Gov. Hochul Looks to Again Incentivize Housing Development in Her State of the State Address

The governor is proposing a new version of the 421a tax incentive in New York City to spur housing construction, as well as increased state funding for affordable housing projects.

Gov. Kathy Hochul
Gov. Kathy Hochul

ALBANY—Gov. Kathy Hochul, in her 2024 State of the State Address earlier today, once again took on the cause of addressing the housing crisis in New York State. This year, the governor is proposing a new version of the 421a tax incentive in New York City to spur housing construction there, as well as increased state funding for affordable housing projects.

“The State of New York is stronger, healthier, safer and more affordable than it was two years ago when I became Governor, but there is more work to do,” Gov. Hochul said. “Every proposal announced today serves to improve our state and ensure our communities are not just surviving, but that they are thriving. Our New York is our future, and the future is brighter than ever.”

Her four-part housing proposal is geared to helping New York City increase its housing supply by incentivizing construction of new housing, including affordable housing; encouraging affordable units in office conversion projects; allowing New York City to add residential density on certain projects; and legalizing basement and cellar apartments.

Other components of the governor’s housing initiative call for the creation of a $500-million capital fund to support the development of up to 15,000 units of housing on state-owned land, including at former correctional facilities, areas near commuter rail stations and under-utilized SUNY properties.

She also hopes to strengthen the Pro-Housing Communities program by making the certification a requirement for accessing $650 million in state discretionary funding.

The governor characterized her housing proposals as a “good start, but it is not enough to fix our affordability crisis.” She added that she and other legislative leaders must come with a sense of urgency to address the housing shortage and affordability crisis that is prompting thousands to relocate to neighboring states.

“Let’s be honest with New Yorkers,” Gov. Hochul said. “The only thing that will solve this problem is building hundreds and hundreds of thousands of homes.”

In the governor’s State of the State “Our New York, Our Future” presentation, the governor also outlined her proposed regulatory reform. She reported that “the Department of Environmental Conservation (DEC) has begun its process to identify efficiencies in its State Environmental Quality Review (SEQR) regulations, including to promote environmentally friendly housing growth while maintaining critical protections for all communities. DEC is poised to commence stakeholder outreach in the beginning of this year. The Department of State (DOS) has adopted SEQR regulations that conform to DEC SEQR regulations and relate to variances for certain housing under the Uniform Fire Prevention and Building Code and State Energy Conservation Construction Code.”

In addition, the governor will propose legislation that will make it unlawful for insurance carriers to inquire about or consider tenants' source of income, the existence of affordable dwelling units, or the receipt of governmental housing assistance in the decision to issue or continue to provide insurance for residential real property. The bill would further make it unlawful for insurance carriers to increase insurance premiums on the basis of source of income, the existence of affordable dwelling units, or the receipt of governmental housing assistance. Currently, there is not a clear prohibition against insurers refusing to cover or charging higher premiums to affordable housing.

Gov. Hochul has also directed Housing and Community Renewal to develop a new public resource to streamline the affordable housing search process and make it easier for housing applicants to find safe, stable, affordable homes. The website will help New Yorkers find state-financed affordable units, determine if they qualify, and apply for those units, all in one place. Housing applicants will be able to search by need, including for accessible homes, homes for veterans, and survivors of domestic violence.

While proposing some housing-related consumer protections, such as taking action to combat housing discrimination against Section 8 voucher recipients and affordable housing providers, absent from the governor’s State of the State was any mention of “Good Cause Eviction” legislation, which is being supported by some in the legislature. The New York State Association of Realtors and the Hudson Gateway Association of Realtors have both come out strongly against Good Cause Eviction proposals.

Last year, Gov. Hochul in her “New York Housing Compact” plan called for the development of 800,000 homes over the next decade. Her plan would have encouraged annual housing growth of 1% per year downstate and one-third of 1% upstate, with a particular focus on spurring development around transit hubs which have benefited from billions of dollars of State investment. However, the plan proved controversial and did not garner sufficient support from the State Legislature. Many lawmakers criticized the proposal for stripping away local Home Rule.

In her 2024 State of the State address, the governor also covered a host of other proposals related to mental health, climate change, consumer protection and crime prevention.

In some of her other business/real estate proposals, the governor is proposing to launch the first of its kind “Empire AI” consortium that would unlock the economic potential of artificial intelligence; bolster state efforts to prepare workers for the jobs of tomorrow by establishing a network of four advanced manufacturing training centers along the I-90 Corridor in Upstate New York and growing statewide business attraction efforts with a $100-million expansion of FAST NY program to prepare sites to be shovel-ready.

The governor said the Empire AI consortium would consist of seven founding institutions—Columbia, Cornell, New York University, Rensselaer Polytechnic Institute, the State University of New York (SUNY), the City University of New York (CUNY), and the Flatiron Institute. Empire AI will be funded through a combination of public and private investment totaling more than $400 million, including up to $275 million from the state in grant and other funding, and more than $125 million from the founding institutions and other private partners.

John Jordan

Editor, Real Estate In-Depth

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