New York's Housing Crisis Is Shaping Up To Be Adams And Hochul's Biggest Political Challenge
Pressure is mounting on New York’s political leaders to find solutions for the city’s worsening housing crisis as pandemic-era tenant protections lapse and rents soar to record levels.
A statewide moratorium on evictions expired over the weekend after median residential rent in the city hit more than $3,400 in December, a record for that time of year. The heat is on Mayor Eric Adams, who is just three weeks into the role, and Gov. Kathy Hochul, who will face her first gubernatorial race this year, to formulate policies that will support landlords and tenants alike.
Real estate players told Bisnow they are optimistic that the city and state will take a pragmatic approach, but there are urgent issues both need to address.
“They’ve got to figure out some of this legislation and policy issues around eviction moratoriums,” said Karim Hutson, the CEO of affordable housing development firm Genesis Cos. "What they're going to do, what type of subsidies are going to give, if [there is] any need for Covid relief and to help families in need."
The state began accepting applications for emergency rent relief again this month, but state leaders are still calling on the federal government for more funds. The Treasury Department will provide an extra $27M from reallocated funding, it announced last week.
“There's got to be some communication around what's going to happen there and some transparency, because any functioning market needs transparency," Hutson said.
Housing advocates are also awaiting details on what the new political leadership's concrete plans are — starting with who is going to be implementing them.
“We just don't have any idea about leadership in housing at City Hall right now,” New York Housing Conference Executive Director Rachel Fee told Bisnow.
Adams has appointed Maria Torres-Springer, a former commissioner of the Department of Housing and Preservation Development, as deputy mayor for economic and workforce development. Fee said her organization still wants to know who will be responsible for guiding housing policy at a city level — Adams hasn't announced his picks to lead the city Department of Housing Preservation and Development or the Housing Development Corp.
"Those two positions are pretty critical," she said.
There are reports that Jessica Katz, the current executive director of the housing nonprofit Citizens Housing and Planning Council, will be named to a newly created housing role in the administration, an appointment Fee said she would welcome.
Adams’ team is taking shape as Hochul has begun outlining her housing plans for the state. Her proposed executive budget, announced on Tuesday, includes $25B for a housing plan that aims to create and preserve 100,000 affordable homes over a five-year period. She also offered some details about the future of Affordable New York, a contentious tax incentive previously known as 421-a that developers use to cover the costs of apartment development.
Rebranded again into Affordable Neighborhoods for New Yorkers, the plan would mandate any building with more than 30 units have 25% of the apartments set aside for people earning between 40% and 80% of the area median income. In buildings with fewer than 30 units, 20% of the rental units would need to go to those earning up to 90% of AMI.
Affordability requirements would be permanent for housing in the buildings with more than 30 units but would still stop at 35 years for buildings with fewer than 30. The current plan allows developers a tax exemption for 35 years if they set aside 25% to 30% of the units for low- and moderate-income tenants when they build a market-rate rental building with more than 300 units.
Critics have long slammed the tax break, and the Legal Aid Society told Crain’s New York Business this week that Hochul’s reform was a “missed opportunity" to address what it described as a “colossal waste of tax dollars.”
But proponents of the program, who have been angsting about its future, were excited by Hochul’s announcements.
“I think it’s a great start and is something everyone can live with,'' YuhTyng Patka, the chair of the New York City Real Estate Tax and Incentives Practice Group at Duval & Stachenfeld, wrote in an email. “Governor Hochul has shown her commitment to addressing NYC’s housing crisis. … We want to incentivize as many developers as possible to provide new product in communities that need it, and helping private developers do it in a way that makes economic sense is the only way to fill in the gaps.“
But major tensions between communities and developers remain, with divergent views on how best to address the housing crisis. Policies like the proposed "good cause" eviction bill, which would give tenants the right to a lease renewal in most instances, are a point of concern for many landlords.
On a city level, multiple rezonings, aimed at boosting housing development, have been met with ire from locals in recent years. Earlier this month, a newly elected council member knocked back a rezoning for two new developments in Brooklyn, forcing the developer to go back to the drawing board and rethink the proposal.
But Joy Construction principal Eli Weiss, who is on Adams' housing transition team, said he has faith in the new mayor’s ability to create an environment that fosters both affordability and business prosperity.
“I've just been feeling very optimistic since Mayor Adams took office,” Weiss said "It’s always time for a change after eight years — he seems to have a very pragmatic approach to the position."
In the long term, Hutson, who has multiple apartment projects in the works in Harlem, is hoping the state and city governments will move to a more holistic approach to affordable housing but is so far pleased to see both Adams and Hochul publicly committing to prioritizing a focus on affordable housing.
“I really applaud them for working together," Hutson said. "We haven't had that level of collaboration with de Blasio and Cuomo."
Weiss said the amicable working relationship between the city and state will mean an easier time for everyone, though he isn't expecting an overnight fix of the city’s myriad housing challenges.
“Ultimately, I'm a developer," he said. "I have to be optimistic.”