The Real Estate Board of New York’s track record of promoting affordable housing and high construction wages may be up for debate among activists, but the 122-year-old organization touts both as major policy victories in the introduction to its annual report. Affordable New York (the replacement for 421a), fair construction pay and safety, and affordable housing production all landed at the top of the group’s list of issues it promoted in the report.
Replacing 421a
The resurrection of the lucrative 421a property tax break was unquestionably the biggest achievement for REBNY in 2017. The issue had seemed hopeless for more than a year, as the old 421a law sunsetted in January 2016 with one weird caveat engineered by Gov. Andrew Cuomo: the labor unions and REBNY had to hammer out a compromise on the policy that would satisfy developers’ desire for cost control and the construction trades’ mission to ensure workers get paid prevailing wages.
The proposal was a triumph for the real estate lobby, but not necessarily for the public. Affordable New York is unlikely to produce much housing for low-income New Yorkers, and it will cost $1.2 billion more than the old 421a program over the next decade, according to a report issued by the city’s Independent Budget Office last year.
Midtown East
The rezoning of New York City’s densest office neighborhood was another achievement for the real estate board, which counts among its members many of the city’s biggest commercial landlords and developers. In November 2015, REBNY, then-City Councilmember Dan Garodnick and then-Manhattan Borough President Gale Brewer resurrected a Bloomberg-era plan to upzone Midtown East. The group, known as the Midtown East Steering Committee, issued a new set of recommendations that required developers to pay for transit upgrades or pay a premium in order to tap into unused air rights attached to landmark buildings in the neighborhood.
The rezoning entered public review at the beginning of 2017 and hewed closely to the steering committee’s recommendations. The City Council ultimately approved the rezoning in August 2017, along with $50 million in capital funding for fixing up public spaces and streets in Midtown East.
Construction Safety
Few issues generated more controversy in the construction community last year than Intro. 1447, a piece of construction safety legislation commonly known as “the apprenticeship bill.” It was introduced in January 2017 as part of a package of 21 bills that covered worker training, prevailing wages, site safety, civil penalties and reporting requirements. When it first hit the floor of the council, Intro. 1447 heavily favored the construction trade unions by requiring workers on buildings of 10 stories or taller to enroll in apprenticeship programs.
REBNY and open-shop groups testified vigorously against the bill at a City Council hearing last January. The final version-which REBNY opposed-required 40 hours of construction safety training for workers on building sites of four stories or higher by September 2020. The City Council passed it in September 2017 with a unanimous vote of 42-0.
Toxic Effects of Green Initiatives?
REBNY has advocated for green energy initiatives in construction and building management for the past couple of years.
In September, Mayor Bill de Blasio unveiled plans to cut the city’s greenhouse gas emissions 80 percent by 2050. The proposal called for new, strict limits on fossil fuel usage in commercial or residential buildings of more than 25,000 square feet that will go into effect in 2030. Landlords who cannot meet the requirements will face steep financial penalties. Older, multi-family residential buildings that rely on natural gas and heating oil are most likely to suffer under the new regulations.
Tax Worries and Investment Sales
Even after a year marked by struggling investment sales and declining retail rents, REBNY members still saw signs the market was doing well. The luxury residential condo market took a hit, but the volume of residential home sales still increased year-over-year throughout the five boroughs for the first three quarters of 2017, the report notes.
And as it looks down the barrel of 2018, the organization will have to contend with unfavorable tax laws passed by a Republican Congress that could negatively affect the market in New York. Under the new rules, the state and local tax deduction will be capped at $10,000 for property, income and sales taxes. Since New York is a high-tax state, residents and developer alike are concerned by the spectre of rising property taxes and whether that will ultimately drive New York’s wealthiest to low-tax states like Florida. (Source: Commercial Observer)
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