New York City and state regulators have joined forces on a previously undisclosed effort to enforce wage rules for service workers at luxury apartment buildings whose owners receive taxpayer subsidies under the city’s massive 421-a tax break.
The New York City Department of Housing Preservation and Development, the City Comptroller and the New York Attorney General’s Office sent out joint letters to landlords receiving the tax break. They asked for certified statements and evidence that they had paid their workers the legally required wages or an explanation of why they were not required to do so.
The letters went out in August to “hundreds” of properties, according to details of the enforcement effort disclosed in response to a public records request by ProPublica. Additionally, the comptroller is investigating several cases of owners not paying workers proper wages, which are set by New York City.
“Landlords and developers must abide by the rules if they are going to accept tax breaks offered to them through 421-a,” New York Attorney General Eric Schneiderman said in a statement to ProPublica. “Public tax dollars cannot be used to profit off the backs of hardworking New Yorkers, and my office will continue our successful work with our partners in government to hold these bad actors accountable.”
The stepped-up wage enforcement marks the latest effort by city and state regulators to police the 421-a tax break, which has been the focus of several reports by ProPublica detailing lax oversight of tenant protections and the worker wage rules.
In recent weeks, city housing officials disclosed plans to suspend benefits for owners of more than 3,000 buildings if they do not comply with tenant protections and other rules of the tax break. Officials said they are hiring additional compliance staff and will publish a legally required report on rents that are supposed to be charged in 421-a buildings. Two City Council members have also introduced legislation to audit buildings receiving the tax break, which now costs the city an estimated $1.4 billion a year.
Schneiderman’s office has previously prosecuted some building owners for failing to pay workers proper wages at buildings receiving the subsidy, but the joint letters mark a broader effort to make sure building owners comply.
The 2007 law requires owners of bigger buildings receiving the tax subsidy to pay service employees such as doormen and janitors the “prevailing wage” for their positions – a rate set by the city comptroller that is calculated to give non-union workers pay comparable to those to union wages. The law, which historically was not enforced, also entitles workers to get additional benefits such as health insurance.
City regulators haven’t enforced a 2007 law that requires doormen, janitors and other service workers at taxpayer-subsidized apartment buildings to be paid wages comparable to union rates. Read the story.
In return for property tax breaks, NYC apartment and condo building owners are supposed to pay doormen, janitors and other service workers the prevailing wage. See the list of buildings that should be complying with this law.
As we reported last December, it’s been common for building owners to ignore those rules while pocketing the tax subsidy. That’s in part because officials hadn’t enforced the prevailing wage requirement, which covers buildings with 50 or more units that started construction after Dec. 2007 (in March, we published a list of the buildings covered by the rule).
In 2015, state lawmakers transferred oversight of the prevailing wage rules to the city comptroller, whose office now has the authority to investigate violations of the law and present them to the housing agency for enforcement. Workers can file complaints with the comptroller, and – if an underpayment is not repaid – the housing agency can revoke the tax benefit, according to new regulations that spell out how the wage requirement will be enforced.
Getting paid prevailing wages can make a big impact on the lives of building service workers, who often get paid as little as $10 per hour while opening doors, picking up packages and signing in guests for tenants who can sometimes afford to pay $7,000 per month.
Isaac Bowman, a worker we profiled in our Dec. 2015 story, was getting paid $10.50 per hour. His monthly wages were so low, he needed a federal Section 8 subsidy to pay his rent. After the article ran, workers in his building, the Exo, opted to unionize and bargain for the higher wages required by law.
Today, Bowman says he earns $17.30 per hour and gets health insurance coverage. The higher pay has resulted in a $600 reduction in his Section 8 rent subsidy – something he’s proud of and hopes will continue as his pay increases with seniority.
“I pay more of the rent,” he said. “That makes me feel good. I want to be self-sufficient.”