New York Senate Includes 421-a Replacement, Good Cause In Budget Proposal

The housing crisis is firmly on the agenda in this year's New York state legislative session. 

The New York Senate revealed its plan to create more affordable housing statewide late Monday night in its annual one-house budget proposal, including a new multifamily development tax abatement and zoning changes that could spur the production of desperately needed new housing in the state.

The proposal, along with a corresponding proposal released by the New York Assembly, comes in response to Gov. Kathy Hochul’s $233B 2024 budget proposal released last month and kicks off the negotiating period among the governor and both houses of the legislature before the April 1 budget deadline.

The Senate's proposal, submitted by Majority Leader Andrea Stewart-Cousins, states the body is “open to further discussing” a new tax exemption for multifamily construction, which would replace the former 421-a abatement that expired in 2022.

The Senate's proposal would include stricter income requirements than the previous version and tie incentives to transparency from the industry, wage standards for construction workers and building staff, and a housing package that includes the core principles of Good Cause Eviction.

Landlords have long rejected Good Cause Eviction proposals as it would restrict the ability to evict tenants, force landlords to offer automatic lease renewals and cap rent increases without justification. 

Another key proposal from the Senate is the creation of a new state agency that would finance affordable housing construction by private developers on state-owned land, seen as a successor to the Mitchell-Lama program of the 1950s, The New York Times reported. 

The Senate also indicated it wants to allow localities to legalize basement apartments and accessory dwelling units, seen as a straightforward path to generate housing, as well as create a state community land trust acquisition fund.

The bill also includes a $40M fund to rehabilitate vacant rent-stabilized apartments and states that the Senate is also open to raising the current cap on individual apartment improvements, which is currently at $15K. Those proposals are also bound by the implementation of a housing package that includes some sort of Good Cause Eviction.

“While we appreciate the Senate’s recognition of the serious financial trouble facing rent-stabilized housing, and the restrictive regulations that have caused this distress, their proposal is insufficient,” Jay Martin, the executive director of landlord group Community Housing Improvement Program, said in a statement.

The multifamily sector has faced turmoil as rent-stabilized buildings have lost value, causing regional banks to spiral and dilapidated apartment units to sit vacant despite the ongoing housing crisis. 

"New Yorkers urgently need data-driven policies that will address the city's need for more rental housing, including below market rate units,” Real Estate Board of New York President James Whelan said in a statement. “We look forward to reviewing the proposal.”

After failing to make progress on a 421-a replacement or a host of other housing proposals last year, Hochul passed the ball to the real estate industry and construction union to come to an agreement over what the replacement will include.

Last week, the two groups, who have been at odds, reached a deal regarding prevailing wage minimums to some laborers as part of the ongoing negotiations.