February 23rd, 2017
NEW YORK CITY CONSTRUCTION STARTS REACHED $32.2 BILLLION IN 2016;
A NEARLY 22 PERCENT DECLINE FROM 2015 AS RESIDENTIAL SECTOR COOLS
Despite Year-Over-Year Decline, Value of Construction Starts
Exceeded Previous Five-Year Average by Nearly 34 Percent
The value of New York City construction starts reached $32.2 billion in 2016, a decline of 22 percent from 2015, according to a New York Building Congress analysis of construction data from Dodge Data & Analytics.
While the overall value of last year’s construction starts is down from $41.1 billion in 2015, the 2016 total easily outpaced the annual average of $24.1 billion in construction starts achieved during a five-year period stretching from 2011 through 2015.
“Despite our inability to match the epic pace of new project starts achieved in 2015, private sector developers and real estate investors maintained their incredibly bullish outlook on New York City in 2016,” said New York Building Congress President and CEO Carlo A. Scissura. “With government work included, the five boroughs have been home to more than $70 billion in new construction projects over the past two years, with much of that work continuing to course through our economy today in the form of new jobs, additional consumer spending, and increased tax revenue.”
The data used in this report encompass all project starts, including new ground-up construction, alterations and renovations to existing structures, and public infrastructure. The data reflect the total estimated value and square footage of each initiated project throughout the entire period of construction.
From start to completion, the construction projects initiated in 2016 will encompass 51.3 million square feet of new floor space. That total is down nearly 38 percent from the 82.2 million square feet of new space started in 2015, but remains well above the five-year average of 44.4 million square feet in construction projects initiated between 2011 and 2015.
TOP PROJECT STARTS
For the second consecutive year, the top three project starts by value involved new office construction. The list was headed by 3 Hudson Boulevard and One Vanderbilt in Manhattan, followed by Tishman Speyer’s new office project in Long Island City, Queens.
The fourth most valuable project to begin construction last year – and the top start by the public sector – was tied to the Metropolitan Transportation Authority’s ongoing East Side Access project.
Spots five through eight on the list were new residential projects in Manhattan, followed by a nearly one-million-square-foot warehouse facility being constructed on Staten Island. The expansion of NewYork-Presbyterian’s Brooklyn Methodist Hospital rounded out the top 10.
A cooling off in the residential sector accounted for nearly all of the drop in 2016 construction. After soaring to $19.5 billion in 2015, the value of residential construction starts dropped to $11.5 billion in 2016, which easily surpassed the average of the previous five years.
New, ground-up apartment construction accounted for 85.2 percent of the residential projects initiated last year, compared to 14.8 percent for alterations and renovations of existing spaces. That marked the fourth consecutive year in which new apartment construction accounted for greater than 80 percent of project starts in the residential sector.
“There was really no way that the residential sector would be able to maintain the blistering pace of new construction that was set in 2015,” added Mr. Scissura. “That said, it’s extremely encouraging to see $11.5 billion in new housing construction last year, despite the expiration of the 421-a tax abatement program and the huge number of apartments that were already in the pipeline in 2016.”
While non-residential construction, which includes offices, hotels, schools, hospitals, transit stations, power plants, and other institutional buildings, dipped slightly – from $18.0 billion in 2015 to $17.3 last year – this sector remains a major source of construction jobs and spending. The value of non-residential construction starts reached $10.9 billion in 2014, $8.4 billion in 2013, and $9.6 billion in 2012.
This sector continues to be buoyed by a surge in new commercial buildings, particularly office towers. Construction starts on commercial buildings increased from $11.9 billion in 2015 to $12.0 billion in 2016. New, ground-up construction of commercial buildings accounted for approximately 64 percent of construction starts in both 2015 and 2016, after accounting for between 27 and 30 percent of initiated projects in the three-year period between 2012 through 2014.
The modest increase in construction starts on commercial buildings was offset, however, by a drop in construction starts by New York City’s institutions, a sector that includes public schools, universities, hospitals, and cultural facilities. These public and private institutions combined to commence $5.0 billion in construction projects last year compared to $6.0 billion in 2015.
Construction starts in the public works sector dipped for the third consecutive year. Projects initiated in this sector, which includes roads, bridges, subways, water and sewer systems, and other infrastructure, reached $3.4 billion in 2016, down from $3.6 billion in 2015 and $3.8 billion in 2014.
