Gov. Hochul at a housing event (photo: Kevin P. Coughlin/Governor's Office)
New York faces an acute housing crisis: rents are sky high, not enough housing is being built, homeownership is increasingly out of reach, and there is a looming eviction crisis coming out of the covid pandemic. But while the issues contributing to the problem have long been simmering, solutions from state and city leaders have been halting and piecemeal, far from meeting the need wherein 53% of New York City tenants are rent-burdened, with 32% “severely” rent-burdened.
The housing crisis, including the shortage of new housing to meet demand, requires an all-of-government response. New York City Mayor Adams and the City Council have recently passed or announced plans for tens of thousands of new apartments, with the mayor promising more to come. Heading into the new year, all eyes will be on Governor Kathy Hochul and the State Legislature as the state’s budget and legislative session begins, with housing among the top issues on the agenda for the newly-elected governor and legislators.
The Democratic governor has already promised that housing will be one of the top priorities for her administration as she starts her first full term in January.
“People want to live here; they just can’t afford it anymore,” she said in an October interview with Politico New York. “The cost of housing is up 57 percent in the last seven years. Rent is up, depending on the part of the state, anywhere from 27 percent to 57 percent across New York. And so what that does is it creates a barrier for young people who are raised here, educated here and want to live in the same neighborhood they grew up in — Long Island, Westchester, the city — and they can’t afford it. That’s a tragedy.”
She pledged to release a “very ambitious housing plan” to meet what she has said is the state’s need for between 500,000 to 1.2 million new units of housing over the next ten years. (The National Low Income Housing Coalition estimates that New York has a shortage of more than 615,000 rental units for very low-income households with a maximum income of $26,200 for a family of four.)
Hochul has already committed to a five-year, $25 billion housing preservation and construction program that will produce 100,000 units, just scratching the surface. “So we have to be much more creative and start catching up with other cities and regions in building housing,” said Hochul, who earlier this year proposed but was unable to pass a series of policies to boost housing production in the state.
In the keynote speech at the New York Housing Conference’s annual conference on Thursday, Hochul pointed to the scope of the state’s housing woes. “We are in the midst of a housing crisis that has been decades in the making,” she said. “In the decade before the pandemic we created jobs at three times the rate of housing units leaving us with 1.25 million jobs but only 400,000 units of housing. See the disconnect? We now have the jobs but where are you going to put the workers? Where are they supposed to live?”
Hochul also acknowledged that the crisis is largely self-inflicted because of the “cumbersome” regulations that delay development for years, as well as local anti-housing opposition. “We're a national leader in blocking housing…New York is essentially in a league of its own when it comes to constricting housing development,” she said.
The governor again pledged Thursday to offer a “bold and audacious” housing plan in her January State of the State agenda, which she said will include a real statewide “housing strategy,” which is currently lacking.
Navigating the state’s housing crisis will be a monumental challenge and there will be at times competing and complementary policy pushes from the governor, lawmakers, tenant and housing advocates, the real estate industry, local officials like Mayor Adams, and others. Reforms could address the entire spectrum of housing policy from rent regulations and tenant protections to zoning rules and tax incentives, and beyond.
“The most important thing is that housing is at the top of the agenda in Albany for 2023,” said Andrew Fine, policy director for Open New York, a pro-housing group based in the city. “And that there’s an agreement among the governor and the State Legislature that they can't go home in June without passing some meaningful bills that will advance housing production.”
In New York City, where the affordable housing crisis is particularly severe, Mayor Adams is attempting to make sweeping changes to citywide zoning regulations under his “City of Yes” plan, in order to make it easier to build housing. As the specifics of that proposal are being crafted with a 2024 timeline, the Adams administration has been working on a series of major development deals, often with private developers, and the City Council has approved over 12,000 units of new housing on rezoned land already this year.
But Adams’ administration has its own demands of the state, particularly when it comes to tax incentives that the governor, mayor, and others say are crucial to spur real estate developers to build affordable housing.
“New York City urgently needs more rental housing, including a significant number of below market rate units,” said James Whelan, president of the Real Estate Board of New York, in a statement. “The State Legislature has taken several actions in recent years purportedly in response to the housing crisis – and that crisis has only gotten worse. We hope the Legislature will now take a different approach by focusing on common-sense policies that produce more of the rental housing New Yorkers desperately need."
