Hochul Aims to Ease Restrictions to Build 800K New Homes Statewide in Next Decade

The governor pushed office-to-residential conversion, more transit-oriented development and legalized basement apartments in her State of the State speech.

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New York Gov. Kathy Hochul laid out an ambitious list of housing proposals to address the state’s housing crisis in her annual State of the State speech Tuesday, including zoning reforms for office-to-residential conversions, transit-oriented development in New York City and its suburbs, fast-tracking new construction and allowing new basement and accessory dwelling units. 

“We have to make our state more affordable,” Hochul said. “Yes, people want to be here. But the thought of not being able to have your grandkids grow up in the same community that they were raised in because they can’t afford it? That’s very sad. And New Yorkers are just struggling to pay rent, food and gas to get to their jobs. They’re hurting … and we must reverse the trend of people leaving our state in search of lower costs and opportunities elsewhere.”

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Her policy book calls for building 800,000 new homes statewide over the next 10 years and setting unit-based goals for various towns, counties and cities in New York. Towns that are served by the Long Island Rail Road or the Metro-North Railroad would have a target of expanding their housing stock by 3 percent over the next three years, and the state would intervene in towns that don’t meet their housing goals. 

Hochul’s policy book calls for “fast-track approval mechanisms … for mixed-income, multifamily projects” in towns that fail to meet their housing targets and don’t adopt policies aimed at housing growth. She also hopes to accelerate new construction by waiving some environmental review requirements, a policy that Mayor Eric Adams has also proposed

In a similar vein, Hochul is working with the state legislature to enable more development around commuter rail stops in New York. A bill sponsored by Manhattan State Sen. Brad Hoylman-Sigal would bypass local zoning to allow four- to six-family buildings and eliminate parking requirements within a quarter mile of commuter rail or subway stations. 

The governor also promised to create a $250 million fund to “aid critical infrastructure projects triggered by plans for increased housing,” including water and sewer upgrades, parking, schools and street improvements, according to her policy book. 

In terms of New York City-specific policies, the governor once again supported removing the floor area ratio (FAR) cap of 12. Lifting the FAR cap would enable both new buildings and conversions of older commercial properties that are too large to comply with current residential zoning to not need approvals before construction begins. 

Hochul also pledged to introduce legislation that would enable more office-to-residential conversions, legislation likely to resemble a set of recommendations that the city issued this week on adaptive reuse for offices. The report, developed by New York City Department of City Planning Chair Dan Garodnick and a group of land use lawyers, tenant advocates, developers, real estate industry officials and architects, laid out a slate of policies that could dramatically expand landlords’ ability to convert commercial property in the five boroughs. It calls for expanding office-to-residential conversions to commercial districts outside Manhattan, removing the residential FAR cap for buildings constructed after 1969, and implementing a new tax abatement for conversions.  

Hochul also laid out plans for new tax incentives, including a broader one for accessory dwelling units, another for including affordable housing in office-to-residential conversions, and a replacement for the 421a tax exemption for new construction, which the real estate industry argues is vital to build new residential projects. 

Her other proposals include legalizing basement units in the five boroughs, expanding the state’s tenant protection unit, and creating a statewide housing planning office tasked with enforcing housing targets for cities and towns. 

The real estate industry was extremely supportive of Hochul’s proposals after her speech Tuesday. 

The Real Estate Board of New York, for example, said in a statement that “we applaud the governor for underscoring the critical role the private sector must play in that effort through a workable incentive program, along with the importance of creating policies that encourage rental housing production.”

Rebecca Baird-Remba can be reached at rbairdremba@commercialobserver.com.