“Our biggest concern right now is the relative lack of new investment to improve and add capacity to the transportation and infrastructure systems that will be relied upon to accommodate all of the private sector investment occurring throughout the city,” noted Mr. Scissura. “The good news is that both Governor Andrew Cuomo and Mayor Bill de Blasio have recently detailed big plans to improve the region’s airports, mass transit, water and other essential public works.”
February 22nd, 2017
By Terence Cullen
There is a progressive dilemma out there with no easy solution: How does one be both pro-labor and pro-affordable housing, when one comes at the expense of the other?
This is a problem that Mayor Bill de Blasio has gracefully sidestepped during his tenure—until last week.
Since coming into office more than three years ago, de Blasio has fashioned himself a pro-union executive. He has negotiated a slew of contracts with labor groups that include those who represent the city’s uniformed police officers (even though his relationship with the New York Police Department has been less than loving) and teachers.
So it came as a surprise when the first-term Democrat last month initially expressed skepticism about proposed legislation that would require New York City construction workers to go through a mandatory apprenticeship program.
As organized labor tells it, the program is the answer to the fact that the construction industry has suffered 31 deaths in the last 24 months.
A month of back-and-forth followed in which the mayor and his staff attempted to clarify their position on the apprenticeship legislation.
So why would Mr. Progressive seemingly spend the last month siding against the unions? (Or, at least, not taking a strong stand for what would normally be an important base of support.)
De Blasio, who is up for reelection in November, was in something of a political quandary. His landslide victory more than three years ago came largely from the city’s labor unions as well as his “Tale of Two Cities” message that harped on the city’s need for affordable housing. Since taking office, he has pledged to create and save 200,000 units across the five boroughs by the mid-2020s. The only problem is that a great deal of those below-market units—especially when it comes to low-income and senior housing—is done by nonunion companies because the labor is cheaper.
“What it comes down to: The mayor has stated, unequivocally, that he is a pro-union individual. He’s never shied away from that,” said Brian Sampson, the head of the Empire State chapter of Associated Builders and Contractors, which represents nonunion companies. “But I think what it comes down to in this instance is, as you look at affordable housing, the unions have priced themselves out of being able to do that work.”
Pro- and anti-apprenticeship sides held dueling rallies outside of City Hall as elected officials reviewed the bills, along with several other proposed laws whose sponsors hope will solve the workplace pandemic. The mayor’s office first questioned the practicality of an apprenticeship program. A few weeks later, his buildings chief told the City Council implementing such a rigid program was unfeasible. Nonunion groups and the development community have maintained it would be a job killer.
It wasn’t until last Thursday, when the mayor met with the Building and Construction Trades Council of Greater New York, the union representing a bulk of the construction industry, that the mayor executed yet another pivot, clarifying his position. The two sides reached an accord in which they’d work together on developing a safety training program similar to the one union laborers go through, but not necessarily an apprenticeship program. A spokeswoman for de Blasio said this was a major step forward.
“The mayor has made clear we must protect every worker on job sites,” the spokeswoman said in a statement the following day. “We share the Building Trades and City Council goal of requiring a strong construction worker safety program, and we look forward to continuing to negotiate the details with all stakeholders.”
While de Blasio might have dodged a bullet in this particular case, the larger question of union-versus-affordable housing isn’t going to go away.
“He touts himself as a very pro-union mayor, but he’s also a competent mayor and understands that he does need nonunion labor,” said a source close to the talks. “Everyone wants to have their cake and eat it too. But when you have to run the whole five boroughs there are many cakes, and you can’t eat any of them.”
To be clear, it isn’t exclusively middle-class housing that’s typically created through programs like the 421a tax abatement. A significant amount of low-income housing in the city is done with nonunion labor, according to industry experts. This is because the rents are typically calculated at a fraction of the median income of the area, meaning the returns for a developer are not great. It often takes years for a property to become profitable. Factor in wages paid out to union workers, and it becomes impossible.
“For an affordable property, the margins are razor thin,” said one industry veteran who spoke on the condition of anonymity. “When you’re paying way too much for labor, it’s very tough to make the numbers work.”
Construction wages, factoring both union and nonunion, in 2015 (the most recent year available) were an average of $76,300 per year, according to a June 2016 report by the New York Building Congress. Salaries grew slowly from 2011, when workers made an average of $71,200 annually. The Building Congress said the molasses-pace increases could partially be attributed to a rise in residential construction (about a third of all the building activity in the city), which has increasingly gone nonunion.
A Crain’s New York Business column written in the wake of the Building Congress report determined that union carpenters’ salary was somewhere around $200,000 per year when calculating hourly wages plus benefits.
