ALBANY — A proposal to revive a lucrative affordable housing tax credit for developers by providing government wage subsidies for the workers they hire is being blasted by business groups, non-profit providers and economic experts.
In order to jump-start talks involving the expired 421-a tax credit, the Cuomo administration has suggested the possibility of creating a two-tiered minimum wage for housing projects, with the state reimbursing part of the costs.
E.J. McMahon, president of the Empire Center for Public Policy, said such a plan would be a double-whammy for taxpayers who would be on the hook for funding the tax credit and helping cover higher wages for workers.
“It’s a real headscratcher having a tax subsidy and a wage subsidy,” McMahon said. “I’m struggling to think of anything like it in the country.”
Mike Durant, who represents 11,000 small businesses in New York as state director of the National Federation of Independent Business, called the proposal “crazy,” particularly after Cuomo and the Legislature this year passed a law to phase in a $15 minimum wage in some parts of the state without offering businesses any assistance.
“This is probably something the labor unions want and I think we’re finding that when the labor unions say ‘jump’, everyone in Albany says ‘how high,” Durant said.
Non-profit groups are also unhappy since their calls for higher state reimbursements were flatly rejected when the state raised the minimum wage.
Sources close to Cuomo dismissed the criticisms as premature since no agreement is in place.
E.J. McMahon of the Empire Center for Public Policy said giving a tax subsidy and wage subsidy is a “real headscratcher.”
They insist that the 421-a tax credit as it was before it expired in January is dead and that the governor is insistent that any deal include not only higher wages for workers, but also more affordable housing units than have been on the table previously under a deal that was cut unilaterally between Mayor de Blasio and the Real Estate Board of New York that was rejected by the governor, Legislature, and unions.
Cuomo might also be pushing to keep the units below market rate for a longer period of time, they say.
The critics, the sources said, are only talking about one piece, paying the union wage. They aren’t looking at the second condition, which is more affordability.”
The developers have complained that paying union-like wages for affordable housing projects is not economically feasible.
But a Cuomo source said the builders might have to accept smaller profits if they are to receive lucrative affordable housing tax credits from the state.
The source said the Real Estate Board of New York and the trade unions have become more flexible in recent talks because the pipeline of affordable housing projects is drying up, including one pushed by de Blasio in Inwood that was rejected by the City Council.
“There’s more incentive to move because they’ve seen the city’s other affordable housing programs stop … but we’re still not there,” the source said.