Housing

Unions, contractors nail down cost cuts

The two sides are back at the table, trying to figure out ways to lower costs

by Theresa Agovino

Last year’s groundbreaking agreement between contractors and unions to bring down construction costs in the city reduced overall expenses by between 10% and 20%, slightly below the 15% to 21% originally projected.

With the deal due to expire at the end of March, the two sides are back at the table trying to figure out ways to lower costs further through a new agreement, says Louis Coletti, president of the Building Trades Employers’ Association, which represents contractors that use union labor.

The initial agreement, which included provisions for union work rule changes and slimmer contractor profit margins, is credited with stimulating more than $7.4 billion in construction activity and saving 25,000 jobs. Mr. Coletti says that the two sides are looking for more permanent changes this time, because it looks like it will be years before the city will see a construction boom matching the one that flourished earlier this decade.

The unions and contractors gathered in Florida last week at the industry’s annual meeting, and the mood was very different than it was in 2009, Mr. Coletti notes.

Last year, the recession was just beginning to have an impact on the construction industry, and there was more acrimony between the two sides.

“There is now a recognition that we are in a new economic cycle and there will have to be shared sacrifice,” says Mr. Coletti.

He declines to say what new measures the two sides are discussing, but he says he is confident that there’ll be a new agreement.

Sparring in Albany Over Raising Wages to Build Lower-Cost Housing

by Manny Fernandez

Two seemingly like-minded political allies — labor unions and nonprofit developers of lower-cost housing — have taken opposing sides in Albany over a bill that would require the developers to pay construction workers the prevailing wage, essentially a union-level wage far higher than nonunion pay.

The developers, many of whom rely on government subsidies to build housing for low- and moderate-income families, say the bill would cut the production in half and increase rents at a vulnerable time for the industry, when the economic downturn has hampered the financing of low-cost housing. Supporters, however, argue that a prevailing-wage law would ensure quality construction and a decent standard of living for workers.

The bill, introduced in the Assembly in January and in the State Senate in April, would require developers of government-subsidized residential housing projects to pay the prevailing wage. It will be debated as part of committee hearings in Albany on Tuesday. Another bill in the Assembly and the Senate would require prevailing wages on projects financed by industrial development agencies.

Under state law, laborers on public works projects must be paid the prevailing wage, which varies according to the trade and location. The proposed legislation would expand the definition of public works to include all government-subsidized building projects by for-profit and nonprofit developers. Most workers who build subsidized low-cost housing in New York City are not currently required to be paid the prevailing wage. Projects receiving federal subsidies are required to pay it, under federal law.

“There is always arguing about what is public work and what is not public work,” Assemblywoman Susan V. John of Rochester, chairwoman of the Assembly’s Labor Committee, who introduced the bill, said in a phone interview on Monday. “This is an effort to try to clear it up.”

A report released last year by a nonprofit policy research group found that imposing prevailing wages on low- or moderate-cost housing projects could increase total development costs by about 25 percent and increase rents in a typical apartment by about $400 a month. The report was prepared by the Citizens Housing and Planning Council, which is made up of housing developers, construction company executives, bankers and academics.

The median nonunion wage for New York City construction workers in selected trades was $13.50 an hour in 2007, and the union median wage was $19.57, according to the report. Because of the increased costs associated with paying the prevailing wage, developers would need larger government subsidies to build the same number of units, according to the report.

“It will mean a lot of projects will not be feasible, or in order to make them feasible, they would be feasible for higher-income residents,” said Michael D. Lappin, president of the Community Preservation Corporation, a nonprofit lending consortium that has financed about 125,000 low-cost units around the state. “It will really have a direct impact on all the affordable housing being done. Much of that affordable housing is what has rebuilt New York’s urban neighborhoods.”

The New York State Building and Construction Trades Council of the A.F.L.-C.I.O., an influential labor group that represents the state’s major construction unions, has been pushing lawmakers to expand the prevailing-wage requirements for years.

