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In State of the State Speech, Hochul Backs Adams Housing Agenda

The governor’s most politically charged proposal would address housing supply in New York City’s suburbs, while specifics on tax breaks for developers remain elusive.

SHARE In State of the State Speech, Hochul Backs Adams Housing Agenda

Governor Kathy Hochul delivers her State of the State address in Albany, January 10, 2023.

Mike Groll/Office of Governor Kathy Hochul

Mayor Eric Adams’ ambitious plan to build half a million homes in New York City received a major boost from Gov. Kathy Hochul in her State of the State speech on Tuesday. 

In her address — the second since she took office and the first since her election — Hochul laid out proposals geared to building 800,000 new homes in the state over the next 10 years, most of them in New York City and its suburbs.

Her speech made it clear that the governor is moving in lockstep with Adams by supporting the mayor’s wish list of zoning changes and tax incentives. Outside the city, Hochul is moving to create targets and mechanisms that would force the suburbs to increase housing construction, especially around transit hubs.

Both Hochul and Adams have made the case that New York’s housing crisis is a supply problem.

“At its root, our housing crisis unfolded because we did not build enough new homes to house everyone who wants to live here,” she said in the speech. “New York City ranks behind Los Angeles, San Francisco, Boston, Houston, Washington D.C., Seattle, and almost every other peer city in how much housing per capita we produce.”

But the proposals outlined in her wide-ranging address did not provide specifics on those tax breaks, the latest in a series of announcements from government officials that do not flesh out the particulars about how they would make incentives for developers to create housing. Hochul also ignored the calls from progressives for multibillion investments in public housing and for “good cause” eviction protections for tenants currently living in market-rate, non-rent-stabilized units.

With the legislature controlled by progressive Democrats, it remains to be seen how receptive the state Senate and Assembly will be to the Hochul-Adams agenda. But Senate Majority Leader Andrea Stewart-Cousins recently said she believed that inadequate supply was a major problem, and many people are hopeful major housing legislation can be enacted this session.

“There is finally an alignment about why building housing of all types is required and are united behind the idea that supply is an issue,” said Annemarie Gray, executive director of the group Open New York, a pro-housing, “yes in my backyard” advocacy organization that is preparing to lobby for many of the proposals. “For far too long New York’s mayors and governors and lawmakers have sat on the sideline and have neglected to pass legislation that have increased housing opportunities elsewhere.”

City Hall cheered the governor’s virtual wholesale endorsement of its legislative housing agenda.

“The governor’s commitment to ensuring that our state finally builds the housing needed to address the affordability crisis is the type of bold leadership we need, and acknowledges that our neighboring suburbs must do much more to solve what is ultimately a regional problem,” Adams said in a statement on Tuesday after Hochul’s speech.

More on the Table

Other major proposals from the governor’s speech include:

  • A new anti-crime agenda including a boosted budget to hire more prosecutors and allowing more people arrested to be held without bail.
  • Spending $1 billion for a broad new push to cope with the mental illness crisis, ranging from grants to help hospitals restore 800 psychiatric beds eliminated in the pandemic, to guidelines to force hospitals to provide more care, to money for supportive housing.
  • Proposing a ban on fossil fuels in new construction — starting in 2025 for smaller buildings and 2028 for larger ones — as well as a prohibition on the sale of new fossil-fuel heating equipment by 2030, depending on building size.
  • A “cap-and-invest” program to limit greenhouse gas emissions across the economy, using the revenue to pay for climate action.
  • A series of economic steps centered on indexing the state’s $15 per hour minimum wage so that it automatically increases with the consumer price index. While New York was among the leaders in increasing the minimum wage to the highest level in the country, it has fallen behind other states that do index their wage to inflation.

Facing the Fiscal Cliff

Hochul also pledged to secure the financial future of the MTA, as the troubled transit system nears a so-called fiscal cliff — but the details were left for later. Calling the MTA “the lifeblood of the New York City metro region,” Hochul committed to ensuring the long-term health of a subway, bus, commuter rail and paratransit system and vowed to work with lawmakers to come up with a “comprehensive set of solutions.”

For months, transit leaders have been calling for new ways for the state, city and federal governments to fund the operations of the country’s largest regional transit system.

But the way forward remains unclear.

