In the Office: The Politicians Shaping — or Trying to Shape — CRE-Related Policy
By Rebecca Baird-Remba May 16, 2023 7:00 amreprints
No elected officials made the Power 100 list this year, but several government figures are shaping policy that affects commercial real estate in New York and nationwide.
Sustainability and clean energy are a major focus locally and nationally. On the federal level, one person is in charge of dispensing funding and tax credits for wind farms, electric vehicle charging, solar panel installations, hydropower projects — you name it: White House adviser John Podesta. Since President Biden appointed Podesta clean energy czar last fall, he has been tasked with distributing $1 trillion in subsidies from the Inflation Reduction and Bipartisan Infrastructure Act.
In fact, the clean energy tax credits promised by the bill might be working too well, potentially raising costs for taxpayers. A South Korean company, Hanwha Qcells, is planning a $2.5 billion solar panel manufacturing complex in Georgia, while major auto manufacturers like General Motors and Ford are expected to invest billions into their Michigan manufacturing facilities to build electric vehicles and the batteries that power them. Dozens of these projects are in the pipeline around the country, potentially costing taxpayers anywhere from $44 billion to $197 billion in tax breaks, one analysis found.
At the local and state level, New York has plenty of movers and shakers reshaping land use and real estate policy — or trying to.
Gov. Kathy Hochul, for example, put forth one of the most pro-development executive budget proposals in recent history. She wanted to build 800,000 units of housing across the state, largely by overriding local zoning near transit stations and setting housing production requirements for cities and towns. The governor also wanted to make office-to-residential conversions in New York City easier, both by lifting the city’s cap on residential floor area and creating a tax incentive for conversions with affordable housing.
Ultimately, legislators didn’t agree, cutting most of these policies out of the budget during negotiations over good-cause eviction, which would have protected tenants from large rent increases. Good-cause eviction, too, failed to make it into the budget, which was finalized in early May. Despite the failure, Hochul’s ambitious housing plan was the closest New York has come to transformative development policy at the state level.
It remains to be seen whether the state legislature will take up any of the governor’s housing proposals or replace the 421a tax exemption, which expired last June. The legislative session ends this June.
“I knew it was ambitious,” Hochul told her hometown paper, The Buffalo News. “I knew it was transformative in its scale.”
She claimed that she “didn’t have time” to build legislative support for her housing reforms. “But I also didn’t want to miss the window to really start the conversation and say, ‘We’re talking about housing now.’ So now I have a year to build consensus and support around a plan.”
Among legislators, State Sen. Brian Kavanagh of Manhattan, who chairs the Senate Housing Committee, has emerged over the past few years as a leader on housing reforms. He has pushed for good-cause eviction, the Housing Access Voucher Program (which would supplement the federal Section 8 program), office-to-residential conversions, and transit-oriented projects.
Kavanagh told Bisnow in early May that “we should do more to try to make sure that we’re building housing in all parts of the state, including some of the suburbs of New York City that have been very resistant to housing. Long Island — Nassau and Suffolk counties — produce housing at a rate that is about one-fifth of the national rate per capita, even though we live in a country that has a housing shortage, nationally. I think we should do something about that.”
The senator, who represents Lower Manhattan, felt that there was still time to negotiate on good-cause eviction, rental vouchers and other housing policy issues before the legislative session ends. Kavanagh’s Assembly counterpart, Housing Committee Chairwoman Linda Rosenthal, also supports good-cause eviction, vouchers and incentivizing office-to-residential conversions. But the Upper West Side Democrat opposed removing caps on residential floor area ratios to allow for taller, denser development or conversions.
“I know the mayor is very enthusiastic about it,” Rosenthal told Commercial Observer in March. “Developers like it. But a lot of communities say, ‘Don’t we have enough tall buildings?’ We need more information about how to rezone these areas. It’s about looking at this holistically. Without that cap, the city gets control of the future and the state is basically out of it.”
Finally, at the city level, there are few officials who touch land use policy more directly than the director of the Department of City Planning. Mayor Eric Adams tapped Dan Garodnick to lead the agency in February 2022, not long after Garodnick left the City Council, where he spent 12 years representing Manhattan’s East Side. He’s been pushing the mayor’s “City of Yes” zoning reforms along, the first of which is a package focused on encouraging green building retrofits, solar panel installations, electric vehicle charging, bike parking and other environmentally friendly code changes.
“It’s our effort to modernize our 20th century zoning resolution,” Garodnick told CO recently. “Many of our resolutions were crafted well before the climate crisis was in full swing. We need to take action to ensure New York City remains a leader. We have some of the most ambitious climate commitments in the world, and we need to take action.”