as well. “We may be in an even better place by Monday,” he said.

A spokesperson for the New York City Building and Construction Trade Council, which is engaging with REBNY on the overarching wage deal negotiations, declined to comment.