In an otherwise cautious State of the State address this week, New York governor Kathy Hochul came down strongly on the side of the nationwide YIMBY movement. Campaigners behind the acronym, which stands for “yes in my backyard,” advocate the removal of obstacles to building housing supply in communities where restrictions have stifled living opportunities for newcomers. Where local governments fail to step up, YIMBYs push states to set minimum standards for permitting housing growth. New York has been among the most reluctant states to curtail local governments’ egregious misuse of zoning to strangle growth; as a result, the New York City metro area routinely ranks high on lists of the nation’s least affordable.
Hochul mentioned her proposals only briefly in the speech but released a 237-page briefing book concurrently. The six major proposals are an encouraging start but would have to be executed properly.
First, accessory dwelling units. Hochul wants to require municipalities to permit one additional unit—which could be located in a backyard, attic, basement, or converted garage—on any owner-occupied lot. In the city, she promises an amnesty for second and even third units in small homes already constructed without a permit.
ADUs are no panacea for the state’s housing woes. But single-family zoning, widespread in outlying parts of New York City and even more prevalent in the suburbs, represents a major obstacle to housing opportunities for workers in vital but lower-paid service jobs. The details of the actual legislation are important, however. An ADU is an investment a homeowner makes based on an expected profit. If Hochul and the legislature decide to freight ADU legislation with rent controls, “good cause” eviction provisions, or off-street parking requirements, fewer homeowners will take the risk.
The legislative details of the New York City amnesty proposal are also important. The city has tens of thousands of non-permitted units in cellars (spaces that are mostly below-grade). Often those units have only one means of egress in a fire; the general safety rule is that there should be at least two. How these units are proposed to be made safe, and how costly those safety measures prove to be, will determine how successful the amnesty is in surfacing housing currently in the shadows.
Second, Hochul seeks to help municipalities rezone to permit multifamily housing near commuter-rail stations in the New York City suburbs. As the proposal stands, such rezoning would be voluntary; there would be no sanction, or avenue of appeal for property owners, if a community declines to rezone. Coincident with Hochul’s speech, State Senator Rachel May, a Syracuse Democrat, introduced a bill that would establish a statewide zoning board of appeals empowered to override local denials of proposed residential developments that include a specified percentage of below-market units. May’s bill represents a useful supplement to Hochul’s proposal.
Third, Hochul proposes to lift the multiple-dwelling law’s statutory cap on the size of residential buildings in New York City. This is an unusual case in which state law encumbers local discretion to allow more housing. The basic zoning control on building size is the Floor Area Ratio (FAR), a multiple of the lot area that specifies the maximum floor area. Currently the multiple-dwelling law caps the maximum FAR for a residential building in New York City at 12—that is, on a 10,000-square-foot lot, the largest allowable residential building would have 120,000 square feet of floor area.
This provision is a vestige of a political deal struck in 1961, but it has persisted despite the efforts of Bill de Blasio’s administration to overturn it. Well-funded “preservationist” groups in Manhattan fought efforts to give the city discretion to permit larger apartment buildings. Currently, Jersey City, not subject to New York’s malign regulatory regime, can build larger apartment buildings than can Manhattan. Hochul rightly wants to return control over the size of apartment buildings to the city so that it has the tools to solve its housing problem.
Fourth, Hochul would allow sleeping rooms in existing hotels to be converted to permanent residences, provided the hotel is located in or near a residential zoning district. Since hotel rooms generally include baths but not kitchens, Hochul’s proposal implies a revival of single-room occupancy (SRO) housing, in which housing units lack complete facilities. SROs were once widespread in New York City, largely as an outgrowth of the World War II housing shortage. But new SROs have been generally prohibited since the 1950s, and most older SROs were eventually converted to standard apartments.
Hochul’s proposal responds to the decline in traveler demand for hotel rooms since the pandemic, which has left many hotels closed. If hotel rooms could be repurposed as permanent residences, some of these buildings could be used immediately, and the monthly rents on single rooms without kitchens would likely be relatively affordable.
Two issues remain with this proposal, however. Lawmakers would need to consider whether, in overriding the current restrictions at the state and local level on permanent occupancy, some form of regulation is needed regarding who will be permitted to operate them. The old-time SROs were in some cases dens of crime, places where vulnerable people were exploited, and community nuisances. New Yorkers need assurance that this won’t happen again. Meantime, the city has effectively outlawed the construction of new hotels. If hotels are taken out of transient operation and travel demand rebounds, this important industry, a major source of jobs and tax revenue, will be adversely affected. That would suit the politically powerful hotel-workers’ union, which sought the constraints on new hotels in the hope that room rates will rise enough at the high end to support its costly contracts. While Hochul’s proposal could supply some low-rent housing, it also risks depriving low-skilled workers of job opportunities.
Fifth are office conversions. As with hotels, the pandemic has resulted in high vacancy rates for office space in New York City, and work-from-home arrangements will reduce office space demand in the long term. The state’s multiple-dwelling law already lets the city waive the 12 FAR size cap and other requirements for office-to-residential conversions, and local zoning does so in the city’s major business districts. In Lower Manhattan, these waivers extend to buildings constructed in 1976 or earlier; in other areas, they extend to buildings constructed before December 15, 1961.
Through state legislation, Hochul would allow office-to-residential conversions of any building in Manhattan below 60th Street. In other areas, she would permit conversions of building constructed before 1980, but both changes would extend only through 2027. The city has always supported residential conversions only of older office buildings, though moving the applicable completion dates forward from time to time makes sense. Newer buildings have often received incentives for their construction, specifically to accommodate the needs of contemporary businesses. Converting such buildings prematurely to residences would risk economic repercussions.
Sixth and finally, Hochul announced support for a new tax-incentive program to replace the current Section 421a real property-tax abatement, also known as “Affordable New York,” which expires this year. This is good news. Because rental housing is taxed much more heavily than owner housing, New York City needs a tax-exemption program to make new rental housing economically feasible. The problem: the legislature insists on sunsetting the program every few years, requiring that it be renewed through an opaque bargaining process in Albany that results in a tax bill that may not entirely be in the city’s interest. It would be much better to delegate the responsibility to the mayor and city council, who presumably have an incentive to tailor tax abatements so that they offer new housing incentives without being undue giveaways. Instead, Hochul proposes yet another state law. She doesn’t supply details, but promises that this time, unlike all the other times, her legislation will do everything—encourage rental housing, ensure greater and longer affordability, but not be a gift to developers. It’s a tall order.
I’ve made proposals similar to Hochul’s, as have others. New York desperately needs to remove barriers to new housing construction, not just throw more money and regulation at the housing crisis while the problems get steadily worse. The legislature is quite capable of lacing ostensibly pro-housing bills with poison-pill provisions that render them largely ineffective at getting housing built. Housing advocates should keep a careful eye on how the governor’s newfound enthusiasm for state action plays out over the legislative session.
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