Beginning July 1st, 2022, a new Prevailing Wage Law was
announced that will significantly affect many multifamily
condominiums and cooperative properties throughout New
York City. It is formally known as Assembly Bill A7434A and
was signed into law by Governor Kathy Hochul in
September 2021. This new law requires that any non-union
condo or co-op with an assessed value of $60,000 or
greater, must begin paying their regularly staffed
employees a prevailing wage rate or they will be forced to
forfeit their NYC property tax abatement. The tax
abatement is a credit that qualifying shareholders and unit
owners may receive from NYC. For many, this abatement
provides a significant break on their real estate taxes and
potential buyers often take this credit into consideration
before purchasing an apartment.
A prevailing wage rate is set annually by the city and is
typically designed to reflect benefits, wages, and terms
that are similar to the SEIU Local 32BJ Union. A big decision
must be made by properties that are currently non-union
and are not already paying their building staff a prevailing
wage rate. Many factors must be weighed such as what will
serve in the best interest of the building staff and what is
considered a reasonable budget for the property.
Being that there is no “right” answer or solution to this
change, each property will need to make a decision based
on what best suits its situation. With the help of their
managing agents, CPAs and tax certioraris, Board members
will need to review all options carefully. The ultimate
weighing factors will come down to deciding how they can
ensure their staff are being paid properly with appropriate
benefits, while also maintaining the financial health of the
building if residents are forced to lose out on major tax
abatements credits.
Leave a Reply