Breaking down how NY Governor Kathy Hochul plans to build 80,000 housing units a year for next 10 years
Breaking down how NY Governor Kathy Hochul plans to build 80,000 housing units a year for next 10 years
The return of the 421 a tax abatement, the removal of NYC FAR caps, and more
Governor Kathy Hochul is setting a goal to build 800,000 housing units in the next 10 years in New York State. Here are the important things about the housing plan in case you don’t have time to read the 276 page State of the State document.
The 800K goal rests on a few key assumptions:
Assuming a 421 a tax abatement replacement.
Note: if the governor is pegging her housing plan on the return of the expired tax abatement, it should be encouraging for NYC developers.
Simplifying commercial to residential property conversions.
3% year over year growth in new home developments in NYC.
Looking back, NYC reached something like 2% growth from 2020-2022.
Bolstering development around transit hubs.
Facilitating basement apartment legalization.
Some other key priorities that will aid NY in reaching its new 800,000-unit mandate are the following:
1. Allowing the state of NY to approve new residential projects if localities block them & are failing to produce enough housing:
This is being modeled similarly to California’s mechanism of checks and balances for boosting housing production.
Depending on the way this is administered, this could look A HECK of A LOT like Builder’s Remedy in California.
Here’s why you should get excited about this if you are a developer in NY. Link.
Comments: Governor Hochul pointed out that economic incentives alone can’t defeat NIMBY attitudes, and I think that’s absolutely correct.
2. Creating a housing progress dashboard across the state of New York.
State leaders will create a statewide database of all things housing: permit approvals, zoning maps, plans, and all other interesting housing KPIs.
This is a necessary step to achieve the aggressive goal that Hochul is setting out to do. This looks to be a heavy lift. Some areas like NYC have embraced the digitization of real estate documents, but some counties may still maintain a primarily paper copy system.
In a best-case scenario, the dashboard looks like this:
3. Removing FAR caps on NYC and restoring the ability for New York leaders to amend the city’s zoning code how they sees fit, with support from the state.
4. Tax breaks at every turn.
Hochul will offer tax breaks to encourage developments near transit hubs, for converted commercial to residential properties, and for the addition of granny units.
Kathy Hochul’s 800,000 new housing units by 2033, breaks down in the following way:
800,000 new units translates to 80,000 apartments built per year. New York City, which is where the lion’s share of housing is erected in NY state only delivered 28,000 housing units to the market in 2022 – and that was a record in recent years. Hochul is suggesting a doubling of production, or something along those lines. It looks like there’s little if any margin of error here, given that this plan would produce only 802,000 units if everything worked correctly and every new amendment to the laws were accepted and put into place!
Unrelated to the housing goal, the NY Governor is also requiring that all buildings across the state be heated via electricity or other means starting in 2025 for smaller buildings and 2028 for larger buildings. This follows NYC’s own timeline for building fossil fuel-free buildings.