Meanwhile, some housing advocates are particularly focused on legislation that will immediately protect renters from large rent increases, eviction, and homelessness. The Housing Justice for All statewide coalition, for instance, has backed three proposals – Just Cause Eviction, a new Housing Access Voucher Program, and the Tenant Opportunity to Purchase Act.
Among other policies, there is renewed focus heading into the 2023 state session on those three bills as well as how to bring tens of thousands of vacant rent-stabilized units back into tenancy, crafting a replacement for the expired 421-a tax abatement program for housing development, the white whale of sweeping property tax reform, ways to build more housing in the New York City suburbs, and more.
Perhaps the most important tax benefit for the real estate industry was 421-a, a program that incentivized affordable housing creation and lapsed last year. Progressives long criticized the program as effectively a major giveaway to developers with limited return on investment.
Governor Hochul proposed a modified version, called 485-w, that had stronger affordable housing mandates and would have opened up new kinds of housing to the tax benefit. But her proposal failed to pass in the face of opposition from state legislators. The governor is likely to advance another measure next year and it remains to be seen whether it will get a nod from the Legislature. Mayor Adams and administration officials are among those who have called for a new solution to be crafted to ensure more housing production.
At a Citizens Budget Commission breakfast last month, Jessica Katz, the city’s chief housing officer, said that besides incentives for new construction, the Adams administration is also pushing for a tax abatement for housing preservation “because now we're in a position where because of the economic environment, we're starting to worry about housing quality in a way that we haven't had to in a certain amount of time.” She specifically referred to renewing the expired J-51 program for renovating residential buildings.
Zoning and Regulatory Reforms
The CBC and the Regional Plan Association, a nonprofit think tank, have both urged changes to the state’s zoning laws and regulations that determine housing development and land use decisions statewide.
In a report released in September, CBC recommended that the state make changes to the State Environmental Quality Review (SEQR) process to expedite development and to set objective standards for local governments to contribute to regional housing while expedite approvals for projects that meet those goals.
RPA has called for a more sweeping zoning framework for the state. “The discussion is heading to how can we change our overall regulations so that we can build more, and more of the type of housing that we need, but in a way that is going to be less objectionable for communities than what's being built now or what could be built otherwise, whether those concerns are noise, height, or gentrification and having too many luxury apartments with not enough affordable,” said Moses Gates, RPA's Vice President for Housing and Neighborhood Planning, in a September appearance on Gotham Gazette’s Max Politics podcast.
“At the top of the list is we just need a state framework at all…In New York, we have absolutely nothing,” he added in the interview, pointing to states like New Jersey and California that have made progress. “We don't even have a state department of planning. So before we can do anything...the state just needs to acknowledge that it plays a role in housing production, smart planning, and housing growth.”
Hochul indicated in her speech Thursday that her approach will be statewide, alluding to the type of framework that Gates spoke of. “[E]very community, every small town, every local zoning board, every planning board, every community has a role to play. And they must,” Hochul said.
Basement Apartments and Accessory Dwelling Units
The Adams administration is also pushing for the legalization of basement apartments and other Accessory Dwelling Units, which officials say will open up new units of housing while also giving homeowners additional streams of income. It would also help bring under code existing illegal housing that can be especially dangerous.
Hochul had proposed a bill in last year’s budget to legalize ADUs for single-family homes, which would have allowed homeowners to go around local zoning laws to add basement apartments or certain types of ‘granny flats.’ But she scrapped it after facing significant backlash from suburban lawmakers, both Republicans and Democrats, particularly on Long Island.
Another proposal Hochul could revive in the new year is a measure to allow multi-family housing development around rail transit stations in New York City and its suburbs. Hochul proposed the idea in this year’s budget but it was met with similar opposition as the ADU proposal and she eventually scrapped it too.
The proposal has support from advocacy groups that say it is crucial to building more housing, especially near transit and in the suburbs.
“We don't think that New York is keeping pace with other states that have really taken actions to unlock housing supply by using the state zoning authority,” said Rachel Fee, executive director of the New York Housing Conference, a nonprofit advocacy group.
Good Cause Eviction
One of the chief priorities for progressive lawmakers and tenant advocates is the “good cause eviction” bill proposed by State Senator Julia Salazar and Assemblymember Pamela Hunter, which would give tenants stronger protections against significant rent raises and evictions. Landlords have vociferously opposed the proposal as it gained momentum in Albany, while Governor Hochul has so far refused to take a position on it.
