New York’s Failed Housing Deal: What Went Wrong?

By Jonathan Maestre
Photo: New York Governor Kathy Hochul

Although the homeless population in New York is decreasing from pandemic levels, homelessness and housing insecurity are still persistent enough to say there is a housing crisis. New York currently has the second-highest homeless population in the United States, with roughly 13% of the country’s homeless population living in the state. Since 2007, the homeless population in the state has increased by 18.5%, with most of the homeless population residing in New York City (de Sousa et al. 2022). The problem is only expected to get worse as the population of New York City is expected to reach 9.1 million by 2030 (New York City Department of City Planning 2006). According to a report from the Real Estate Board of New York, or REBNY, 560,000 new housing units must be constructed by 2030 in New York City in order to meet growing demand (2023). This is where the New York Housing Compact comes in.

In the latest State of the State address, Governor Kathy Hochul announced her plan to tackle New York’s housing crisis. The New York Housing Compact was a bold initiative that aimed to create 800,000 new housing units over the next decade, with 500,000 of them to be built in New York City (Governor Kathy Hochul 2023a). Hochul’s plan sought to achieve its goal using a number of strategies. These strategies include increasing infrastructure funding for municipalities, legalizing office and basement conversions, and authorizing property tax exemptions for affordable housing outside of New York City and secondary housing units on single-family properties, also known as accessory dwelling units (Governor Kathy Hochul 2023b). However, the main focus of the compact is that it would establish new statewide housing targets. Downstate localities would be forced to increase the housing supply by 3% every 3 years and upstate localities by 1% every 3 years, with affordable multi-family housing units given double weight (Governor Kathy Hochul 2023b). If localities are unable or unwilling to meet these new housing targets, developers would be allowed to bypass local zoning codes and negotiate for approval directly with the state. 

After the State of the State address, Governor Hochul’s ambitious plan received nearly as much praise as it did criticism from local leaders. The plan was praised for seeking to cut red tape for new housing projects in order to stimulate housing growth. However, it saw pushback from many local community leaders because it also would have significantly decreased the powers of local zoning authorities. In particular, Hochul’s plan saw massive pushback in suburban counties like Westchester, Nassau, and Suffolk. Although the Governor was praised by many local suburban officials for her ambitions, many of these same officials would unite against the plan because of their shared desire for zoning authority to remain in their hands. But, this pushback wasn’t unexpected. “I know from personal experience, most municipalities are incredibly wed to their authority with home rule and are very defensive of that,” said New York State Senator Peter Harckham when initially asked about Hochul’s plan (Brand and Campbell 2023a). Before long, local officials would be rallying under signs reading, “Local Control, Not Hochul Control” (Chang 2023). However, the housing compact would also start to see more opposition from the left.

While the suburban “Not In My Backyard” crowd opposed the housing plan for going too far, tenant advocates and progressive lawmakers opposed the deal for not going far enough. Tenants have long been fighting for “good cause” eviction laws, which would restrict rent increases and prevent private landlords from evicting tenants without a specific reason. So, by halting the Governor’s proposals, progressive lawmakers hoped to use the housing deal as a means to gain support for “good cause” as well as rental assistance programs like the Housing Access Voucher Program, or HAVP. “If good cause and HAVP aren’t part of the deal, then we can’t accept it!” tweeted Assemblymember Phara Souffrant Forrest (Brand and Campbell 2023b). 

Soon, both houses of the state legislature would each propose their own versions of the housing deal that attempted to appeal to NIMBYs and progressives alike. These counter-proposals radically changed the goals of the Governor’s plan. Gone was the state’s ability to override local zoning codes, which was the core of the initial plan. Instead, the legislature proposed a weaker incentive-based housing plan, which the Governor initially opposed due to similar incentive-based plans failing in other states (Governor Kathy Hochul 2023b). In addition to dropping the key strategy of Governor Hochul’s plan, neither of the counter-proposals also included tax exemptions for accessory dwelling units or plans for denser transit-based zoning. Both the Senate and Assembly did include “good cause” pledges in their proposals but they were criticized for seeming to lack any real commitments (Small 2023). 

