This time last year, Mayor Bill de Blasio announced his ambitious 10-year plan for affordable housing. He rolled it out at a Fort Greene housing development that will have 50 percent of units at affordable rents and be built by union labor and contractors. It’s proof that we do not have to sacrifice good, middle-class jobs to build the affordable housing we need. However, this is too often the exception, not the norm. As Albany reconsiders the 421-a affordable housing tax break, we should not accept the false choice that it’s either affordable housing or good jobs—they can and must go together.
Almost everyone agrees that New Yorkers are not getting their money’s worth from the 421-a tax break. It costs New York City more than $1.1 billion a year, according to the city’s Independent Budget Office. What do we get in return? A recent study by the Community Service Society finds that 421-a costs $1 million per affordable apartment created. Only 12,500 of the 150,000 residential units receiving the break in the last fiscal year are affordable for a family of three earning $46,600 a year. Another study of 61 buildings in downtown Brooklyn by Real Affordability for All revealed that just 6 percent of the 4,395 units receiving 421-a are rented below market rate. We can do much better for $1.1 billion.
To tackle income inequality, it’s essential to not only build more affordable housing, but also to create good jobs that lead to long-term, middle-class careers. To do this, we will need to rethink subsidies and create the kind of smart standards for affordable housing and job quality that deliver the outcomes we need. Linking good job standards to housing subsidies will create more middle-class careers with good wages and opportunities through New York’s best workforce training programs.
Take, for example, the Construction Skills pre-apprenticeship program that serves recent city high school graduates and public housing residents.
Columbia University studied this program and called it "a national model for training minority youth for middle class careers in the construction industry." Of the 1,600 local residents the program has placed into construction training and employment, 89 percent are minorities. After 15 years, 80 percent of the referrals it has placed remain employed in jobs that pay union wages and benefits. This is what creating middle-class careers looks like.
With such urgency to overhaul affordable housing and better leverage public tax breaks for real public benefit, it is no surprise that there are numerous proposals from housing advocates, council members, the mayor, real estate developers and others. It’s disappointing, though, that the New York State Association for Affordable Housing, which represents developers that often build more luxury housing than affordable housing, is taking the rather myopic position of calling for maintaining the status quo. Contrary to all available evidence and popular opinion, NYSAFAH applauds the 421-a program as a “huge success.” It is pushing for an expansion of tax breaks and aggressively opposing good job standards.
In its current form, 421-a is awfully lucrative for NYSAFAH’s members. One member, L+M Development Partners, is receiving 421-a benefits for four new developments since 2010. L+M’s construction model pays workers wages lower than even entry-level standards (as low as $12 an hour) and often relies on bottom-of-the-barrel subcontractors. One favored subcontractor, MC&O, was found to have cheated workers out of $830,000 in wages in 2013. Prior to that, MC&O’s principals pleaded guilty to felony tax fraud for paying workers off the books. Another NYSAFAH member, Lettire Construction, also benefits from 421-a. The Department of Labor has found of $3 million in stolen wages from 300 workers on Lettire Construction sites.
It’s no wonder these developers refuse to share what workers are paid on its projects. The status quo is very profitable. NYSAFAH has sued to block Local Law 44, a city law requiring reporting of this information by the Department of Housing Preservation & Development. What are they hiding?
As the 421-a expiration deadline approaches on June 15, we need to imagine a future where tax breaks and public subsidies create affordable housing, good jobs with career ladders, and a stronger economy for all. We want to see more pictures like what we saw in Fort Greene a year ago. It will require action in Albany and a commitment by all parties to address both affordable housing and good jobs.
Matt Ryan is Executive Director of ALIGN and a board member of Construction Skills.
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