State Senator Brian Kavanagh and outgoing Assemblymember Steven Cymbrowitz, who chair the housing committees in their respective chambers, proposed legislation to create a Housing Access Voucher Program for homeless families and households at a risk of homeless, which would cost roughly $200 million in its first year. The measure had significant backing in the Legislature but the governor’s office did not support the bill, specifically arguing over the estimated budget impact of the program.
It is likely to be among the top housing priorities for the Democratic majorities in the Legislature during state budget negotiations.
Tenant Opportunity to Purchase
State Senator Zellnor Myrie and Assemblymember Marcela Mitaynes sponsored the Tenant Opportunity to Purchase Act, which would give tenants first chance to buy the buildings where they live before the owner can put them on the open market. The proposal, also known as right of first refusal, did not make it past committee last year.
The Community Housing Improvement Program (CHIP), a group that represents owners and managers of tens of thousands of rent-stabilized buildings in New York City, is making a major push for a “vacancy reset” allowing landlords to reset the rent on rent-stabilized units when they are vacated to a level in line with other apartments in the neighborhood, higher than is currently allowed under state law.
The group says the measure would allow building owners to rehabilitate 20,000 vacant and dilapidated units, which would then continue being regulated but at the new, higher rent. According to reporting from City Limits, as many as 38,621 rent-stabilized units out of roughly 1 million in the city, are vacant, down from more than 61,000 last year, per data from New York State Homes and Community Renewal, the state’s housing agency, which relies on self-reporting by landlords. According to CHIP, owners have been unable to perform needed renovations on many of those buildings after the Legislature passed the Housing Stability and Tenant Protection Act of 2019 (HSTPA), which limited rent increases on vacated rent-stabilized apartments.
“Better housing is possible. And it doesn’t require billions of dollars in government investment, it simply requires the government to implement policies designed to grow the supply of housing and rollback current policies, which are designed to keep housing scarce,” said Jay Martin, executive director of CHIP, in a statement. “The high rents, lack of quality apartments, and overall frustration with housing is solely due to bad policies put in place decades ago, and the lack of political courage among elected officials to change these policies over the years.”
Tenant advocacy groups have naturally opposed the idea of a so-called vacancy reset. And the proposal will likely face headwinds from left-leaning legislators. But there will be pressure on Hochul and lawmakers to find a solution that will help bring tens of thousands of vacant, rent-stabilized units back into service to tenants.
Open New York, for instance, has proposed an action plan to reduce apartment vacancy including a statewide rental registry, greater enforcement through foreclosures on properties with longstanding unpaid taxes and violations, property tax reform, adding more affordable homes to the city’s online Housing Connect portal, and beefing up staff at the city’s Department of Housing Preservation & Development.
Besides the vacancy reset, CHIP’s legislative agenda for 2023 also includes support for Hochul’s ADU and transit-oriented development proposals, the Housing Access Voucher Program, removing the cap on floor area ratio that limits the size of housing development, and a ban on parking minimums for housing development near transit hubs.
CHIP and the Rent Stabilization Association, another trade group of landlords and property owners, filed a lawsuit prompted by the 2019 law, arguing that the entire rent regulation system is unconstitutional. The case has yet to be decided and could end up on appeal before the U.S. Supreme Court.
Increasing the FAR Cap
Last year, Governor Hochul proposed eliminating the state’s cap on floor area ratio (FAR) for residential buildings in New York City, which would allow developers to build denser buildings. Commercial buildings already have a higher FAR cap than residential ones. But the proposal was among several housing policies that failed to pass the finish line and which the governor may revisit next year.
Property Tax Reform
A big open question is whether the governor and Legislature will finally attempt to reform New York City’s property tax system, which is in large part governed by state law and imposes inequitable taxes on homeowners despite the value of their homes. Successive mayors have pledged to take it up as an issue in Albany and have repeatedly failed.
The most recent effort came from Mayor Bill de Blasio who punted the issue to a commission that issued its reform recommendations in a report just days before his tenure ended. Mayor Adams has shown no indication of carrying that report forward or proposed any alternatives of his own.
The New York City Council held a hearing in mid-November on the city’s property tax system, where there was a variety of testimony urging city and state officials to urgently address the issue in 2023. Among those testifying was City Comptroller Brad Lander, who issued a framework for comprehensive reforms including incentivize new rental housing production by reducing base tax rates by about 30%, aligning tie tax breaks with the cost and affordability of buildings, and replacing the expired 421-a program with a new version of the state’s Mitchell-Lama program to create permanently affordable, cooperative homeownership.