Gov. Hochul Survived Reelection, Now She Has to Tackle the State’s Housing Crisis

“This is not a new phenomenon,” Hochul said at an Association for a Better New York (ABNY) breakfast on Dec. 14. “We know that New York is the place that workers, families and businesses want to be, but many cannot afford to move here, to live here or relocate here. … The question is, why didn’t we build housing?”

After a year in which mortgage rates more than doubled, interest rates ballooned and rents sharply climbed upward, forcing some New Yorkers to leave the city, the rising costs and limited supply of affordable housing have risen to the forefront of the state’s legislative agenda.

A renewed focus on housing comes after the governor’s first full year in office that left many New Yorkers disappointed in her leadership. A majority of voters said Hochul did not make progress on her goals in 2022, while only a third said she did, according to a December Siena College poll.

Some of that was due to a skimpy state budget with few housing items. Measures to renew a tax incentive that spurred housing construction, permit backyard homes in the suburbs, and lift a cap that would allow taller buildings — each of which carried significant political risks for a governor facing re-
election — never made it in.

A law that would have given tenants stronger protections from eviction and exorbitant rent hikes didn’t garner the governor’s backing, either.

Instead, Hochul prioritized tweaking the state’s bail reform law and ensured a controversial move to make sure the Buffalo Bills got its $1.4 billion football stadium deal.

Now that a contentious election is over and a full four-year term is ahead of her, Hochul appears ready to make significant changes to the state’s built environment.

“Last year they proposed some of these things, but there hadn’t been enough time to work the grassroots support and make coordinated effort. This year there will be much more of that,” said Tom Wright, president and CEO of the Regional Plan Association (RPA), a nonprofit organization that makes quality of life recommendations for the tri-state area. “The politics have changed, too. The more the public learns about these issues, the more supportive they’ll become.”

The state’s 159-page economic development plan, released by the “New” New York Panel of civic leaders the mayor and governor jointly convened in May, sought to enhance commuting throughout the region, reimagine central business districts and find creative ways to build new affordable housing. Details about how to achieve these goals remain scarce, but Hochul promised she would reveal more in her “State of the State” address in January.

State Senate Housing Chairman Brian Kavanagh says the legislature is ready to get to work.

“I think it will be a big year for housing,” Kavanagh said. “Almost everyone I talk to agrees that this is the time. It’s going to be a complicated negotiation with a lot of stakeholders, but there is a broad recognition that big things need to change.”

Housing

The governor’s economic recovery goals impressed the crowd at the ABNY breakfast, but boosting the region’s housing stock won’t be easy.

Housing construction in the state has not kept pace with New York’s population growth over the past decade, and then construction stalled during the pandemic. The expiration of a tax abatement that subsidized market-rate housing construction, known as 421a, in June prompted developers to delay many of their new projects in rezoned areas that would otherwise have accommodated them.

Without a similar incentive, some real estate leaders questioned whether the state will be able to create the nearly 1 million new units it promised in its timeline.

“The top figure is an incredibly aggressive and forward-thinking number … but developing housing right now is a serious math problem, and the math doesn’t work,” Rafael Cestero, CEO of affordable housing lender Community Preservation Corporation, said. “Without dramatic changes to the tax code in the city or new tax incentives, building multi-
family rental housing doesn’t make sense.”

In the weeks following the election, Hochul and top state officials called housing developers and land use attorneys to discuss which measures would be necessary to spur development. Those conversations focused on potential tax and zoning incentives for new developments that include a broader spectrum of affordability. The talks also looked at potential means of expediting conversions of hotels and older office properties to residential use, as well as transforming existing market-
rate units to ones that are more affordable.

“I wouldn’t be surprised if we see an entire toolbox,” said Brett Gottlieb, a partner with Herrick Feinstein’s real estate department. “Whatever they come up with will likely have more [area median income] options, different benefit terms, and a benefit that might be calculated in a different manner. It’s up to the economists and the marketplace to determine what tools they think are most effective.”

Some of those programs that apply to the city could also focus on the suburbs, where new construction lagged even further than in the five boroughs. Even though Hochul lost Nassau, Suffolk and Rockland counties in her re-election, she may not feel beholden to constituents who opposed zoning measures like accessory dwelling units, a secondary residence located on a single-family lot, and transit-oriented development that would bring dense towers near Long Island Rail Road stations.

