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Hochul Targets NY Housing Shortage With Developer Incentives
(Bloomberg) -- New York Governor Kathy Hochul took aim at tackling the state’s housing shortage, a month after the state legislative session ended without any action taken on the ambitious housing program the governor outlined last winter.
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Hochul announced a program to extend tax abatements for the construction of affordable housing in Brooklyn’s Gowanus neighborhood, a localized extension of a controversial tax break that state legislators let expire in 2022. The program would require approval from Empire State Development, the state’s economic development agency.
She also issued an executive order instructing the state government to direct $650 million in grants to communities that can demonstrate they are “pro-housing” and directing state agencies to identify properties that can be repurposed for housing.
“It’s all about the entire state of New York,” Hochul said Tuesday in Gowanus. “It’s about encouraging housing production from Brookhaven to Brooklyn to Buffalo.”
She recommended repurposing “abandoned, vacant” or “reusable” state properties for housing, such as the former Downstate Correctional Facility at Fishkill — a now-abandoned prison in Dutchess County — or “Site K” at the Javits Center on Manhattan’s West Side.
New York’s housing shortage is particularly dire. The downstate region added more than half a million more jobs than it did homes over the past two decades, according to the New York City Planning Department, and housing prices in the greater New York City metropolitan area have increased 50% over the last seven years.
The state legislature let tax incentives for constructing affordable housing, known as 421-a, expire last year and have not yet replaced them. Developers have until mid-2026 to complete projects that are already underway, a task they’ve said will be difficult for some buildings in Gowanus and elsewhere across the state.
They’ve asked for a blanket extension of the timeline to complete current projects and for the state to introduce a new incentive to encourage more affordable housing construction, which has come to a near-standstill across New York City.
“I think there’s reason to be excited and optimistic” about Hochul’s announcement, said Brett Gottlieb, a partner in the real estate department at New York law firm Herrick, Feinstein LLP, which has one of the largest real estate practices in the city. Gottlieb is optimistic that the geographic area of the 421-a mirror program will be expanded at a later date.
Since 421-a lapsed, plans for new housing have slowed, Gottlieb said. The program “provided a mechanism for developers, in a state where it’s very expensive to build,” he said.
“If you were to speak to developers, almost every developer you would speak to would tell you that buildings that have been built with 421-a would not exist but for the existence of the program,” Gottlieb said.
Hochul, who was joined by labor leaders and housing advocates as she signed the order, is struggling to make progress on New York’s housing shortage after her aggressive statewide housing initiative was rejected by lawmakers. Her failed proposal, which pledged to build 800,000 housing units over the next decade by requiring municipalities to grow their housing supply, threatened overriding local zoning regulations in order to get the housing built.
The plan spurred significant blow-back from New York suburbs and lawmakers of both parties, some of whom said Hochul had failed to get buy-in from necessary stakeholders before announcing the policy proposal. Hochul ultimately dropped the housing plan, known as the “Housing Compact,” from state budget negotiations.
The Legal Aid Society rebuffed Hochul’s Gowanus order, accusing her of “trying to save face with this executive order, one that is legally dubious at best, which will fail to ensure housing affordability in the short-term and accomplishes nothing to stabilize communities and keep tenants housed.”
Meanwhile, housing advocacy groups’ initial response to Hochul’s actions was lukewarm.
“These actions are necessary, important, and yet insufficient to address the scale of our housing crisis,” Open New York said in a statement. “Nonetheless, we are pleased to see the governor do what she can to make up some ground.”
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