“We need to see specifics,” Danny Pearlstein, policy director for Riders Alliance, an advocacy group, told THE CITY about Hochul’s address. “What we need on a day-to-day basis is a seamless transition where no one has second thoughts about riding transit because they’re going to be stuck on a platform or at a bus stop for 20 minutes — and we’re not there yet.”

Forcing the Suburbs

The most politically charged proposals outlined in Hochul’s speech are designed to force the suburbs to allow more housing construction, especially around transit hubs. The governor made a similar proposal in her budget last year but withdrew it 30 days later amid major opposition from suburban legislators as her election campaign began in earnest; then-candidate for governor Tom Suozzi called it a “radical proposal” that incorrectly claimed it would end single-family zoning in the state.

This year’s agenda is much more far-reaching. It would require municipalities in the region served by the MTA to increase their housing supply by 3% over three years. Localities that don’t meet that target would lose the right to reject projects that meet criteria for the number of homes and percentage of affordable units, echoing the approach taken in California.

“These ideas are not rocket science and other states have done them,” said Gray of Open New York. She and others argue that more apartments around transit hubs are crucial for the city’s affordability crisis because it will allow more people who work in the city to move to the suburbs with easy commutes.

The State of the State speech on the whole ignored proposals from tenant and progressive groups. Hochul did not mention “good cause” eviction and did not call for billions in new spending to build housing modeled on the Mitchell-Lama program, or a proposed voucher plan to help more New Yorkers with rent.

Housing Justice for All, the progressive tenant advocacy group which held a rally outside her New York City office during the speech, called the plan “gutless.”

“Instead of investment in public housing, we got handouts for big developers. Instead of vouchers to help more New Yorkers afford homes, we got zoning changes,” the group said in a statement. “Instead of real tenant protections like Good Cause, we got more wishing and hoping that the private market will solve everything.”

Affordable housing advocates demonstrated outside 250 Broadway, where many city offices are located, the day before Gov. Kathy Hochul’s State of the State address, Jan. 9, 2023.

Katie Honan/THE CITY

Hochul also backed giving the city the power to legalize basement apartments and lifting the limit on density in residential construction. In response to the changing economic landscape in the era of remote work, she also said she would support legislation that would allow the city to encourage the conversion of office buildings into residences.

On Monday, the city’s Planning Department finally unveiled its proposals on office conversions, which begin with loosening the rules for buildings built between 1961 and 1980. The changes would boost the amount of square feet eligible for transformation to 340 million square feet from about 200 million.

Those rules would apply in all major office hubs including Lower Manhattan, Flushing, Queens and The Bronx Hub. It would also end restrictions on residential construction in parts of Midtown, the business district most affected by the lack of office workers.

The city believes that the new rules would allow the creation of as many as 20,000 units in former office buildings, making room for homes for 40,000 people.

“This will be a meaningful contribution to the housing shortage, but we think it also helps to deal with the confluence of events: people who coming to the office less than they used to, more underutilized office space, and we have a housing crisis,” said Department of City Planning Director Dan Garodnick.

The administration proposes a tax break for conversions that include affordable housing, echoing real estate professionals.

“People are realizing that left to their own devices there will just be market-rate condos and apartments and there has to be an incentive to make affordable housing work,” said John Sanchez, executive director of the 5 Boro Housing Movement, an advocacy group launched this week to support conversions, a tax break and lifting of the density cap.

But the administration does not specify what sort of tax break is needed and the governor was vague on other tax incentives. Hochul endorsed a tax break for conversions, the reinstatement of a property tax break for new residential housing to replace the controversial 421-a exemption, rand einstating a break for apartment renovations — all without providing specifics on how they would work.

A proposed 421-A revision she proposed last year is believed to no longer be viable politically or economically because of rising interest rates.

That may be designed to put the onus on the legislative leaders, who allowed 421-a to expire last year. Business leaders moved quickly to put the spotlight on them.

“Legislators will, hopefully, work with the governor to make the investments and policy changes necessary to achieve her ambitious but very sensible goals,” said Kathy Wylde, president of the Partnership for New York City.

Added Basha Gerhards, senior vice president at the Real Estate Board of New York: “The State Legislature has taken several actions in recent years purportedly to address the housing crisis. Yet that crisis has only gotten worse. We hope the Legislature will work with the Governor to enact common-sense policies that produce more of the rental housing New Yorkers desperately need.”

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