But progressives who supported her election bid could generate the largest amount of pushback for her housing agenda. Hours after the ABNY breakfast, state lawmakers and tenant advocates rallied to announce their own housing priorities for the coming year. Among them was Good Cause Eviction, which wants the state to cap rent increases and prevent unlawful eviction procedures. Other proposals include housing vouchers for low-income New Yorkers and a rule that would give tenants the opportunity to purchase their units.

“We don’t need tweaks around the edges. We need a wholesale overhaul of our housing system that puts the needs of tenants and homeless New Yorkers first,” said Cea Weaver, campaign coordinator for Housing Justice for All, a tenant advocacy group. “These are our homes, and it’s time Gov. Hochul listened to our power.”

Transportation

Unlike the governor’s housing priorities, her transportation program had far more specifics with goals that are achievable sooner rather than later.

The centerpiece of the plan was her pledge to offer more off-peak transit service by improving the frequency of city subways to every six minutes on weekends and during midday hours.

Hochul ticked off the progress of several transit system upgrades, including East Side Access to Grand Central Terminal, a new Penn Station, four Metro-North stations in the East Bronx, and the LIRR third track. There are so many infrastructure projects in the pipeline, she didn’t even mention the Gateway Tunnel, Second Avenue Subway, JFK and LaGuardia airports terminal rehabilitations, or the Interborough Express commuter line that would transport riders between Bay Ridge, Brooklyn, and Jackson Heights, Queens.

“A lot of things are going to get moving,” said Carlo Scissura, CEO of the New York Building Congress, a construction industry trade association. “It’s a good moment for transit. We’ll look back 10 years from now and say the last 20 years was one of the greatest building periods in our history.”

Getting the Metropolitan Transportation Authority’s finances on solid footing is among the Hochul administration’s most difficult challenges. The MTA has proposed incremental fare hikes, while also soliciting billions of dollars in funding from Congress and the state legislature.

The governor reiterated her support for a congestion pricing plan that would charge drivers entering Manhattan’s central business district while also filling gaps in the MTA’s budget. She did not give a set date for the plan’s long-delayed launch.

“Because of the commitment to funding the MTA and supporting congestion pricing, that’s the governor showing backbone,” RPA’s Tom Wright said. “By showing she’s willing to back these policies, we can have an honest conversation about how to fully fund the MTA.”

Transit advocates appreciated the governor’s emphasis on off-peak subway frequency, but expediting bus speeds could make an even greater impact for New Yorkers who can’t afford cars.

Riders Alliance’s Danny Pearlstein, whose transit organization has campaigned for better bus and subway service, also wants lawmakers to also consider making bus fares free or at least curtail any rate hikes while inflation continues to rage.

“A fare hike will hamper ridership growth and disproportionately impact low-income people,” Pearlstein said. “That should come out of the state budget rather than out of riders’ pockets.”

Quality of life

Even with housing and transportation as important concerns, New Yorkers want state leaders to prioritize the cost of living and reducing crime numbers in the coming year.

Nearly two-thirds of voters (63 percent) said making the cost of living more affordable should be a top concern in Albany, followed by reducing crime (58 percent), a Sienna poll showed. Only 29 percent of voters said affordable housing should be a top priority.

The governor’s panel focused on fostering long-term prosperity for the region by repurposing offices and investing in public space in Midtown. Some of its recommendations addressed quality of life issues, such as reimagining waste collection and making outdoor-dining sheds permanent, but few tackled cost of living increases other than expanding access to child care statewide and increasing the supply of supportive housing.

Crime concerns were even less prevalent. Hochul acquiesced in October to deploying a surge of police officers to serve 10,000 additional overtime hours a day on New York City subway platforms. Yet there’s been little talk of additional tinkering to bail reform despite the issue playing a key role in the gubernatorial race. She raised the idea of linking greater judicial discretion over bail to legislative pay raises that passed just before Christmas, but ultimately backed down.

“People are very dissatisfied with her political positions regarding crime and bail reform, but she feels that she’s done her job with those changes last year and this year is the year to focus on housing,” Herrick Feinstein’s Brett Gottlieb said. “Will she hold up the budget over either? I guess it remains to be seen.”