June 10, 2015

RE:

Memorandum of Opposition to S.5768 (Martins) and A.7944

(Wright) - Prevailing Wage Mandate on Private Affordable Housing

Dear Senator/Assemblymember:
We the undersigned, who are leading the fight to restore and build New York States
economy, strongly oppose S.5768 and A.7944, which would mandate the payment of prevailing
wages to construction workers who build private housing that receives tax abatements pursuant
to Real Property Tax Law 421-a. Expanding the prevailing wage mandate to private housing
projects will recklessly reduce the availability of new affordable housing in New York City at a
time when working families are struggling to find clean, quality housing.
Mandating prevailing wages on private housing projects that simply receive a tax
abatement is a profoundly damaging precedent. Prevailing wages are currently required only for
public works projects such as those undertaken by the state or municipalities. If enacted, this bill
would for the first time extend costly and administratively-complex wage mandates to privatelyowned and developed projects.
Of particular concern is that if prevailing wages are required as proposed in these bills,
many affordable housing projects across New York City will never be built. Because affordable
housing is an essential element of a stable workforce the people who are the backbone of our
economy and our communities, this wage mandate that would result in fewer affordable housing
units is deeply troubling to us.

The costs to hardworking people is also too great. Because the payment of prevailing
wages is administratively complex and penalties for violations are severe, many small
contractors, including many Minority and Women-Owned Businesses (MWBEs), will not
participate on housing projects with prevailing wage mandates and will lose out on this critical
work. Further, organized labor takes over prevailing wage work and cuts out the local, non-union
workforce, depriving the workers where the project is being built of steady, good paying jobs.
The stark situation for affordable housing in New York City is that there is already a
housing crisis, and the State should be seeking to address that issue, not further contributing to it:

There is a fundamental and growing lack of affordable housing in New York City as
evidenced by the estimated vacancy rate of 3.45 percent for rental housing, which means
New York City is in a declared state of housing emergency.1
56 percent of New York City renters are rent-burdened, meaning they pay more than one
third of their income on rent and utilities.2
Of this population, approximately 3 in 10 renter households are severely rent burdened,
paying more than 50 percent or more of their income for housing.3
The New York Times recently highlighted the staggering dimensions of the problem
when it reported that in 2014 the tenant lottery for 2,500 subsidized apartments in New
York City drew a total of 1.5 million applications a 600 applicant to unit ratio.4

Beyond this fundamental housing need, private housing projects are also a significant
economic driver and this wage mandate would substantially reduce the following economic
benefits which the affordable housing industry generates, on average, each year:

18,490 affordable housing units, including new construction, rehabilitated and

preservation units.
31,800 jobs during construction, and sustains 5,650 permanent jobs to support resident
spending and building maintenance.
$1.8 billion in wage compensation during construction, and $230 million in wages
annually thereafter.
$2.6 billion during construction in economic spinoff activity, including spending on
materials and services, while thereafter sustaining $650 million in annual economic
spending on local goods and services, and building maintenance.5

For these reasons, we strongly urge the Legislature to reject prevailing wage mandates on
private housing projects, as proposed in S,5768 and A.7944.
1

NYC Housing Preservation and Development, HPD Releases Initial Findings of 2014 New York City Housing and
Vacancy Survey (February 2015). See http://www1.nyc.gov/site/hpd/about/press-releases/2015/02/24.page
2
Id.
3
Id.
4
Mireya Navarro, NY Times, Long Lines, and Odds, for New Yorks Subsidized Housing Lotteries (Jan. 29, 2015). See
http://www.nytimes.com/2015/01/30/nyregion/long-lines-and-low-odds-for-new-yorks-subsidized-housinglotteries.html?ref=nyregion.
5
New York State Association for Affordable Housing, Economic Impacts of Affordable Housing on New York
States Economy (May 2012). http://nysafah.org/cmsBuilder/uploads/HR&A-Economic-Impact-Report_002.pdf

Yours,
Associated Builders and Contractors Empire State Chapter
The Associated General Contractors of New York State, LLC
Buffalo Niagara Partnership
The Business Council of New York State, Inc.
The Manufacturers Association of Central New York
National Federation of Independent Business
New York State Association For Affordable Housing
New York State Builders Association
New York State Economic Development Council
Northeastern Retail Lumber Association
Rochester Business Alliance
Unshackle Upstate

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