Gov. Hochul proposes town-by-town housing production targets to boost development

Gov. Kathy Hochul is floating a proposal to require every village, town and city in New York to meet mandatory housing production goals, as a key component of her plan to build 800,000 new homes statewide over the next decade.

Hochul emphasized her plans to supercharge housing development, dubbed the New York Housing Compact, during her second State of the State address on Tuesday, with additional details on the town-by-town targets and other production measures in an accompanying policy book.

“For a society to reach its full potential, equal access to housing is a must,” the governor said in prepared remarks. “Because when there’s not sufficient housing for people at all income levels, they struggle.”

The plan would force New York City and its surrounding suburbs to increase their housing stock by 3% over the next three years. Towns considered to be upstate — located in areas not covered by the MTA — will have to increase their housing stock by 1%.

So-called “affordable housing”— units where rents are capped for low- and middle-income earners — would count as double, meaning municipalities could create less housing if it is priced for New Yorkers most in need. Roughly 50% of New Yorkers are considered rent-burdened, meaning they pay at least 30% of their income toward housing, according to U.S. Census data. Hochul has not yet specified those affordability targets.

Hochul and state officials said towns that fail to meet the three-year targets will be subject to a “fast-track approval” process, which would force through projects that meet minimum housing goals and safety standards. She estimated that the production goals would create about 149,000 new homes statewide.

The governor’s housing agenda would be subject to negotiations and approval by the state Legislature.

Rachel Fee, executive director of the housing group New York Housing Conference, said the state approval process would give the production targets actual weight.

“It’s meaningful once you put teeth on it,” Fee said. “This is smart growth and it’s taking on exclusionary zoning head-on, which has led to segregation.”

The rules would specifically target suburbs where housing production has lagged. Towns in Long Island, for example, have produced just seven new units of housing for every 1,000 residents compared to the parts of New Jersey immediately adjacent to New York City, which have produced five times that rate.

New York City issued about 26 housing permits per 1,000 residents over that span, New York Focus reported. The city recorded close to 2% housing growth over the past three years, Hochul’s office said.

Hochul’s housing plan also lays out rules to mandate more housing near transit stops to create an estimated 190,000 new units. And she’s proposing loosening zoning restrictions and giving tax breaks for owners who convert offices to housing –a strategy touted by Mayor Eric Adams – and legalizing basement apartments to create about 56,000 new units.

The state would also seek to establish a $250 million fund to help towns upgrade infrastructure, like roads and sewers, to accommodate more residents-–addressing a frequent complaint in localities that resist new housing development.

Hochul’s 800,000-unit housing plan also relies on an expectation that 407,000 new units of housing would be built without her proposed interventions — roughly the rate of production over the previous decade.

But, Hochul made clear that housing development hinges on a replacement of the controversial 421-a tax break that expired last year without renewal and which cuts the majority of a developers’ property tax bill in exchange for the creation of a modest number of income-restricted apartments, typically priced for New Yorkers who earn well above the area median income.

She did not propose an alternative after her modified 421-a proposal — known as 485-w — died amid pushback from many liberal lawmakers who consider the one-size-fits-all, decadeslong tax breaks a giveaway to the real estate industry.

Instead, Hochul said she will work with the Senate and Assembly to craft a new program.

The Real Estate Board of New York, a trade group that represents developers, said the tax abatement program is essential for fueling housing creation in the five boroughs, citing results of recent reports showing that the number of building applications decreased by 59% between June and November 2022.

“We face a severe housing shortage that is only getting worse and hopefully these sobering findings will encourage stakeholders to advance policies that facilitate more of the development and construction activity that our city needs,” said Zachary Steinberg, REBNY's senior vice president of policy.

New York City’s housing development has trailed population growth by a wide margin over the past two decades. From 2010 to 2018, the number of new jobs in New York City rose by 22%, while the number of housing units increased by 4% – meaning there was one new apartment created for every five new jobs–according to a 2020 analysis by the Citizens Budget Commission.

But advocates for low-income and homeless New Yorkers say Hochul’s proposals will accomplish little without concrete affordability goals and plans to immediately house people living in shelters or at risk of eviction. Roughly 69,000 people spend each night in a shelter run by New York City’s Department of Homeless Services, and evictions are on the rise as protections dwindle.

“The bottom line is that the announcement is just that: a declaration of policy goals absent the fine print that we will see in the appropriations bills and program legislation that will accompany Gov. Hochul's budget announcement later this month,” said Shelly Nortz, deputy executive director for policy at Coalition for the Homeless.

The National Low Income Housing Coalition estimates that New York state needs 615,025 new apartments priced for “extremely low-income renters” who earn less than 30% of the area median income, or about $36,000 for a family of three.

“Rent increases are shattering records. Homelessness is surging. And more and more New Yorkers are losing their homes every day,” said Cea Weaver, an organizer with the statewide Housing Justice for All Coalition.

The coalition has pushed eviction protections in non-rent-stabilized housing — known as Good Cause protections —and a statewide rent subsidy for low-income New Yorkers modeled off the federal Section 8 program. Neither of the proposals made into Hochul’s speech or policy book.

“To truly solve the housing crisis, we need robust protections from rent hikes and evictions, deep investment in rental assistance, and a commitment to social housing that’s free from market forces,” Weaver said. “It’s time for the governor to listen to us instead of shutting us out and doing the bidding of rich real estate donors yet again.”