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Hochul on the Housing Hot Seat as Tenant and Real Estate Groups Press for Opposite Actions

The governor, with Mayor Eric Adams’ support, wants to help build hundreds of thousands more homes. Getting her controversial plans through the polarized state legislature will be a big test of her power.

SHARE Hochul on the Housing Hot Seat as Tenant and Real Estate Groups Press for Opposite Actions

Pictured at a recent press conference, Gov. Kathy Hochul and Mayor Eric Adams are trying to work together to create new housing, January 27, 2022.

Hiram Alejandro Durán/THE CITY

Mayor Eric Adams’ point person on housing, Jessica Katz, went to Albany last week to push the administration’s housing agenda in the state legislature — the first of many trips she expects to be making upstate in the next few months. 

Katz, NYC’s chief housing officer, expressed optimism about bridging the chasm between the competing demands of tenant groups that want to expand rent regulations and real estate interests seeking to roll them back.

“The narrative is shifting and it’s becoming clear across the system you can’t support tenants without housing supply, and you can’t increase housing supply without supporting tenants,” she said.

Case in point: A nonprofit group called Open New York, formed to counter not-in-my-backyard (NIMBY) opposition to housing development, also supports a tenant-backed “good cause” anti-eviction bill that would limit rent increases and require landlords to renew leases in most instances.

“We desperately need more housing and we need a lot of different ways of providing housing stability, and lots of places around the country have tied zoning reform to tenant protections,” Annemarie Gray, the group’s executive director, told THE CITY’S FAQ podcast.

Meanwhile, the Real Estate Board of New York (REBNY), which represents the city’s largest landlords and developers, signed on to a letter sent to Gov. Kathy Hochul last week supporting an expanded housing voucher subsidy program — another major objective of tenant groups and one the governor has yet to embrace.

Hochul is expected Wednesday to provide more details on the housing agenda she outlined earlier this month. It focuses on groundwork to create 800,000 new housing units statewide in the next decade, with half a million of those to be located within the five boroughs.

“Since becoming governor, housing has been front and center in my agenda,” Hochul said in her State of the State speech earlier this month, outlining what she called “a groundbreaking strategy to catalyze the housing development we need for our communities to thrive. For our economy to grow. And our state to prosper.”

Long Wish List

Real estate interests, the mayor, pro-housing trade organizations and tenant groups are all seeking allies as they try to steer the governor to prioritize their preferred — and competing — policies.

Among them:
Adams wants the legislature to increase allowed density in new residential construction, create a program to help homeowners finance improvements to bring basement apartments up to code, allow more flexibility to create housing units in low-rise residential neighborhoods, and make it easier to convert office buildings to residential use.

The governor has endorsed those proposals and put forward controversial measures that would force the suburbs around the city to increase their construction of new housing — especially around transit hubs — and give the state the ability to override local opposition to new projects in communities that aren’t building enough housing.

Both the mayor and the governor are on board with a series of tax breaks that only the state can legally implement. These include new tax abatements intended to spur residential construction and renovations in the city, replacing expired tax breaks known  as 421-a and J-51.

They’re also both pushing what would be a new tax break to convert office space into apartments.

The most progressive groups have already denounced Hochul’s plan as “gutless” for not providing billions in direct state spending for new construction. More moderate tenant groups are focused on good cause eviction and ramping up a state voucher plan that within five years would provide $1 billion in subsidies to tenants, mostly those who do not qualify for federal aid programs because of immigration status or other factors.

Climate of Crisis

By any measure, New York City is up against a dire housing crisis. Rents soared for apartments on the market in the last year, as the city recovered from the pandemic. One-third of New Yorkers spend half their income on rent, well above the recommended outlay of putting one-third of income toward housing. And the city is simply not building enough housing to keep up with population growth.

Costs are soaring in the suburbs around the city, too, and upstate is not producing enough new housing either.

The key question is whether the legislature has the appetite for tackling big issues with political risks of alienating either tenants or real estate — or, in the case of the suburbs, loud opposition to more housing in wealthy and mostly white towns.

Adams’ housing leader says she thinks the housing crisis is bad enough that the climate will be receptive.

“I know across the board that despite having housing supports in place, our legislators are saying that their constituents are having trouble finding an apartment,” Katz said. “We have to have big swings on housing and it seems our colleagues in the legislature are interested.”

She adds that one reason for optimism is that for the first time in decades, the governor and mayor are in lockstep on the reforms they want to see enacted.

Skeptics remain unconvinced the legislature is ready to make tough decisions — though none THE CITY interviewed agreed to speak on the record. 

Neither the governor or mayor has yet to spell out the specifics of the tax breaks they are seeking, and the governor might not do so in her budget coming this week. They have apparently decided that putting forward a specific proposal will play into the hands of progressives in the legislature who opposed them last year, so they are waiting for Albany lawmakers to act first.

As the example of Open New York shows, some groups are trying to come up with a grand bargain that would combine the proposals for increased housing construction, tax breaks to accomplish it, and tenant protections like those in the “good cause” proposal.

It won’t be easy, since real estate interests remain adamantly opposed to “good cause.”

The current proposal would cap annual rent increases at 1.5 times the consumer price index — which is far lower than in states such as Oregon that have passed similar measures.

“It is odd to be for rent control when you want more supply,” said Jay Martin, executive director of the Community Housing Improvement Program (CHIP), which represents small- and medium-sized owners of rent-regulated apartments. His group is pushing a provision that would allow rents for vacant apartments to reset to market rates before becoming regulated again, which is regarded as a long shot.

Tenant groups say landlords aren’t interested in a compromise.

“Every time we talk to landlords, they say they just want to get bad tenants out,” said Ellen Davidson, an attorney at the The Legal Aid Society, which is one of the most active groups representing tenant interests in court proceedings and Albany.  “We tell them we are happy to add those provisions and ask them what’s missing from the list, and the landlords say there is nothing, we just want the right to decide not to renew a lease.”

What is clear to everyone that getting significant housing proposals approved will be a test of the newly elected governor’s power.

“We will see a lot of push and pull about what is absolutely needed,” said Martin, of CHIP. “The governor will have to use a lot of political capital, especially if the legislators dig in their heels and do not work with her.”

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