As part of her 2023 State of State address, Governor Kathy Hochul announced a statewide strategy to address New York’s housing crisis by building 800,000 new homes over the next decade. The plan, dubbed as the “New York Housing Compact,” is a comprehensive, multi-pronged strategy that mandates local participation and grants incentives to achieve housing growth across the State.  It allows municipalities the flexibility to achieve mandated housing goals, but includes the possibility of State intervention for those that fall short.

Housing Growth Targets

The Housing Compact will require all cities, towns, and villages to achieve specific targets for housing growth on a three-year cycle. For New York City and other downstate municipalities that are served by the Metropolitan Transportation Authority (“MTA”), the housing growth target is three percent over three years. For municipalities in upstate counties where the housing need is less acute, the new homes target is one percent over three years.  Municipalities will have broad discretion to decide how best to increase housing supply in order to meet their targets.

To encourage the inclusion of higher-density and affordable housing as part of the new growth, approved multi-family and affordable units will be assigned extra weight in calculating a municipality’s progress toward its goals.  For example, municipalities will receive credit for two units for every new affordable housing unit constructed.

Municipalities that do not meet their target, but are implementing good faith measures or “Preferred Actions” designed to spur development to achieve the growth targets, will be granted an additional three-year grace period to meet their new housing goals.   

Funds for Planning and Infrastructure Improvements

The Housing Compact will make available a $250 million Infrastructure Fund and $20 million Planning Fund to encourage the construction of new housing throughout the State. This funding can be used by municipalities to undertake new zoning measures or develop other strategies to help them hit their growth targets.  Municipalities can also submit requests for funds to pay for critical infrastructure improvements, such as for water and sewer extensions and new roads that would support the addition of new housing.  Municipalities may obtain support and guidance from a new Housing Planning Office within New York State Homes and Community Renewal created under the plan.

Mandate Transit-Oriented Development

The Compact requires municipalities with MTA rail and subway stations to rezone the area within a half-mile radius of the station for residential use at a minimum density of 25 units per acre.  According to an announcement on the State’s website, the Governor believes that expanding housing opportunities in transit-oriented communities will provide more families with improved access to jobs and thriving sustainable communities.

Incentives to Build and Rehabilitate Housing

The Housing Compact is accompanied by a series of new proposals to incentivize the construction of new housing and the rehabilitation of existing housing. This includes new property tax exemptions to encourage housing development near train stations and incentivize affordable housing in commercial buildings that are converted to residential use in New York City.  Property tax exemptions will also be offered to support homeowners who build Accessory Dwelling Units and property owners who undertake certain renovations in New York City.

New York State Homes and Community Renewal will be directed to make $5 million in State Low Income Housing Tax Credits available to support the development of mixed-income housing outside of New York City.

To stimulate production of new rental housing in New York City, the Governor pledged to work with the State Legislature to renew the state’s former “421-a” tax abatement program, which encouraged developers to set aside units in new buildings for affordable housing.

Fast-Track Housing Approval as a Remedy

Housing projects with affordable housing that are denied a permit in municipalities that fall short of their growth targets and fail to take good faith Preferred Actions to spur development, may be eligible for fast-track housing approval.  This fast-track process will require an appeal to a new State Housing Approval Board or to the courts. Appealed projects will be approved unless a municipality can demonstrate a valid health or safety reason for denying the application. 

Expedited Environmental Review

In recognition that the State’s environmental review process can be used by municipalities and project opponents to stall or stop a development project, the Housing Compact proposes an expedited environmental review process for certain housing projects.  Notwithstanding expedited environmental review, the process will include safeguards designed to ensure that these developments will not create environmental harm.

Mixed Reception from Local Officials

Here on Long Island, the Governor’s ambitious proposal to address the housing crisis received mixed reviews from local officials.  According to a recent article published in Newsday, Suffolk County Executive Steve Bellone said that he supports the plan, because it “will incentivize local municipalities to work closely with the state to address an issue that is critical to Long Island’s economic future.”  Huntington Supervisor Ed Smyth was critical of the proposal and said that he “expects the Town of Huntington to exceed the governor’s goals, but it will be done without the governor’s heavy-handed involvement.”

A more measured approach was taken by Brookhaven Supervisor Ed Romaine, who acknowledged the need for more housing, but is waiting for more details from the governor’s office.  However, he warned that the plan will not work if the state tries to control local zoning.  Smithtown Supervisor Edward Wehrheim reacted similarly, and said that it’s “problematic” for “a higher-level government to override local zoning.”  These same concerns are likely to be echoed by local officials across the State who view the Governor’s proposal as trampling on home rule authority.

In 2022, Governor Hochul tried to address the State’s housing crisis by requiring municipalities to permit accessory dwelling units on lots zoned for single-family homes.  That proposal quickly lost steam and was eventually dropped following criticism by local officials of the State’s attempt to control local zoning decisions.  The Governor’s new proposal presents another political minefield – one that she is apparently willing to navigate in order to address the State’s housing problem.  The plan’s success will depend on the level of collaboration between the State and local governments and the willingness of all parties to finding a solution.  If battle lines are drawn, this proposal is doomed to the same fate.

Additional details of the New York Housing Compact are expected to be released in the coming months, as the State Legislature begins its 2023 legislative session.