RPTL Section 421-a Prevailing Wage Rule Amendments

Adopted Rules: Closed to Comments

Agency:
Effective Date: 
Sunday, March 1, 2020

DEPARTMENT OF HOUSING PRESERVATION AND DEVELOPMENT 

Notice of Adoption of Rules 

Notice is hereby given that pursuant to the authority vested in the Commissioner of the Department of Housing Preservation and Development (HPD) pursuant to Section 1802 of the City Charter and Section 421-a of the New York State Real Property Tax Law and in accordance with Section 1043 of the City Charter, HPD is adopting amendments to chapter 50 to title 28 of the Rules of the City of New York to implement changes to the prevailing wage requirements for building service employees in buildings receiving tax benefits under New York State Real Property Tax Law section 421-a (the “421-a Statute”) enacted by Chapter 20 of the Laws of 2015 and Chapter 59 of the Laws of 2017 and to the minimum average hourly wage requirements for construction workers for certain projects in accordance with subdivision 16 of the 421-a Statute. 

A notice of proposed rulemaking was published in the City Record on October 15, 2019.  A public hearing was held on November 19, 2019. 

Statement of Basis and Purpose 

Section 421-a of the Real Property Tax Law (“421-a Statute”) provides real property tax exemptions for eligible new multiple dwellings. In New York City, HPD determines eligibility for these exemptions and is responsible for ensuring that applicants for the exemption comply with the exemption’s eligibility requirements, including the requirement that the applicant’s building service employees receive a prevailing wage. 

Chapter 20 of the Laws of 2015 amended the 421-a Statute to add enforcement oversight over the building service employees’ prevailing wage requirements by designating enforcement authority to the fiscal officer which, in New York City, is the Comptroller. Chapter 20 of the Laws of 2015 also articulated the fiscal officer’s enforcement powers, which include conducting investigations to determine the prevailing wage for building service employees, holding related hearings, and issuing rules necessary for the proper execution of the duties, responsibilities, and powers conferred upon the fiscal officer by Chapter 20. 

Chapter 59 of the Laws of 2017 amended RPTL Section 421-a(16) and provided for Affordable New York Housing Program tax exemption benefits for buildings that commenced construction after December 31, 2015, and on or before June 15, 2022, and who completed construction no later than June 15, 2026.  Chapter 59 of the Laws of 2017 requires compliance with the prevailing wage requirements for building service workers and provides enforcement authority to the New York City Comptroller.  RPTL Section 421-a(16) provides that eligible multiple dwellings containing less than thirty dwelling units are exempt from the requirement.  For an eligible multiple dwelling receiving benefits pursuant to RPTL Section 421-a(16) to meet the affordability exemption from the building service workers prevailing wage requirements, all of the dwelling units must be affordable housing units and at least 50%, upon initial rental and subsequent rentals following a vacancy, must be affordable to and restricted to occupancy by individuals or families at or below 125% of Area Median Income.  

Chapter 59 of the Laws of 2017 also provided that in addition to the other requirements provided in subdivision 16 of the 421-a Statute, rental projects with 300 or more dwelling units that are located in portions of Manhattan, Queens and Brooklyn must pay construction workers a minimum average hourly wage.  The Comptroller also was given enforcement authority with respect to these minimum average hourly wage requirements for construction workers. 

Chapter 50 of Title 28 of the Rules of the City of New York governs building service worker prevailing wage requirements and construction workers minimum average hourly wage requirements in certain buildings receiving benefits pursuant to the 421-a Statute. 

HPD’s rule amendments authorize the imposition of civil penalties for violations of the prevailing wage and minimum average hourly wage requirements.  The civil penalty cannot be more than 25% of either (a) the prevailing wage underpayment, or (b) the differential between the wages set forth in the contractor’s certified payroll report and the actual wages paid.  The civil penalty shall be assessed based upon such factors as size and good faith of applicant, contractor or subcontractor, as relevant, the gravity of the violation, the violation history and the failure to comply with bookkeeping and other non-wage requirements. 

The rule amendments also amend the definition of “Owner” in the rules to track Labor Law Article 9 and ensure that the definition covers any entity that is employing building service workers for work that extends beyond such entity’s individual residential or commercial unit.  Finally, the rule amendments make some technical amendments to Chapter 50.  

HPD’s authority for these rules is found in sections 1043 and 1802 of the New York City Charter and section 421-a of the Real Property Tax Law.