Putting a prevailing wage on construction projects receiving subsidies has been floated before. The real estate industry and organized labor were forced to negotiate a benchmark salary in 2015 and 2016 in order to save the 421a tax abatement. Those talks broke down, and the property tax break, considered the lynchpin of creating middle-class housing, has been expired for the last 13 months.
In February 2016, the New York City Independent Budget Office (IBO), a city-funded fiscal watchdog, determined that tying a wage increase to construction projects that receive city financing by way of housing bonds would be impossible. A potential prevailing wage would increase housing costs by $4.2 billion, or $80,000 per unit. (A wage bill is also included in the safety package but has been met with extreme skepticism.)
IBO’s report found that the majority of affordable projects between 2011 and 2015 were done without a prevailing wage, which is often determined by union agreements. In 2015, workers who didn’t receive an augmented salary built 4,123 affordable units, while those receiving a prevailing salary built 977, according to the IBO.
De Blasio’s housing pledge, released in 2014, aims to add 200,000 affordable units over a 10-year period, impacting some 500,000 New Yorkers. Alicia Glen, the deputy mayor for economic development, in October 2016 addressed criticism that the mayor’s office had been too slow in creating or saving below-market homes. “We are on budget and ahead of schedule,” she said at an Oct. 25, 2016 Building Congress event. “Yes, we have 144,000 to go, but it’s not like we haven’t been doing anything.”
And the numbers show that the de Blasio administration has indeed had considerable success so far. City Hall announced in January that last year it subsidized 21,963 apartments—financing the construction of 6,844 new units and the preservation of another 15,119 existing homes. The mayor’s office noted that the 2016 numbers were the best in a single year in a quarter of a century. In total, the city has financed roughly 62,000 new or existing homes over the last three years.
The mayor last week during his State of the City address said he planned to expand his housing plan given its success in 2016. It would be carried over to the least fortunate of New Yorkers, meaning the rents would be some of the lowest possible. His updated plan adds 10,000 apartments for households making less than $40,000 per year, 5,000 units for senior citizens and another 500 residences dedicated to veterans.
Those in the real estate industry acknowledge that those units and the low rent attached to them will no doubt have to be constructed with nonunion labor.
“Particularly in an environment where you don’t have any kind of tax abatement program,” the longtime industry expert said, referring to the continued expiration of 421a, “it’s very, very difficult to make the numbers work with union labor—even if you got the land for free.”
That is why many believe the apprenticeship mandate created a political headache for hizzoner. Sampson, who represents the nonunion companies, or merit shop, testified against the legislation during a marathon City Council hearing on Jan. 31 concerning the overall safety package on the grounds that it would give unions a full share of the market. His argument, which others have made to legislators, is that it would be difficult for existing workers to show documentation of their workplace training; others would have to leave their jobs and enter into a program, which their employers likely couldn’t afford to support. The result would be a massive loss of jobs, they have argued.
He told Commercial Observer last week that implementing the apprenticeship program would mean fewer opportunities for minority- and woman-owned businesses to secure construction work. That’s because they wouldn’t be able to cover the costs of sending their workers through the apprentice program, which requires classroom and on-site training. Unions, he added, wouldn’t be able to supplement the needs of the market.
“There are some other areas where, depending on the size of the project and where it’s located, maybe it could be considered,” Sampson said of union labor potentially building affordable housing. “But at the end of the day, it just makes each one of those units more expensive and takes a sector of New York City population and excludes them from that opportunity.”
De Blasio first said in mid-January that he opposed the legislation because it seemed impractical to implement. After some backlash, he clarified his statement days later during his weekly WNYC appearance, saying that while he was in favor of union labor, and increased memberships, the apprenticeship program wouldn’t address the safety problem in the short term.
“I think we have to be honest about the huge amount of construction work happening right this minute in New York City that is nonunion,” he said. “And that is a whole history that can be discussed as well—how did it get that way—but it is true right now…I’ve always believed that [union sites are safer], but the notion that we can flip a switch and make everything union overnight is not real. I want to get there, but we have to be clear about the safety problem in the here and now.”
The source close to the negotiations put it in blunter terms. “Anyone you talk to realizes that the mayor needs nonunion labor, and he cannot get any part of his affordable housing plan without them,” the source said. “The mayor knows he needs them to achieve his goals. He obviously has to be very careful not to anger the merit shops.”
The source added, “It’s well known in the industry that [that was] his reason for opposing the apprenticeship” proposal.
The City Hall spokeswoman did not comment when asked if the mayor’s initial opposition was rooted in its potential impact on affordable housing.
