Hochul’s housing plan draws praise, skepticism – trade watchers

Gov. Kathy Hochul’s roadmap to build 800,000 new homes in upstate New York over the next decade has sparked optimism in the real estate industry, even if it has angered critics at far ends of the political spectrum.

The proposal, laid out in Hochul’s Jan. 10 State of the State address, also lacks many budget details and a clear path to legislative passage for now.

What is known is that the roadmap would require municipalities to expand their housing stock by 3 percent inland and 1 percent inland every three years. To achieve these goals, Hochul proposed removing housing density restrictions, accelerating environmental assessments, updating zoning laws, and introducing tax incentives for building large volumes of housing.

If cities don’t meet their targets, the state will step in with an accelerated permitting process to build more homes. “Doing nothing is a waiver of our responsibility to act in times of crisis,” Hochul said. “Today we say no more delays. No more waiting for someone else to fix this problem. … We will not waste this opportunity. We just need each and every community to do their part.”

For the real estate industry, it is long overdue to focus on the country’s housing needs. college written down that there was 516,000 fewer housing units than jobs in the states, while New Jersey, Connecticut and Massachusetts are building housing faster than New York. Home prices in the New York City area have risen 50 percent since 2015, while rents have soared 30 percent, forcing half of the city’s tenants to evict more than 30 percent of their income to pay for their housing.

The stock of affordable housing in the city is also shrinking. It was between 2017 and 2021 96,000 fewer units costing less than $1,500 per month, a 2021 NYC Housing and Vacancy Survey found.

“The housing supply crisis in New York City has continued to worsen,” said Zachary Steinberg, senior vice president of strategy at the Real Estate Board of New York, a trade association for the city’s real estate industry. “There is no light at the end of this tunnel unless the public sector works quickly to push policies forward to enable the construction of new housing and the production of below-market housing that New Yorkers desperately need.”

Not everyone agrees with the governor’s proposals. progressive groups criticized Hochul for omitting plans to strengthen tenant protection even as evictions constant elevated in the past year and rising rents Tenants forced to spend more or move. Conservatives condemned the governor’s emphasis on mandating suburban development as an attack on local control over zoning decisions.

“Hochul’s vengeful declaration of war on the New York suburbs, masquerading as a housing plan,” said Lee Zeldin, former Republican gubernatorial candidate, in a filmed response to Hochul’s speech. “She doesn’t understand that New Yorkers don’t want to be run by an imperial governor. The people want to run the government, not the other way around.”

The details of how much Hochul’s housing plan will cost, as well as any tax incentives and targets, remain unknown. But for the first time in many months, there is optimism in the real estate industry that Albany is finally ready to start housing construction.

“People are finally acknowledging that there is a major housing shortage. When the governor went through the stats, it was a little embarrassing to find that Boston is building twice as much housing as New York,” said Sheila Pozon, a land-use attorney at Kramer Levin. “We just don’t produce enough.”

NYC

Hochul’s plan would require New York City to create half a million new units, a massive undertaking that real estate leaders believe is feasible given the right conditions. To achieve these goals, Hochul proposes updating zoning laws, removing height and floorplate density restrictions, and accelerating environmental assessments.

So far, the measures have met with little resistance from city leaders. Late last year, city council members supported rezoning plans for new ones multi-family projects in AstoriaEast New York and the East Bronx. There were even some second guess among Harlem officials after local opposition was obstructed a 915 unit Building on 145th Street in spring – only for the site to become a truck depot.

A few days before the governor’s address, New York Mayor Eric Adams released his own plan to convert vacant office properties into new ones 20,000 units of apartments after consultation with the university administration. Hochul’s proposal would update zoning statutes to allow for the conversion of commercial buildings constructed in the 1970s, ’80s and ’90s, potentially making 120 million square feet available for residential use.

“We’re blessed with a relationship between the mayor and the governor that hasn’t existed in a while,” said Mitch Korbey, partner and chair of Herrick Feinstein’s land use and zoning group, citing the long-standing rivalry between Andrew Cuomo and Bill de Blasio. “I shudder to think how these plans would go ahead without a dialogue between Albany and City Hall that you are now having.”

