NY’s new housing plan (v.17)
NY’s new housing plan (v.17)
City of Yes for Housing Opportunity – another NYC Mayor's housing plan!
Mayor Adams’s new housing plan was announced last Thursday (9/21/23). Many plans have been proposed by elected officials in NYC to “solve housing.” It’s understandable to view each new plan as more of the same – all talk and no walk. Nevertheless, Adams’s plan is important to understand because it could grow the housing supply if it is approved, and it could affect the value of real assets in NYC. The plan can be boiled down to five key areas:
1. Transit Oriented Development (TOD) outside of Manhattan.
o Explanation: This zoning change would increase the allowed density of properties built near subway and bus stops in NYC. If it sounds familiar, that may be because Governor Hochul included this idea in her Housing Compact proposal that failed to become law.
o Background: The zoning change would be valuable to existing owners because it would mean additional air rights would artificially be added to their lots. This would raise existing property valuations. Neighboring property owners could also benefit by purchasing said air rights to build taller structures. This would also create opportunities for developers to create assemblages and rebuild certain corridors. This could change the character of important commercial thoroughfares. Think 4th avenue in Bay Ridge, 86th street in Bensonhurst, Church avenue in East Flatbush, or Atlantic avenue and Fulton street in East New York.
o Probability of passing: High. This seems like a no-brainer that should garner widespread support.
2. Relax restrictions on office to residential conversions.
o Explanation: This would do two things: 1) expand the neighborhoods of Manhattan where office -> resi conversions are allowed, and 2) make office buildings built between 1961 and 1990 eligible for conversions (not currently the case).
o Probability of passing: The office to residential talk is very topical nowadays and everyone *has* to have an opinion on it! This rule seems likely to pass because:
§ 1- Office occupancy is down across the board (vacancy was in the mid/high teens in Q2 2023 per reports from JLL & Avison Young), and this lowers tax revenue for NYC.
§ 2- Replacing office buildings with affordable housing is popular among elected officials right now.
§ 3- It’s unclear who would lose from this besides neighboring apartment owners.
3. Building on unused parking lots, or “campuses”.
o Explanation: Allowing for the development of multifamily or retail buildings on the same lots as churches or other “campuses” just means allowing multiple permitted uses on a single site. This has traditionally not been allowed and has required lots of discretionary approvals. This would make partnerships between churches and private developers easier to navigate, open to fewer intrusions. When third parties get involved in church real estate transactions, the development of housing often gets delayed. Alchemy Properties’ struggle to replace a run-down church on 86th street and Amsterdam Avenue with apartments is an example of this. The church and the developer both agreed to the project, but they have been unable to move forward due to issues related to the Landmark Preservation Commission (see a presentation on this here).
o Probability of passing: 50/50. This could be a little bit sticky politically.
4. Legalization of accessory dwelling units (ADUs).
o Explanation: This would allow owners of 1 or 2 family homes to create accessory dwelling units, or granny flats, in their rear yards.
o Background: This gained traction when NY Senator Brian Kavanagh and Assembly member Harvey Epstein presented a bill on the topic in 2022. The idea of converting unused (“illegal”) spaces into apartments was championed by former mayor De Blasio too, who launched a pilot program for the conversion of basements into legal apartments in 2019. Governor Hochul supported the idea also. The problem with these attempts, besides being half-baked, was that they were all branded as basement conversion programs, rather than garage conversions. When NYC floods killed 11 residents in basement apartments, the conversion idea lost its steam.
o Probability of passing: Medium. If the idea is focused around outdoor garage homes in parts of NY with semi detached properties, I think the bill distinguishes itself enough from prior bills that failed. California has permitted some 60,000 ADU homes, since ADUs were legalized in 2016.
5. Remove parking requirements on new buildings
o Explanation: This is also a zoning rule change. Reducing parking requirements would allow developers to take the allowable square feet to be built that were previously dedicated to parking and use those to build more apartments. That means more apartments built. In the same vein, that lot could be worth more to a seller today.
o Probability of passing: High This is aligned with the city’s aims to disincentivize the use of private transportation, as a means of reducing CO2 emissions.
Timeline for Adams’s plan
September 2023 – announcement of plan.
Fall/Winter 2023/2024- NYC Department of City Planning (NYC DCP) will perform an environmental review to take a more granular look at the consequences of the proposal.
Spring 2024 – Official rezoning public review process begins. This is called the Uniform Land Use Review Procedure, or ULURP. ULURP usually takes about a year to get through to completion and allows everyone under the sun in local government to comment on the proposed changes.
For a complete read of the plan, click here. This piece was focused on how the new plan would effect investors and property owners.
Sources: NYC Dept. of City Planning, NYT, Crain’s
1. Eliminating required parking, esp. in the outer boroughs is dumb. It will always be needed, by eliminating it you are just creating higher demand and thus COST for most people. Prices will SKYROCKET as alternative parking is unavailable and the parking garages themselves are eliminated to make more profitable housing!
2. Must be careful with zoning changes. People live where they live because they like it that way. Esp. sensitive in the lowest density areas.
MOST IMPORTANTLY, GET THE 421A BACK IF YOU WANT HOUSING STARTS! THESE OTHER ISSUES ARE MOOT IF IT MAKES NO FINACIAL SENSE TO BUILD !!!!
THEY SHOULD ALSO BE GETTING RID OF LOFT LAW!!! THOUSANDS OF PERFECTLY GOOD APARTMENTS ARE BEING KEPT VACANT BECAUSE ITS TOO EXPENSIVE TO "LEGALIZE" UNITS, YET CITY'S IDIOTIC ANSWER TO THE PROBLEM IS LET TENANTS LIVE THERE ANYWAY (just for free- I can only guess that means that they really aren't so dangerous - but than why are they illegal?) Just another poorly disguised law to steal from Owners to the benefit a few undeserving Tenants. Meanwhile, Owners are now more afraid than ever, so THOUSANDS of perfectly viable units sit empty "waiting" for office uses that will NEVER materialize.