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New York City Lets Luxury Building Owners Stiff Workers & ‘Still Get A Tax Break’

A ProPublica Investigation Finds Landlords Who Stole Workers’ Wages Were Still Able To Take Advantage Of Benefits From The 421-A Housing Program

Published Sunday, January 3, 2016
by ProPublica.org

(NEW YORK CITY) - When Isaac Bowman got a Concierge Job at a luxury Queens Apartment Building, he hoped it would be his ticket out of a homeless shelter and into New York City's Middle Class.  The pay was low at only $10 an hour, but at least it was a start toward getting his partner and three stepchildren into an apartment of their own, reasoned Bowman, who took the job and became a victim of Wage Theft.

Under terms of a large City Tax Subsidy, owners of the 117-unit building, The Exo, were legally bound to pay Bowman $16.88 an hour - almost 70% more than he got, plus benefits now worth $10.13 per hour.  The higher pay is required at bigger buildings that benefit from the city's 421-A Housing Program, which grants about $1.1 billion in tax breaks each year to owners.  In return, they must pay Service Employees the Prevailing Wage - a rate set by the City Comptroller that is benchmarked to Union Contracts so that Non-Union Workers get comparable pay for similar work.

Paying less than the law requires can subject employers to losing their tax break, but city officials haven't enforced the rules on compensation at 421-A Buildings, leaving Workers like Bowman vulnerable to abuse.

"They're ‘stealing’ from people like me," said Bowman, who only learned of the requirement from Union Organizers. "I don't think it's fair."

Forest Properties, which owns The Exo, did not respond to requests for comment.

Neither did the building manger.

Tax bills show The Exo has been receiving an annual 421-A Property tax break worth about $900,000 since 2011.

The failure to police the Prevailing Wage Mandate is one more in a series of Oversight Lapses by City and State Officials who regulate the 421-A Program, which is New York City's biggest housing subsidy.

As ProPublica has reported, thousands of building owners have failed to register their apartments for rent limits, as required by law.

Landlords also have banked the 421-A Tax Breaks unabated while overcharging tenants with bogus "preferential" rents and abusing other rules meant to protect tenants.

When it comes to Prevailing Wages, there's little debate that enforcement has been lacking.

The city agency that administers 421-A - the Department of Housing Preservation and Development (HPD) - says that it has no authority to pursue employers and readily concedes that it hasn't done so.

Oversight of the Wage Requirement was transferred to the City Comptroller's Office under a reauthorization of the 421-A Program that lawmakers approved last Summer in Albany.

Comptroller Scott Stringer told ProPublica he will use the "full weight and resources" of his office to hold building owners accountable, but how far his reach will extend remains to be seen.

That's because lawmakers, as part of the reauthorization, required the city's real estate lobby and Building Trades Unions to agree on an expansion of Prevailing Wages to construction jobs on new 421-A Buildings

Without a deal by January 15th, the city will lose authority to approve new 421-A Projects.

The two sides aren't discussing details of the talks, but Gary LaBarbera, the lead Union Negotiator and President of the New York City Building Trades, said regulators need to act because Wage Theft is already "an epidemic problem" for Non-Union Construction Workers.

As is, it's up to Workers to bring Wage-Theft Allegations to the attention of authorities.

But employees are caught in a Catch-22: They often have no idea that they're entitled to the Prevailing Wage, and finding out if they are isn't easy.

Smaller 421-A Buildings are exempt from the requirement, and while HPD keeps a list of the buildings that are covered, the agency doesn't disclose it.

HPD turned down ProPublica's requests to release the list, and officials in Stringer's office also declined to provide it, saying the list is not yet finalized.

To fill the gap, 32BJ Service Employees International Union (SEIU) has launched a push to identify buildings that are covered and to educate Workers about their rights. 

The Real Estate Board of New York, which represents large developers and building owners, said it is working with the Union "to put in place clear procedures to ensure the effective enforcement" of Prevailing Wages for Service Workers.

"We have to be like your ‘neighborhood police,’" said 32BJ President Hector Figueroa, because Prevailing Wage Laws "have very little meaning if they're not enforced."

To Read the Rest of This Labor News Story, Go to: www.crainsnewyork.com/article/20151230/REAL_ESTATE/151239993?utm_campaign=socialflow&utm_source=facebook&utm_medium=social

 

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