Gov. Andrew Cuomo warned of an explosive populist reaction to a proposal to extend a new tax break to condominiums in exchange for prevailing wage requirements for construction workers—one of the suggested solutions to reinstate the lapsed 421a tax credit.
The governor said that such an arrangement would run into opposition from Mayor Bill de Blasio, the Democrat-dominated Assembly and potentially even himself. The condo compromise was rumored to be a potential point of consensus between organized labor and the real estate industry while they were negotiating the terms of 421a before it expired a week ago.
“That is going to be political dynamite, saying you want to add condominiums,” he said. “That is not a little change. That is a major policy discussion.”
Condominium builders had received the lucrative property tax exemption, which in some parts of the city required building below-market units, for decades until last year. This past June, however, Mr. Cuomo and the State Legislature agreed that such high-priced developments should not receive the abatement any more.
The same arrangement, however, also required the Building and Construction Trades Council of New York and the Real Estate Board of New York to come to a deal on writing new pay floors into the exemption. The two sides declared negotiations had failed last Friday.
Mr. Cuomo said the announcement shocked all observers.
“I think everyone was surprised,” he said. “I think most people agreed they would reach an agreement.”
The governor also noted that extending 421a to condos would have required scrapping the existing abatement and crafting a new piece of legislation anyway, since REBNY and the building trades were not allowed to rewrite any part of the law unrelated to wages.
Insiders expect State Senate Majority Leader John Flanagan, a Long Island Republican, to carry a new version of the exemption in his body of the State Legislature. A source told the Observer it would ultimately fall upon the governor to forge a resolution at the end of the Albany session in June—a possibility Mr. Cuomo hinted at today.
“I don’t think there is any possibility, or any realistic possibility at this point, that the two sides are going to agree,” he said. “It might be a totally different approach and a totally different program.”