By: Thomas S. Tripodianos Published: March 2018

Budget Resolution Could Mean Prevailing Wage Requirements for Private Improvements

The New York State Senate's 2018 Budget Resolution includes language that calls for a "discussion about whether the definition of public work should be updated."  It can be construed that this "discussion" opens the door to applying prevailing wage laws to many private construction and improvement projects which were previously not within the definition of public work.

Both houses currently have legislation (S.2975/A.5498) that defines public work so broadly as to encompass construction of private residential buildings, which are assisted only indirectly by government.  This bill bootstraps minimum subsidies for affordable housing as the justification to require the wage regimen applied to public works, which inures to the benefit of construction income.

Covered could be any or all of the following:

1.   Local real property tax abatement or exemption, which is essential for any construction of one and two family homes in the outer boroughs of the City of New York, or most moderate rehabilitation and new apartment renovation or construction. Real property tax abatement programs are used by local governments outside New York City to promote and target first time homebuyers to assist in the purchase of residential housing.  These programs provide assistance to the purchaser, not to the builder/developer.

2.   State agency bonds issued under Federal tax exemption rules, which are used to purchase privately issued bank mortgages on one and two family homes and apartments.  This program is also directed to the purchaser.

3.   Guarantees through SONYMA insurance on State agency bonds which provide credit enhancement to attract private investors in apartment construction or rehabilitation.

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