In his Jan. 31 testimony to the City Council, New York City Department of Buildings Commissioner Rick Chandler said he opposed the apprenticeship legislation because the program did not directly address safety. He added that it would impact workers without a high school diploma or an equivalent—something required to be approved for an apprenticeship program.
“The department recognizes the need to improve safety training for workers on construction sites, and as such supports a number of initiatives to do so,” Chandler said. “However, we do not support requiring apprenticeship programs for all workers. While apprenticeship programs have safety components, they are primarily focused on teaching a trade.”
Chandler also opposed another bill that would’ve required a prevailing wage on projects receiving subsidies. He said it didn’t directly have to do with safety and would drive up the costs of building affordable housing.
The Real Estate Board of New York, the lobbying arm of the real estate industry, and the New York State Association for Affordable Housing, a predominantly nonunion group of affordable housing developers, have toed similar lines on the legislation. While all sides agree that safety has to be a priority, they said the apprenticeship program—and the ripple effects on nonunions—would be an affordable housing killer.
“Requiring apprenticeship programs on projects receiving city financial assistance will also negatively impact construction,” REBNY said in its testimony to the City Council. “The added wage costs will increase overall costs, which could impede the progress made thus far toward affordable housing production.”
Gary LaBarbera, the president of the Building Trades Council, has maintained that the apprenticeship legislation is not an attempt by union labor to grab a larger share of the construction sector and damage nonunion builders. Instead, the union leader has said a structured training system is the only way for jobsites to be safer. His argument has been that all but three of the construction deaths in the last two years were at nonunion sites.
At the City Council hearing last month, LaBarbera indicated he would be open to an adjustment to the apprenticeship laws. The priority, he said, was to have nonunion workers receive safety training that was up to the same standards that their union counterparts had to meet.
In a statement to CO following his meeting with de Blasio, LaBarbera maintained that figuring out how to address the issue of safety was paramount.
“Implementing a strong construction worker safety program is the first step towards ending the epidemic of fatalities on construction jobsites,” he said. “Safety is our top priority, not only for unionized construction workers, but for all workers in the construction industry. The legislation before the City Council offers an effective safety training model with standards that have been proven to be the gold standard.”
February 17th, 2017
By Kenneth Lovett
At a time when New York City is facing a homeless crisis, a new report to be released Friday says that increasing state investment in affordable housing not only will benefit the needy but the entire economy.
The report done by HR&A Advisors for the New York State Association For Affordable Housing found that statewide affordable housing efforts between 2011 and 2015 generated $54.5 billion in total economic impact.
That includes construction-related spending and the local economic activity it generated.
The bulk of the impact — $45.9 billion — was seen in New York City, the report says.
“Affordable housing is not just a lifeline for low- and middle-income families — it is an economic engine that helps drive communities across New York State,” said association President and CEO Jolie Milstein.
Affordable housing projects accounted for 329,000 direct and indirect jobs throughout the state.
It also led to an additional $6.5 billion in annual economic spending that included $4 billion on local goods and services and building operations and maintenance, the report found.
The state’s affordable housing industry on average builds or preserves 25,655 affordable housing units per year. Some 83% of the total units created between 2011 and 2015 were located in New York City.
The report notes that the number of New York City households paying over 30% of their income on rent rose from 41% in 2000 to 51% in 2015 while market rate rental units affordable to households at median income fell from 63% to 48% over the same period.
The report is a followup to one done in 2012 that found that between 2003 and 2010, affordable housing development had a $39.6 billion economic impact.
The report is being released on the day the state Legislature will hold a budget hearing on housing issues.
Milstein is urging the state to fully fund Cuomo’s $2 billion in affordable housing initiatives he included in his new budget plan.
Cuomo and the Legislature last year agreed to a $2.6 billion five-year plan to construct 6,000 new supportive housing units in the state. But so far only $500 million for the projects — including $150 million to fund the first 1,200 units in the state budget approved last spring — has been authorized.
The details of how to spend the rest of the money is subject to a signed agreement by Cuomo and the legislative leaders. Cuomo has signed such an agreement, but the Legislature so far has not followed suit.
Housing advocates have accused Cuomo of not doing enough to reach a deal.
Cuomo officials have said the Senate GOP haven’t wanted to sign off until a deal is reached to resurrect an expired tax credit for developers who build affordable housing.
Developers have warned that the construction of affordable housing projects will slow considerably if the tax credit is not renewed.
