Gov. Kathy Hochul slammed the door shut Tuesday on an “incentives only” plan to tackle New York’s housing crisis that would have abandoned her controversial construction mandate.
The state Assembly and Senate floated a grants program that would have set aside $500 million in incentives to encourage builders to increase desperately needed housing stock in the Big Apple and its suburbs.
The plan was Dem legislative leaders’ counter to Hochul’s proposed mandate to force jurisdictions to build more housing, a requirement fiercely opposed by Westchester and Long Island lawmakers in both political parties.
“We have not yet come to a final agreement, but it remains clear that merely providing incentives will not make the meaningful change that New Yorkers deserve,” Hochul said Tuesday in a defiant statement — issued just minutes after a published report suggested she was open to the “incentives only” plan.
“I will continue to discuss other elements of the plan and policy changes that will increase supply and make housing more affordable,” the governor said.
A source familiar with Hochul’s thinking was even blunter about the governor’s opposition to the Dem leaders’ counter-proposal: There will be no incentives if there are no requirements.
“We proposed something that we knew was very ambitious,” said a person familiar with Hochul’s thinking. “But we’re not going to do a water-downed version that will be completely ineffective.”
Experts have said the pols’ alternate “incentives only” approach would not generate enough new housing to put a dent in the downstate shortage, which has caused rents to soar to new records across New York City and Long Island home prices to skyrocket by 66 percent.
The housing fight was set to take center stage in Tuesday’s closed-door budget negotiations between Hochul, Assembly Speaker Carl Heastie (D-The Bronx) and state Senate Majority Leader Andrea Stewart-Cousins (D-Westchester).
“The strongest person in a negotiation is the person who can walk away, the person who can say, ‘I’m not going to take your [terrible] deal,’ ” a political observer said.
“We’re in the blame-game phase of this, and I think the legislature is going to take the blame — and should.”
Hochul made mandating new construction a central plank in the policy agenda that she is attempting to include in the state’s must-pass $227 billion budget, which provides the governor a vehicle to force lawmakers to strike deals they would not be otherwise willing to make on contentious issues.
First, it would require every community board in New York City and village in Westchester County and on Long Island to expand its housing supply by 3 percent every three years.
Communities that don’t hit the benchmark would be subjected to oversight from a state housing board that could override local rejections of housing projects that include units set aside for working-class and middle-income New Yorkers.
Second, it would require that New York City and many suburban communities allow construction of two- to four-story residential buildings near subway stops and train stations. Those new units would count toward the 3 percent targets.
The plan was bolstered by the release of a report this week that revealed New Rochelle in Westchester has bolstered its once-flagging local economy and contained rent hikes by dramatically expanding the amount of housing that can be placed near its Metro-North station.
The new report, from the highly respected Pew Charitable Trusts, found that average rents in the suburb fell by 5 percent between 2020 and 2023 as new housing built as part of its downtown rezoning came into fruition.
The drop in rent prices in New Rochelle came as rents in Westchester overall rose by 5 percent and by 8 percent in New York City, the report said.
The researchers also examined three cities that relaxed their land-use rules: Minneapolis, Minn.; Portland, Ore., and Tysons, Va. — and all of them also saw average rent increases far below the national average.
“The additional housing means landlords don’t have as much power to raise rents,” said Alex Horowitz, the top housing researcher at Pew. “These numbers translate to tenants saving thousands of dollars over the period we looked at.”
As the battle continues over the competing plans by Hochul and state Dem leaders, several sources said Tuesday that both sides could still strike a deal on lower-profile housing issues, including modifying or lifting state restrictions on residential-building sizes in New York City.
Supporters of the regulations include prominent Manhattan Democrats such as state Sen. Liz Krueger and Assemblywoman Deborah Glick, who argue the rules are needed to prevent Manhattan from being overwhelmed by large buildings.
Opponents, including New York City Council Speaker Adrienne Adams (D-Queens), point out the regulation in practice allows developers to build tall buildings with fewer units than otherwise, exacerbating the housing shortage.
A study by Columbia University found the rules had likely prevented the construction of roughly 200,000 apartments since they were enacted in the 1960s, enough units to house roughly 500,000 people.
– Additional reporting by Zach Williams