This week’s just full of surprises. REBNY and the Building and Construction Trades Council agreed yesterday—sending out the news at 5pm—to extend and expand the 421-a tax exemption.

The New Rules

Eligible buildings in Manhattan (300 rental units or more south of 96th Street) will pay construction workers an average hourly wage of $60, plus benefits. For eligible Brooklyn and Queens buildings (such as the Durst Organization’s Hallets Point, pictured), the wage will be $45/hour.

Developers will have to hire independent monitors—who report to the NYC HPD—to make sure these obligations are met within 120 days of the final, received Certificate of Occupancy.

Buildings with 50% or more affordable units are excluded from these obligations, and projects that have already started but are still eligible can opt-in to the program.

Developers can also enter into a Project Labor Agreement to opt out of the wage agreement and still be eligible for the abatement.

New rental units with income limitations will be kept in place for 40 years, and their buildings will receive a 100% property tax exemption for 35 years.

The Reactions

Hornig Capital Partners managing partner Daren Hornig (pictured) called the agreement a “Trump Stimulus plan,” believing that REBNY and Gov. Andrew Cuomo didn’t want to get guff from President-elect Donald Trump about not being able to reach a decision.

Slate Property Group principal David Schwartz says he believes the unknowns of the pre-election season stalled negotiations, and the unchanged control of the Senate and assembly made business-friendly legislation easier to pass.

Cushman & Wakefield New York investment sales chairman Bob Knakal also thinks the election was a factor, as few would want to touch a “hot-button political issue” with their jobs on the line.

“It’s not really surprising at all that we heard about this so soon after the election,” he says.

Dane Real Estate president Heidi Burkhart is a bit more optimistic, believing the city and state governments recognized the importance of creating a system that benefits the lower income levels.

But, David and Bob said, the industry was certain something would come and replace the abatement, as rental properties are desperately needed, but were impossible given the current tax rate, property taxes, transfer taxes and other fees.

“421-a is a PILOT program to spur development and economic activity,” David says. “Everyone knows we needed something. Maybe not in this form, but there would be something.”

Regardless of the reason, Daren calls the agreement a long-overdue growth stimulus for the city and the rental market, which simple couldn’t function without some kind of abatement.

Community Preservation Corp CEO Rafael Cestero (pictured) adds the new agreement makes the 45-year-old program more effective and efficient, expands the affordability requirement and increases production.

Daren says he’s proceeding with caution on the market—he still needs to see how the debt market will react to the agreement—but has already begun re-evaluating deals that he overlooked earlier this year.

“2017 will certainly be a more robust year than 2016, by and large," he tells Bisnow, which is "a great thing."

David (pictured) is also putting out calls for potential deals and refocusing Slate’s acquisition strategy, but says it’ll be at least a year before we really see any changes, considering the conservative financing market.

“We’re not going to see a huge run-up in land values or a building boom, but it’ll stop the stalemate,” he says.