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New York Prepares Another Push to Promote Housing

Last year, New York state lawmakers considered a package of mandates with a goal of 800,000 more units. After that deal fell apart, this year's model will be less ambitious.

New York Gov. Kathy Hochul delivers her third State of the State address
Rather than mandates, Gov. Hochul hopes to sell the Legislature on incentives to promote housing this year.
Barry Williams/TNS
In Brief:
  • New York Gov. Kathy Hochul gave her State of the State address on Tuesday, calling for new incentives to promote housing production.

  • It’s a sharp turn from last year, when she called for mandating more housing production in every part of the state with the goal of building 800,000 new units.

  • Tenant groups and real estate developers are also lobbying for more renter protections and tax incentives.

  • New York legislators spent much of last spring scrambling to put together a package of bills to promote housing construction. They wanted to advance Democratic Gov. Kathy Hochul’s housing agenda, while also satisfying both real estate groups and tenant advocates. Maybe it wasn't surprising that they ended up empty-handed at the budget deadline.

    This year, they'll try again, looking to pass new policies aimed at what Hochul calls “the insanely high cost of rents and mortgages caused by the unconscionable shortage of housing in New York.” But the approach will look a bit different.

    Hochul delivered her annual State of the State address on Tuesday, kicking off Albany's annual budget season. She outlined a range of initiatives that are substantially different from last year’s “Housing Compact," a proposal that called for a major expansion of housing supply, on the order of 800,000 additional units. Last year's proposal included requirements for every community in the state to increase production, especially in areas close to transit stations. The proposal fell apart amid objections in suburban areas about the loss of local control.

    In her speech, Hochul acknowledged that last year’s housing proposal crashed, and proposed a different approach. But she was clear that her diagnosis of the housing crunch hasn’t changed. “The only thing that’ll solve this problem is building hundreds and hundreds of thousands of homes," she said.

    This time, instead of mandates, Hochul is proposing a series of incentives. Some would tie discretionary state funding to local rules that promote more housing production, making it easier for “pro-housing” cities to get state grants. The governor began establishing some of those incentives by executive order last summer.

    She’s also proposing to increase housing construction on state-owned lands, provide state incentives for office-to-residential conversions, and adopt a new version of a tax break for multifamily construction that would offset the expiration of a former program, known as 421-a, which developers say is a key tool for producing low-cost housing.

    “I think the governor has agreed that incentives is the way right now. Let’s get the [cities] that are eager to build and proceed with that,” says state Rep. Linda B. Rosenthal. “And then, in the more recalcitrant areas, there has to be a discussion: carrot and stick, whatever works.”

    Cleaning up a facade in Manhattan
    Building costs in New York have spiraled higher, making it that much more difficult to create below-market units.
    David Kidd/Governing

    Balancing Competing Interests

    Housing challenges in New York — home to the biggest and densest city in America as well as lots of rural communities — are particularly varied.

    Development groups say that the cost of building, especially in New York City, has spiraled out of control. That's made it increasingly difficult to offer below-market rental units. The expiration of the 421-a tax incentive is a big reason housing production has sharply dropped in the city, according to a report from the New York Building Congress, a construction trades group.

    “Our priority now is to see the Legislature work with the governor to create a real incentive program that will get shovels in the ground and housing built,” says Carlo A. Scissura, the group’s president.

    Other groups, including the Real Estate Board of New York, a powerful developers lobby, are backing similar incentives, while also seeking programs to help owners of rent-regulated units pay for repairs.

    The debate about how to address housing affordability has spread far beyond New York City. Tenant groups are pushing to expand rent stabilization policies upstate. Some Democratic legislators, including Rosenthal, are pushing for a state rental subsidy program that would supplement the federal Section 8 housing voucher program. Hochul has so far opposed that idea because she says it would be too costly.

    Focusing on Supply

    For a long time in Albany, lawmakers have addressed demands from tenant groups and real estate organizations in a kind of push-and-pull balance. Rent control laws were extended alongside incentives for developers for many years, says state Sen. Brian Kavanagh.

    It’s not always easy to square those interests. Many of the developers who were seeking new building incentives last year were also opposed to so-called good cause rules, for example, which would require landlords to provide a valid reason for evicting a tenant or not renewing their lease.

    Advocates of different stripes were frustrated by the outcome of last year’s negotiations. “The governor sort of abandoned her housing program because she didn’t build a coalition around it," says Cea Weaver, an organizer with Housing Justice for All, an advocacy group focused on tenant protections around the state. "She faced a tiny bit of resistance and she walked away.”

    With housing costs still squeezing New Yorkers — and, some believe, contributing to the state’s population loss — lawmakers say they’ll keep working on solutions.

    “It is my view that there is a deal to be had that will address the very different aspects of this crisis all over the state,” says Kavanagh, a Democrat who chairs the state Senate’s housing committee.

    The Housing Compact was “directionally, the right thing to propose and courageous to propose it in the way [Hochul] did,” Kavanagh says. But opposition to last year's proposal was strong in places like Long Island, where local leaders said a rush of new housing could overwhelm infrastructure needs and schools.

    It’s clear that Hochul wants to take a different tack this year. Kavanagh says the Legislature should work with her administration to make the incentives as strong as possible. (Republican leaders in the Legislature did not respond to interview requests.)

    Rosenthal, who chairs the housing committee in the state Assembly, says the Legislature may have to revisit the local-control question and have a debate about requiring cities to increase housing production. Hochul didn’t lay the groundwork for that debate last year, Rosenthal says.

    Rosenthal and other lawmakers hope they can make more progress this year than last, but some acknowledge it may take several years to put together the right mix of policies to address the state’s housing challenges.

    Jared Brey is a senior staff writer for Governing. He can be found on Twitter at @jaredbrey.
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