Cuomo struck a deal with the developers and trade unions that has yet to be approved by the Legislature.
The HR&A Advisors report says that the development of a typical 50-unit affordable housing project “requires investment of approximately $9.4 million, which generates $16.6 million in one-time economic spending and supports 100 one-time direct and spinoff jobs. The ongoing operation of the project would generate $2.0 million in annual economic spending and support 14 direct and spinoff jobs.”
February 2nd, 2017
By Khorri Atkinson
Mayor Bill de Blasio’s administration’s push to spur commercial and affordable residential high-rise developments within a 50-block area in Long Island City received a full-throated rebuke this week from residents and business owners, who argued that many locals and small businesses are already being pushed out by a prior rezoning and rising real estate values.
About 100 visibly frustrated people from the area denounced the plan at the Department of City Planning’s public meeting Tuesday night, after officials introduced and discussed a study of the “LIC Core Neighborhood Plan.” The study seeks to create a mixed-use district situated between Sunnyside Yard and Queensbridge Houses.
But residents said another up-zone of the area following a rezoning that passed in 2001 would only benefit rich developers. The earlier proposal was intended to create office space, but instead, residents say, led to a rapid increase of residential towers and lack of retail amenities.
“We are scared to death, because how much can you charge a kid for a ballet class?” asked long-time Long Island City resident Zoe Morsette, who owns a working studio and said she has been struggling with soaring rent increase in recent years.
“We’re afraid to lose all of it,” Morsette added. “And my apartment building is in this zone and I’m wondering, are they going to tear down this building?”
Another resident decried de Blasio’s proposed 16-mile Brooklyn Queens Connector streetcar line, which the city said would cost $2.5 billion and will be funded by an expected increase in property values along the route. The streetcar is expected to make stops in Long Island City.
The public meeting came a year after the mayor expressed his interest in rezoning the area. The Long Island City Core Neighborhood Planning study area largely overlaps with the earlier Queens Plaza rezoning and part of the neighboring Dutch Kills neighborhood that was rezoned in 2008.
Long Island City is one of 15 neighborhoods throughout the city that de Blasio wants to rezone as part of a broader initiative to build about 80,000 new below-market-rate apartments and 160,000 market-rate units by 2024. The mayor also hopes to preserve 120,000 existing homes for low-to-middle-income tenants. The administration said city planning officials have been meeting with local stakeholder groups privately since 2015.
The director of city planning’s Queens office, John Young, and the agency’s Long Island City planner, Penny Lee, who presented the study, both worked for former mayor Michael Bloomberg’s administration and said the earlier rezoning plan fell short. They said of the 13,000 residential units built or under construction in the area since the earlier rezoning, only about 650 are affordable. The city had also hoped to create up to six million square feet of office space, but only 2 million square feet was constructed or is in the process of being constructed, Lee said.
De Blasio’s plan, they said, would include more affordable housing units and exist under the administration’s mandatory inclusionary housing policy, which requires developers to ensure that 20 to 30 percent of units are rent-regulated.
But it is still unclear how many affordable units will be created under the plan. Throughout the meeting, officials repeatedly reassured residents that their concerns would become the basis for the plan’s development.
“We recognize that not every time we do a zoning change it’s perfect,” Lee said. “We have tried to strike a balance. We have tried to strike compromises — with the city’s goals and community objectives.”
City planning officials said the department will host more public meetings to solicit feedback from residents on the rezoning. The department also plans to produce a concrete rezoning proposal of the study area by June so it can start the land-use approval process, called ULURP, which could take up to seven months. The proposal would need approval from Queens Community Board 2, the Borough president, the City Planning Commission and the City Council.
But residents are skeptical of the time-frame, saying it’s not feasible for them to address their concerns and thoroughly vet the study.
“If the public in Long Island City says we don’t want any development, that’s not an option, right? That’s not something you have to listen to, right?” asked Naved Husain, an organizer with the Committee Against Anti-Asian Violence, a racial justice and community organizing group.
“We don’t have to listen to it,” Lee said, before jokingly adding that, “But by the same token, if everybody shows up with pitchforks…we hope that won’t be the outcome.”
Councilman Jimmy Van Bramer represents the area and will play a key role in the land-use approval process. In a statement through his spokesperson, he said, “I look forward to hearing what comes out of the community and stakeholder to meetings currently taking place and will evaluate any proposals that may be forthcoming with only the best interests of my constituents in mind.”
Lee repeatedly told residents that taking no action would mean less affordable housing in the study area. She said rezoning would increase density to offset the rising demand for commercial space that is squeezing out artists.
