By PETER KIEFER,
The use of nonunion labor for the construction of "affordable" housing could serve as a remedy to the skyrocketing construction costs that are slowing development in New York City, the Manhattan Institute says.
In a 40-page report examining the reasons for soaring construction costs, which have been rising 10% annually, the think tank says efforts by construction unions to impose a "prevailing wage" at affordable housing construction sites result in "further costs by requiring developers to prove that they are in compliance with the law."
The president of the Building Trades Employers' Association, Louis Colletti, called the report's recommendation of nonunion labor "absurd."
"If you want to continue to build substandard housing in terms of quality and safety, then continue to use nonunion companies," he said.
The president of the New York Building Congress, Richard Anderson, said that because of the limited construction budgets for affordable housing, the use of nonunion labor is often the only feasible solution.
Still, he added, "This is a valid area of investigation, but I would not support this recommendation."
A global construction boom, soaring costs of land, labor, steel, and concrete, among other materials, and an increasingly Byzantine city permit process have made construction in New York City more expensive than in other American metropolitan areas, the report says. Constructing a square foot of office space in New York costs $400, it says, more than double the cost in Chicago and Atlanta, where it is $189 and $154, respectively.
The construction cost per square foot increased to $428 a square foot in 2008 from $360 in 2006 for a typical residential building.
"It's not just one thing, it is everything," the author of the report and a consultant in urban and regional economics, Rosemary Scanlon, said.
A more streamlined permitting process, continued rezoning, a reduction in the liability of developers, and more tax abatements could help reduce the costs, she said.
Mr. Anderson said the recently implemented safety regulations imposed by the Department of Buildings has affected his members. "Even greater attention to safety means the cost will go up even more. We are not complaining, but just pointing out the realities and the cost implications of the added safety requirements," he said.
Asked whether the use of nonunion labor could affect the quality of the construction, Ms. Scanlon said the developers and contractors she spoke with "never implied that nonunion work was shoddy."
A spokeswoman for the city's Economic Development Corp., Janel Patterson, said: "The city is engaged in a study looking at the escalating costs of construction, and analyzing a broad set of potential cost drivers. We are working now to develop actionable strategies moving forward."