New York Is Passing a Big Housing Deal. Everyone Is Grumbling.

New York politicians are seeking to supercharge construction of new affordable housing while also giving thousands of existing apartment dwellers stronger protections against evictions and rent increases.

The complex deal brokered by Gov. Kathy Hochul and state lawmakers, billed as the biggest overhaul to New York housing policy in decades, has left advocates on nearly every side wondering whether it will actually improve the state’s worsening affordability problem.

The package—which lawmakers hope will be approved this week as part of a $237 billion state budget—includes a “good cause” eviction protection favored by progressive lawmakers, in exchange for new developer tax breaks to create housing in the state. It also includes incentives for converting offices into apartments, removal of a zoning restriction and adjustments to regulations on renovating some of the city’s one million rent-regulated units once they become vacant.

State officials estimated the entire package would spur around 200,000 new housing units over the next decade.

The high cost of living and lack of housing have been top concerns for New Yorkers in the aftermath of the Covid-19 pandemic, when moratoriums halted evictions and economic uncertainty scrambled development plans. The overall net vacancy rate for rental apartments in New York City dipped to 1.41% last year—one of the lowest recorded since the mid-1960s, according to a city report.

Hochul unveiled the deal Monday evening, but acknowledged that final details were still being worked out with fellow Democrats who control the state Legislature. This account is based on discussions with developers, activists and officials who were briefed on the parameters of the deal and are beginning to assess its full effects while criticizing specific parts.

Forced out

Dorca Reynoso had lived in her apartment in Manhattan’s Inwood neighborhood for 20 years when the owner informed her the monthly rent was doubling, to $1,250 from $625.

“I got really ill, my anxiety and depression, not knowing—where am I going to go?” she said at the state Capitol, where she was lobbying lawmakers.

The good-cause provisions are aimed at protecting tenants like Reynoso. The new agreement would restrict increases in monthly rent to 5% plus the rate of inflation, with a maximum of 10% when a lease is renewed. Tenants would have an effective right to a lease renewal; landlords could push for an eviction if there was nonpayment of rent, if illegal activity was occurring or if a tenant was causing a significant nuisance.

Just over 40% of New York’s 2.4 million rental housing units are rent-regulated, meaning allowable increases are set by a special board and evictions are more closely restricted. The good-cause provisions would expand a form of those protections to the private market, but there are several loopholes in who would be covered.

Newly constructed units would be excluded for 30 years, and the exemption would apply retroactively to units built as early as 2009. Units in small owner-occupied buildings are exempted, as are dwellings where the landlord owns 10 or fewer units across an entire portfolio. Units above a certain rent threshold would also be excluded, Hochul said, but the exact level was still being negotiated.

“It’s not clear how many of the unregulated tenants we were seeking to protect would be covered,” said Judith Goldiner, attorney in charge of the civil law reform unit at the Legal Aid Society, which represents many low-income tenants.

The deal is weak and essentially unenforceable, said Cea Weaver, who leads a coalition of tenant groups. She added she was upset that the protections would only automatically apply to New York City tenants, and require municipalities in the rest of the state to opt in.

Still not enough

Ann Korchak’s family owns two 10-unit apartment buildings on Manhattan’s Upper West Side. About 40% of those units are already rent-regulated, and she sees the new good-cause provisions as an unfair form of universal rent control.

“The free-market apartments really cover the lion’s share of the expenses for the building,” she said. “They’re really tying our hands.”

One of the rent-regulated units in her family’s portfolio has been vacant since 2021 after a single tenancy that lasted more than 50 years. Korchak said it would cost $200,000 to renovate the apartment so it could be rented again, but a law enacted in 2019 only allows a landlord to pass on $15,000 of that cost in rent increases.

The current proposal would raise that amount to $30,000 for rent-regulated units that become vacant, and $50,000 for units that were occupied for 25 years or longer. There are around 20,000 rent-regulated units that have become vacant since 2019 but aren’t on the market because the needed renovations are cost-prohibitive, said Jay Martin, executive director of Community Housing Improvement Program, a landlord trade group.

“It’s woefully inadequate to address the long-term insolvency issues we have,” he said of the current package. “This does not allow landlords to catch up.”

Shovels in the ground?

Almost all the rental housing that was constructed in New York City when Alicia Glen was a deputy mayor used a special property tax break called 421-a. New buildings make payments based on a site’s predeveloped use in exchange for setting aside some units as affordable and paying certain wages during construction.

Democratic state lawmakers said the program was too generous for developers and let it expire in 2022. New construction starts were cut roughly in half in 2023, according to an analysis of building permits by the Real Estate Board of New York, a developer trade group.

The housing package includes an updated version of the program, called 485-x. It would also allow incentives for about 80 projects that started before 421-a expired. “Having this tool back in the toolbox is absolutely fundamental to, and mission critical to, the city,” said Glen, who is now chief executive of MSquared, a real-estate investment and development firm.

The package would also provide incentives for converting commercial office buildings into housing and it would remove a state density cap on residential buildings. That would allow city officials to zone for taller structures in new parts of the city.

REBNY President James Whelan said these policies would help increase the supply of housing, but that it “falls short of addressing the city’s housing needs and must be reassessed in the coming years.”

Write to Jimmy Vielkind at [email protected]