Officials also said Queensbridge Houses will not be rezoned, but the Department of Small Business Services would help connect residents to jobs opportunities connected with the study area.
October 26th, 2016
Painters’ union and New York City Housing Authority create apprenticeship program
by Rosa Goldensohn
For years, unemployment has plagued the city’s public-housing residents, who rarely could navigate the process to nab one of the well-paid union building trades jobs in and around the developments where they lived.
Now, the New York City Housing Authority and the city painters’ union have opened that door a little wider, teaming up in an effort to create lasting jobs for public housing residents through a new training program.
The city’s Civil Service Commission has approved 105 apprenticeship positions, allowing those in the training program to sign union cards.
“They get paid while they work, and they train next to our journeymen and painters who are already working in NYCHA,” said Davon Lomax, political director of painters’ union DC9. “They’ll be doing everything from sanding to painting to lead abatement to patchwork.”
DC9 began training Housing Authority residents three years ago, but the official positions give trainees the job titles that qualify them as full-fledged painters’ union members.
“The point was to create the titles so when they did graduate they can land somewhere,” Lomax said. “They can’t be in the union if they don’t have the title.”
Housing Authority residents often point to unemployment as a root cause of violence and other problems in public housing.
Of the more than 100 residents already enrolled, 86% are women and 96% are minorities.
After completing the training, the program graduates can work on private-sector jobs or on property of the Housing Authority, which has a project labor agreement with the Building Trades through 2018.
“But they could also be working at the World Trade Center for any other union construction site in New York,” Lomax said.
Construction and engineering firm proposes creating a new Brooklyn neighborhood the size of Battery Park City
September 12th, 2016
AECOM envisions building as many as 45,000 units of housing along the Red Hook waterfront and extending the No. 1 train to the area
By Daniel Geiger
One of the city’s largest construction and engineering firms is floating a plan to transform a huge swath of the Red Hook waterfront into a residential neighborhood with a new subway connection, acres of parkland and waterfront-flood protections that would revitalize and protect the low-lying neighborhood from storms and future sea-level rise.
AECOM envisions building as many as 45,000 units of housing, much of it in new residential towers that would rise on underutilized Brooklyn sites owned by the Port Authority of New York and New Jersey and the city. The company plans to unveil the proposal Tuesday at the NYU Rudin Center for Transportation. Under the preliminary plan, proceeds from the sale or long-term lease of the land to developers, as well as other funds generated from revenue streams such as real estate taxes, would go toward upgrading the neighborhood’s infrastructure, which includes extending the No. 1 train from lower Manhattan via a new tunnel under the harbor to the Brooklyn area. AECOM’s plan also involves creating three new subway stations, one at Atlantic Basin next to the container terminal, another at the Red Hook Houses, one of Brooklyn’s largest public-housing complexes, and a No. 1 train station that would connect to the F and G subway lines at Fourth Avenue.
“We have to recognize that growth is necessary to create a waterfront that people can use, affordable housing and a mass-transit connection to a neighborhood where one doesn’t exist,” said Chris Ward, a senior vice president at AECOM and a former top executive at the Port Authority, who helped craft the plan.
If the project comes to fruition, a new residential neighborhood almost double the size of Battery Park City and several times as large as Hudson Yards on Manhattan’s far West Side—the biggest development project currently underway in the city—would be created.
The plan calls for constructing more than a dozen towers that would contain as many as 45,000 apartments, a quarter of which would be set aside for affordable housing. The new towers would sit on multiple sites: two adjacent waterfront compounds, the 80-acre Red Hook Container Terminal owned by the Port Authority of New York and New Jersey, a similar-sized adjacent parcel of city-owned waterfront along Columbia Street, the southern edge of the neighborhood overlooking the Gowanus Bay and unused land located at Red Hook Houses. Development at the public-housing complex could fund improvements to Red Hook Houses, AECOM said, but it is also likely to be controversial. Recent proposals to create additional residential space in public-housing has prompted outcry from residents and local officials.
“As the city expects another million residents in the next decade where will they all live?” Ward said. “This is a canvas where we can create tens of thousands of housing units without pushing people further to the periphery of the city.”
AECOM acknowledges that its plan lacks key details, including how much the development and infrastructure would cost, how much revenue it would generate and how to coordinate a neighborhood-wide redevelopment on land parcels that are controlled by several different stakeholders with potentially varying objectives. But the company outlined three different scenarios for the Red Hook project. Two of the cases would provide funding for a subway extension to varying degrees, however, AECOM acknowledged that other funding sources would be necessary.
