Friday, May 8, 2015

Modular Construction May Soon Be Dead in NYC

The future of affordable housing in New York City is in the hands of Albany now, as the debate over whether to renew the 421-a tax abatement — the key city program promoting low-cost residential development — gets fully underway. As the state reviews ways to reform the program, legislators must avoid proposals to link prevailing wage to 421-a projects.

If the prevailing wage is attached to 421-a projects, it could possibly spell the end of modular housing’s advantage in the NYC market. What modular factory could survive paying prevailing wage in the factory?

Not only will it hurt modular construction but by mandating prevailing wages on 421-a construction projects, it will severely limit the creation of new rental housing in New York City — especially affordable units.

It is no secret that New York City is experiencing a severe housing crisis. Today, more than half of the city’s renter households struggle to pay the bills. Affordable housing lotteries regularly receive tens of thousands of applications for a fraction of available units.

“Prevailing wage” does not actually represent the mean wage in the construction industry. Rather, it mirrors the current union wage, which is significantly higher than the even the upper end of the Bureau of Labor Statistics reported scale paid in New York City.

This is what $45 an hour gets you in NYC 

For example, this translates to an average state prevailing wage of $45 per hour for a carpenter, not including an additional $41 per hour fringe or overtime.

Requiring the prevailing wage would result in a huge jump in wages at affordable housing projects — and leave these projects with huge funding gaps. The result would be many projects unbuilt, employees out of work and residents left without new homes.

If New York state agrees to add the Prevailing Wage to all 421-a projects, modular home factories may have to build outside the 5 boros.

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