“Is the cost of construction higher? Yes it is,” said Edward J. Malloy, president of the group. “But I think we deliver a better product, on time and in budget.”

Phillip Morrow, president and chief executive of the nonprofit South Bronx Overall Economic Development Corporation, which builds low-cost units, said the financial impact of paying the prevailing wage was only one concern. Mr. Morrow said he also worried that the nonunion, largely black and Hispanic work force that builds these projects would be replaced with mostly white union labor. “The unions don’t have the best record for employing minority workers and workers from the community,” he said.

Mr. Morrow said that if he had to pay the prevailing wage, his options would be limited. “We’re going to ask for more public dollars. In the Bronx, we don’t have the option of raising the rents. The market is not going to support these higher rents. We have to get more subsidy per unit.”

Opponents of the bill said federally financed projects receive additional money in order to pay the prevailing wage, but the proposed state legislation includes no extra financing. They said that because many of these projects receive private financing, they should not be considered public works, like schools or roads. “It’s absurd,” Mr. Lappin said. “Who thinks of public works as a 40-unit apartment building in the Bronx that needs some public help to keep it affordable?”

Assemblywoman John said developments such as Atlantic Yards in Brooklyn, a residential and commercial project for which the city and the state have agreed to provide subsidies, were clearly public works. “I do believe that it’s important that we uphold the provisions of our State Constitution that say that when we’re spending tax money, people are paid prevailing wage,” she said.

A State Grab on NYC Hou$ing Would Fund Fresh Debt

From Comptroller William C. Thompson

The state government is looking to raid a fund that was established specifically to build affordable housing in New York City. As New York City’s comptroller, I certainly understand that our state is facing a massive budget deficit
and must consider every revenue source. But the city finds itself in the grips of both a severe economic recession and an affordability crisis.

Even as Wall Street’s implosion dealt a crippling blow to our economy, personal expenses in our city remain wildly uneven with the rest of the country.

In January, my office reported that our real gross city product fell an estimated 5.5 percent in the fourth quarter of 2008. Meanwhile, a study released last week by the Center for an Urban Future found that New York City today is by far the most expensive city in the country.

Read the entire release: Housing

NYC rent control bills gain

The measures have been rejected repeatedly by GOP

by Rick Karlin

The Democrats in control of both houses of the state Legislature are starting to flex their muscles, and one of the first examples may affect laws governing rent control in New York City.

Assembly Democrats on Monday overwhelmingly passed a series of bills designed to strengthen the city’s unique rent control laws. One such measure would increase to $240,000 from $175,000 the annual income threshold at which a tenant’s rent can be de-controlled. Another piece of legislation would reduce the amount a landlord could raise the rent on a vacated apartment from 20 percent to 10 percent of the previous rent.

While Assembly Democrats have long favored such measures, in the past they would routinely be shot down by Senate Republicans. But the month-old Democratic control of that chamber means some of those measures may finally end up on Gov. David Paterson’s desk.

“We’re not interested in one-house bills,” said Sen. Pedro Espada, D-Bronx, chairman of the Senate Housing Committee. Espada said the Senate would likely take up some at least some of the rent control measures passed in the Assembly later this month.

The prospect of tougher rent control laws is unwelcome news for the Rent Stabilization Association, which represents landlords. “It’s a major concern to us,” said Frank Ricci, the group’s director of government affairs.

Ricci said the sagging economy is creating more vacancies and lower prices, which obviates the need for more rent controls.

Those arguments were voiced on the Assembly floor Monday afternoon by Republicans. Suffolk County GOP Assemblyman Michael Fitzpatrick said rent control laws seem aimed to benefit affluent Manhattanites who live in high-rent buildings.

Democrats responded that many tenants in rent-controlled apartments are middle-class city workers such as teachers and police officers.

On both sides, the battle over rent control has consistently drawn enormous campaign contributions from real estate interests, which have given to both parties.