The firm predicted that the creation of 25 million square feet of new residential space would be enough to fund 2.5 miles of waterfront protection measures, 6,250 affordable housing units, and generate $50 million of annual tax revenue for the city, but not enough to pay for a subway-line extension. A 35 million-square-foot residential development would finance 4.5 miles of coastal protection (enough to protect the entire Red Hook waterfront), 3 miles of streetscape improvements, 50 acres of new park space and create 8,750 affordable housing units. A project of that size would generate $90 million of revenue for the city and would partially pay for a subway extension. While a 45 million-square-foot project would create 11,250 units of affordable housing and the same level of coastal protection and fund 5.7 miles of streetscape improvements, 100 acres of new park space and would fund the bulk of a subway extension. This scenario would generate $130 million in annual revenue for the city.
“This is meant to be a starting point for a conversation,” Ward said, who estimated the cost of a No.1 train station extension at about $3 billion.
August 23rd, 2016
By Konrad Putzier
Gov. Andrew Cuomo’s proposal to revive the 421a program took the New York real estate industry by surprise last week, but its key provision is just as eye-opening: the addition of a direct wage subsidy would add a new and untested wrinkle to affordable housing policy in the U.S.
“There’s probably never a novel idea but it’s not something that’s done in a lot of cities,” said Rick Jacobus, principal of urban planning consultancy Street Level Advisors. And George McCarthy, president of think tank Lincoln Institute of Land Policy, said he is “not aware” of any such program existing in the U.S.
Cuomo’s proposal, unveiled to developers last week, seeks to revive the 421a tax abatement program, which expired in January. The program offers tax breaks to housing developers who keep a set portion of new units affordable, but labor groups and the Real Estate Board of New York failed to reach an agreement on whether the program should include a prevailing wage requirement.
Cuomo’s new proposal seeks to solve the impasse by adding a minimum wage for construction workers to the program that is partially financed with New York state money. His 421a pitch doesn’t require union labor, nor do developers have to pay prevailing wages.
Below 96th Street in Manhattan, developers would have to pay workers at least $65 an hour, including benefits, for all projects over 300 units seeking 421a. Along the East River in Brooklyn and Queens, developers seeking to receive the tax abatement would have to ensure workers make at least $50 per hour in wages and benefits. But $15, or 30 percent, of those wages would be reimbursed by the state, according to the New York Times. It wasn’t immediately clear how the state would fund the subsidy or how it would be managed.
Similar direct wage subsidies tied to development programs in the U.S are hard to find. Earlier this year, for example, Austin, Texas’ public transit authority Capital Metro agreed to pay a portion of construction wages at the mixed-use development Plaza Saltillo. But it claimed the wage subsidy would be financed with a rent hike on the public land underneath the project, meaning the private developer would actually foot the bill.
Far more common are indirect wage subsidies, said Jacobus. Several cities tie tax abatements for affordable housing development to prevailing wage requirements. In effect, the tax abatements help pay for union wages, meaning taxpayers indirectly subsidize them.
One urban planner, speaking on condition of anonymity, argued that Cuomo would have done better choosing this more common approach. “Are there any cases in this country where the local labor force is partly unionized and the government subsidizes the non-union labor force?” he said. To him, the proposal is a haphazard attempt to save a program that Cuomo needlessly jeopardized last year by making its future contingent on an agreement between REBNY and the unions. “He broke it and thought someone else would fix it,” the urban planner said.
McCarthy disagreed, arguing that the proposal is a good compromise between the need to keep down the cost of affordable housing development and to ensure that workers make living wages. “I think it’s innovative,” he said. “It does help affordable housing development get on a quasi-level playing field.”
August 22nd, 2016
by Kenneth Lovett
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.
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.
July 5th, 2016
by Glenn Blain
Plans to develop nearly 3,000 units of affordable housing across New York have been put in jeopardy because Gov. Cuomo and legislative leaders failed to reach an agreement on how to spend $2 billion they put in the budget this year for new housing, advocates charged.
In a survey of developers and housing agencies, the New York State Association for Affordable Housing found that 2,935 units of affordable housing currently on the drawing board have been placed in limbo by the inability of Cuomo and lawmakers to reach a deal on how to dole out the $2 billion before the Legislature’s session ended last month.
The figure includes 1,360 units planned for the city that are at risk.
“With so many state-funded projects at risk, The real impact is on thousands of low- and middle-income New Yorkers who may never see the new affordable housing they desperately need,” said Association President Jolie Milstein.
