How Albany Can Unlock an Adaptive Reuse Revolution in Housing

Imagine a scenario in which a city had thousands of residents struggling to find and stay in affordable homes while large, obsolete facilities like hospitals and schools stood empty for years. This is precisely what is happening in New York today.

At a time when we are struggling to tackle a spiraling affordability crisis, adaptive reuse of vacant and underused structures allows us to reimagine them as affordable housing. This approach offers a more successful solution to overcoming resistance to change, as one of the major obstacles to development comes from NIMBY pushback. These challenges cause delays that significantly drive up per-unit costs for affordable housing statewide. Lawmakers and elected leaders need to step up and adopt key changes and budget provisions during this legislative session so the housing industry can unleash the potential of this underutilized resource. 

With its million-plus buildings, the Empire State is home to an aging stock of increasingly obsolete properties. These buildings aren’t just industrial keepsakes of the past. They are an essential part of the solution to the chronic shortage of affordable housing in this state. And the most sustainable building is one that already exists.

In Manhattan alone, 20 percent of office buildings remain vacant, a trend accelerated by the rise of remote work. These vacant spaces in older buildings, once overlooked, are now ideal candidates for conversion into housing.

In neighborhoods with high vacancy rates in commercial and industrial spaces and limited affordable housing options, adaptive reuse offers a practical, cost-effective way to provide much-needed homes across the state. An adaptive reuse project in Olean, for example, took a vacant warehouse and converted it into 46 affordable housing units.

Cities like Buffalo are already demonstrating the success of adaptive reuse. Old office buildings, industrial spaces and abandoned hospitals are being transformed into much-needed housing. Meanwhile, officials in Queens are planning a major redevelopment of the century-old Creedmoor Psychiatric Center in Queens Village. That could include more than 2,000 housing units. 

Despite the immense potential of adaptive reuse, current policy and financial tools don’t do enough to support these projects. The New York State Historic Tax Credit (HTC) is a key tool in financing the adaptive reuse of buildings across the state. The HTC can be made more effective with a number of recommended changes in this year’s budget process. Without proper reforms to the HTC, New York is missing out on the opportunity to harness the power of adaptive reuse in many of the buildings already shaping New York’s skyline.

Gov. Hochul’s executive budget proposal takes a step in the right direction by improving the state’s HTC program, particularly by allowing federal and state tax credits to be awarded to different recipients. This change would increase the number of affordable housing units and provide a long-term solution to the housing crisis without additional costs to taxpayers.

If we unlock HTC’s full potential, New York could gain millions of dollars in private investment for adaptive reuse projects that provide affordable housing. In 2023 alone, the federal HTC incentivized over $225 million in investment in adaptive reuse projects across the country, showing the financial viability of the tax credit at a national level. According to Forbes, the U.S. Department of Housing and Urban Development and the Advisory Council on Historic Preservation noted that “historic buildings and housing affordability often go together.”

Currently, these credits can only be sold to the same investor, which limits their value and attractiveness to private investors. By allowing the tax credits to be sold to different investors — something already permitted in 24 other states — New York can attract greater investment and boost the viability of affordable housing projects.

Additionally, eliminating the census tract limitations in the HTC for affordable housing purposes would allow for greater flexibility in selecting locations for affordable housing projects. Such flexibility is especially important as it would encourage developers to pursue projects across high-opportunity neighborhoods.

One thing remains clear through all of this: It’s time we acknowledge the potential of New York’s existing older buildings and harness them to help solve the housing crisis. Reforms to the HTC must be enacted now to unlock the full potential of adaptive reuse. The buildings are already here, so we may as well put them to work!

Jolie Milstein is president and CEO of the New York State Association for Affordable Housing.