421a, Rent Reset, Zoning Reform
From left: Joseph Strasburg, Jay Martin, and Jim Whelan

From left: Joseph Strasburg, Jay Martin, and Jim Whelan (Getty)

Nearly a year ago, Gov. Kathy Hochul proposed zoning changes and property tax incentives as part of her state budget. To the dismay of the real estate industry, most of that housing agenda flopped.

But the industry has its sights on some of the same proposals and others heading into the 2023 legislative session, which starts early next month.

A major priority is the replacement of the expired property tax break, 421a. Hochul has said she is committed to addressing this issue next year, though her previous proposal to replace the program proved a non-starter for lawmakers. However, efforts to build housing and reform property taxes have since gained momentum.

The landlord group Community Housing Improvement Program last week released its lobbying agenda for the state legislative session. The group is working on suggested bill language for a “vacancy reset” — allowing building owners to raise rents when a stabilized apartment is vacant.

CHIP argues that the change is needed because the 2019 rent law rendered tens of thousands of apartments unrentable by ending vacancy decontrol and severely restricting rent increases to pay for renovations.

The Rent Stabilization Association, which teamed up with CHIP to wage a legal challenge against the state’s rent stabilization system, has not released a formal agenda. However, Frank Ricci, RSA’s executive vice president, agreed that something needs to be done to allow landlords to pay for apartment renovations.

“One way or another, there needs to be a serious conversation with the people who know how to do this kind of work and the people in the legislature to get those apartments habitable,”
he said.

He added that RSA supports increasing funding for the state’s housing courts and will continue to oppose good cause eviction bill that would protect tenants against rent increases higher than 3 percent, or 150 percent of the inflation rate, whichever is larger.

“It will continue to be a priority for us to ensure it is never enacted,” Ricci said.

Newburgh’s version of good cause was struck down by a judge last month, leaving statewide legislation as its backers’ most feasible route.

Potential common ground for the industry and tenant advocates may be a Housing Access Voucher Program, a state-funded initiative akin to federal Section 8. The Senate and Assembly showed support for a $250 million program, but it was not ultimately included in the budget.

CHIP referred to it as “thoughtfully designed,” noting that it would give tenants more flexibility in choosing where they want to live.

“It is also designed to give owners more certainty that the voucher would be paid by the government without delay,” CHIP said in a release.

The Real Estate Board of New York has not revealed its agenda for the session, but the trade group indicated that it is focused on a variety of tools, including a replacement 421a, to promote housing creation and the recovery of the city’s economy.

The industry has also backed a proposal to lift the city’s cap on the residential floor-area ratio, or FAR, and zoning changes to ease the conversion of empty office space into housing. CHIP also supports the legalization of accessory dwelling units and removing parking requirements for certain projects.

Hochul signaled Thursday that housing will be central to her policy agenda next year.

“We’re a national leader in blocking housing,” she said at a New York Housing Conference event. “New York is in a league of its own in terms of restricting new housing.”

The audience greeted the line, which few politicians have had the courage to say, with spontaneous applause.

For Hochul and the landlords groups, writing the bills will be the easy part. Building public support sufficient to persuade legislators is another story, although it will be easier next year than in 2022, which was an election year for all state lawmakers.

“Every town, every planning board, every zoning board has a role to play,” the governor said, calling for an education campaign to “change their mindset.”

Suzannah Cavanaugh contributed reporting.