The $2 billion that Cuomo and the Legislature placed in New York’s 2016-2017 budget was to be the first installment of a five year, $20 billion plan that the governor unveiled in January to create thousands of new units of affordable and supportive housing.
The allocation, however, did not contain any specifics on how the money was to be spent, leaving it for Cuomo and the leaders of the Senate and Assembly to negotiate a so-called memorandum of understanding at a later date.
In the final hours of the Legislature’s session last month, Cuomo and lawmakers announced plans for only $150 million in new spending, infuriating housing advocates.
“We trust that our state leaders do not want to lose this opportunity to fully address the urgent statewide housing crisis,” Milstein said. “The time is now for Gov. Cuomo, Speaker (Carl) Heastie and Majority Leader (John) Flanagan to sign the $2 billion MOU and ensure that all these developments can move forward.”
Cuomo spokesman Rich Azzopardi said the governor is still looking to reach an agreement with the Legislature.
“It was Gov. Cuomo who made and secured the unprecedented $20 billion five-year commitment to affordable and homeless housing,” Azzopardi said. “The first $150 million subject to the MOU has been released and we’re eager to reach an agreement on the balance. We urge the legislature to join us in keeping these projects moving and helping to ensure every New Yorkers has a safe, decent and affordable place to call home.?”
Senate and Assembly officials did not respond to requests for comment.
June 27th, 2016
By Sally Goldenberg
A new report examining the impact of Airbnb on New York City’s rental market concludes the company is responsible for removing at least 8,000 apartments from the city’s housing stock and driving up lease prices.
The report found that in 2015, 8,058 Airbnb listings – 16 percent of the company’s total in the five boroughs – were what the authors classified as “impact listings,” which refer to those likely to have the biggest effect on the city’s residential market.
The designation refers to listings that meet all of the following criteria: rental of an entire apartment or home; “regular short-term,” which means booked for fewer than 30 days, booked for more than one reservation per month and containing at least one non-booked day a month; and “commercial,” which is defined as those listed for at least three months a year by hosts with more than one unit on the site or those listed for at least six months a year by hosts with only one unit on Airbnb.
In New York, it is illegal to rent an apartment in a three-unit building or larger for fewer than 30 days without the host present.
The 49-age report found that more than half of the so-called impact listings were managed by hosts who control multiple Airbnb units.
It also concluded that Airbnb activity is concentrated in several neighborhoods in Manhattan and Brooklyn – the East Village, West Village, Williamsburg and Bedford Stuyvesant, for instance.
The report states that in addition to increasing rental prices, Airbnb rentals are often in violation of health, safety, building and zoning regulations.
The analysis was presented at a press conference on the steps of City Hall Monday morning.
“Airbnb and companies like it do way more harm than good,” said Peter Ward, president of the Hotel Trades Council, the politically powerful hotel workers union that has been critical of Airbnb. “Airbnb comes to communities like New York and it operates illegally most of the time. It breaks our laws. It avoids taxation. … It has a terrible effect on affordable housing.”
Public Advocate Letitia James said the company “is one of the biggest factors contributing to our affordable housing crisis.”
Airbnb dismissed the findings as inaccurate and politically motivated.
“If the hotel lobby that funded this misleading study was serious about affordable housing, they would have urged politicians in Albany to act on real solutions like restarting the 421-a tax credit program,” company spokesman Peter Schottenfels said. “Instead, they made targeting middle-class people their top priority.”
Schottenfels was referring to the development tax incentive program for residential properties that expired in January when the building trades coalition and the Real Estate Board of New York could not reach an agreement on construction worker wages for projects receiving the tax break.
“We need to work together and find solutions that actually benefit middle-class New Yorkers, including how to protect responsible home sharers, rather than protecting the interests of a well-connected hotel industry,” he said.
A spokesman for the anti-Airbnb coalition, ShareBetter, said the analysis was paid for by Housing Conservation Coordinators and MFY Legal Services, not the Hotel Trades Council.
Airbnb also said 95 percent of the company’s entire home hosts only have one listing.
The Hotel Trades Council teamed up with the Real Estate Board of New York to push the passage of a bill in Albany that would increase fines on illegal Airbnb listings.
Ward, in his comments, said he hopes Gov. Andrew Cuomo will sign the bill.
A spokesman for Cuomo emailed in response, “This is one of 554 bills that passed both houses of the Legislature at the end of this session. They are under review by Counsel’s office.”
Read the study here: http://bit.ly/28YROsH