Although the housing deal was now a shell of its former self, it still included many of its original components such as the legalization of office conversions and a new rental voucher program. However, this did not mean that housing proposals were now set to be included in the new state budget. The legislature’s unwillingness to support Governor Hochul’s key terms of the original plan caused tensions that would continue to prevent a housing plan from being agreed upon. This would come to a head when Governor Hochul threatened to veto any proposal from the legislature (Ferré-Sadurní 2023). By the end of the legislative session, it was clear that a housing deal would not be met and finger-pointing began among New York’s top political figures. In a joint statement from Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie, they said, “Unfortunately, it was clear that we could not come to an agreement with the governor on this plan. It takes all three parties – the Senate, the Assembly and the governor – in order to enact legislation into law.” Governor Hochul fought back with a statement of her own. Julie Wood, the Governor’s communications director said in a statement, “Governor Hochul put forward nation-leading housing legislation in her executive budget that the legislature flatly rejected. Now, in the final hours of the legislative session, the Assembly and the Senate are blaming the governor for their own failure to act” (Chadha 2023). 

The New York Housing Compact failed, and the only party to leave satisfied were local suburban officials who got to keep local control. While it’s easy to attempt to blame one party for the failure to reach a housing deal, it’s clear that the state’s collective action problems reach deeper than one bad actor being at fault. Late budgets have long been an issue in New York, especially when controversial issues are being debated. When the state budget was overdue in 2017, former Governor Andrew Cuomo blamed its tardiness on the political polarization surrounding the issue of bail reform (Fink 2023). Like bail reform, housing is a very polarizing issue and one that will likely grow as the housing crisis worsens, and the fight for a housing deal will surely continue into the next legislative session. We can only hope that New York’s political savvy are able to learn from the failures of the past legislative session and that polarization does not cause history to repeat itself.

References

de Sousa, Tanya, Alyssa Andrichik, Marissa Cuellar, Jhenelle Marson, Ed Prestera, and Katherine Rush. 2022. “The 2022 Annual Homelessness Assessment Report (AHAR) to Congress.” The U.S. Department of Housing and Urban Development. https://www.huduser.gov/portal/sites/default/files/pdf/2022-AHAR-Part-1.pdf. 

“New York City Population Projections by Age/Sex & Borough 2000-2030.” 2006. New York City Department of City Planning. https://www.nyc.gov/assets/planning/download/pdf/data-maps/nyc-population/projections_report.pdf. 

“Report: In Q1 2023, New York City’s Dwindling Construction Pipeline Continued to Languish amid Housing Supply Crisis.” 2023. Real Estate Board of New York (REBNY), April 14. https://www.rebny.com/press-release/report-in-q1-2023-new-york-citys-dwindling-construction-pipeline-continued/. 

“Governor Hochul Announces Statewide Strategy to Address New York’s Housing Crisis and Build 800,000 New Homes.” 2023a. Governor Kathy Hochul, January 10. https://www.governor.ny.gov/news/governor-hochul-announces-statewide-strategy-address-new-yorks-housing-crisis-and-build-800000. 

“The New York Housing Compact.” 2023b. Governor Kathy Hochul, March. https://www.governor.ny.gov/sites/default/files/2023-03/NY_Housing_Compact_info_deck_March_2023.pdf. 

Brand, David and Jon Campbell. 2023a. “Gov. Hochul’s Ambitious Housing Plan Meets Suburban Blockade.” Gothamist, January 30. https://gothamist.com/news/gov-hochuls-ambitious-housing-plan-meets-suburban-blockade.

Brand, David and Jon Campbell. 2023b. “Gov. Hochul Drops Core of Ambitious Housing Plan as Budget Talks Drag On.” Gothamist, April 18. https://gothamist.com/news/gov-hochul-drops-core-of-ambitious-housing-plan-as-budget-talks-drag-on. 

Chang, Clio. 2023. “Long Island NIMBYs May Be Winning Housing Fight.” Curbed, April 19. https://www.curbed.com/2023/04/kathy-hochuls-long-island-nimby-housing.html. 

Small, Eddie. 2023. “Assembly, State Senate Budget Proposals Take Sledgehammer to Hochul’s Housing Plans.” Crain’s New York Business, March 16. https://www.crainsnewyork.com/real-estate/assembly-state-senate-budgets-take-sledgehammer-gov-kathy-hochuls-housing-plans. 

Ferré-Sadurní, Luis. 2023. “N.Y. Democrats, at Odds Over Tenant Protections, Fail to Reach Housing Deal.” The New York Times, June 8. https://www.nytimes.com/2023/06/08/nyregion/housing-good-cause-eviction.html. 

Chadha, Janaki. 2023. “A Last-Ditch Effort for a Housing Deal in Albany Collapses. Finger Pointing Begins.” POLITICO, June 9. https://www.politico.com/news/2023/06/09/new-york-housing-deal-collapse-00101100. 

Fink, Zack. 2023. “A Late State Budget? Certainly Not the First.” Spectrum News NY1, April 5. https://www.ny1.com/nyc/manhattan/politics/2023/04/05/a-late-state-budget–certainly-not-the-first-.