Though property owners are eager to break ground, few have been willing to move forward without tax incentives to offset the costs. Foundation filings fell 60 percent after the 421a tax break for multifamily projects expired in mid-June 2022, from 411 in the first five months of 2022 to just 165 filings between June and November, according to a Real Estate Board of New York Report.

Hochul teased several options, including low-income tax credits and a reduction that would replace 421a, although no details are expected to be announced until the draft state budget is released in the coming weeks.

“The governor will really try to find a way to get a replacement, but there has to be a subsidy; Otherwise we won’t get to 800,000,” said Pozon. “They won’t be able to get the funding.”

The suburbs

Getting the suburbs to build thousands of homes is another matter entirely.

the state for decades done little to control exclusionary zone practices on Long Island or in Westchester County and the Hudson Valley. Suburban community leaders blocked multifamily development as their representatives in Albany obstructed bills setting state standards for zoning and permitting secondary housing units.

Now Hochul is wresting power from municipalities with proposals that would encourage new construction near transport hubs and accelerated multi-family projects in locations that aren’t meeting its goals.

This is a welcome development for many this year.

“Zoning is a state power in the state constitution,” said Moses Gates, urban planner with the nonprofit Regional Plan Association. “It’s the community’s responsibility to deal with it responsibly. This also includes ensuring that there are enough housing options for people in the communities and that they cover a fair share in the region.”

Under the governor’s plan, cities would be allowed to rezone neighborhoods within a half-mile of a Metropolitan Transportation Authority station for denser housing. In addition, the state would allocate $250 million for sewage infrastructure and park structures to support new developments. Another $20 million would help cities upgrade their planning offices and collect housing data.

John Armentano, a land-use attorney for Uniondales Farrell Fritz, said Long Island cities would be more likely to favor new construction projects if the state could help foot the bill for sewer and water lines.

“Many villages are considering expansion projects and a new sewerage area will make this easier,” Armentano said. “Sewer areas drive development and densification. traffic and poop. That’s how it all works.”

Legislative Response

The governor will have to work with an increasingly polarized legislature that has shown that to be the case not afraid of challenges their decisions.

Before Hochul even gave her address, it was legislators demonstrate in Albany against their choice for supreme judge and to support efforts to end evictions and increase taxes on the rich.

Manhattan Rep. Linda Rosenthal, who became the new Chair of the Assembly Housing Committee this month, has been averse removing the cap on floor area ratio zoning requirements that would result in taller and denser dwellings. She said the state needs to focus on that Add More supportive housing, expanding access to vouchers and removing barriers to housing protection in addition to the governor’s goals.

have progressive legislators opposite To replace the expired 421a tax break for new home construction that developers desperately want. And Hochul’s plan to force municipalities to build more housing near train stations and update zoning codes didn’t sit well with Conservatives.

“Reg. Hochul’s housing proposals would be a disaster for our community,” said Edward Flood, a Republican congressman from Port Jefferson. tweeted. “Her goal is to turn Brookhaven into the Bronx by removing local control over zoning laws and forcing a 3 percent growth in upstate areas. Hard pass!”

Real estate insiders believe the legislature will adopt some of the governor’s housing stimulus proposals but make their own changes to them. This could include an increase in funding for supportive housing, new language on tenant protection, and a broader degree of affordability in tax breaks for the measures to pass.

“Legislation will have requirements for affordable housing that does not fall within the zoning for conversions and beyond what we currently allow,” said Korbey. “There’s enough precedent that it works.”

Once the governor presents her budget proposal later this month, real estate lobbyists will focus on urging lawmakers to adopt a litany of proposals that could result in hundreds of thousands of new units.

“The state legislature has taken several measures in recent years to allegedly address the housing crisis. But this crisis has only gotten worse,” Basha Gerhards, senior vice president of planning at REBNY, said in a statement. “We hope lawmakers will work with the governor to enact sensible policies that will produce more rental housing that New Yorkers desperately need.”

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