Belated New York Budget Injects $800M Into Rental Assistance Program, Doesn't Renew 421a

New York lawmakers reached a deal for the budget Thursday, providing more money for the state’s rent relief fund and resurrecting the "drinks to go" program, while the renewal of a treasured development incentive was left out.

Gov. Kathy Hochul announced on Thursday that officials had reached a $220B “conceptual” agreement for fiscal year 2023, nearly a week after the deadline. Hochul’s budget, which she described as “bold” and bringing much-needed economic relief to New Yorkers, paves the way for new casinos in the city and suspends certain state taxes on gas.

But a $250M housing voucher proposal from the Senate and Assembly, which had support from both real estate and tenant groups per The Real Deal, didn't make the cut. Omitting a plan to extend the Affordable New York break, often known as 421a, the future of the incentive program — which developers say is key to generating badly needed housing in the city — remains uncertain.

“Without it, the crisis will worsen as the city fails to produce enough housing to keep pace with population and job growth and working people will pay the price. We look forward to continuing that conversation with the State Legislature and other stakeholders,” said Gary LaBarbera, the president of the Building and Construction Trades Council, along with 32BJ President Kyle Bragg and Real Estate Board of New York President James Whelan, in a joint statement.

"Leading labor unions, elected officials, research organizations and editorial boards agree with the need for a program to spur rental housing production by the private sector that includes below market rate units." 

Hochul released a proposed replacement in January, but it was slammed by advocates who have long argued it is merely a tax dodge for the real estate industry. Last month, New York City Comptroller Brad Lander pushed state legislators to let the program expire and instead overhaul the property tax system. His office released analysis that showed the program is set to cost New York City $1.77B in tax revenue this year.

Mayor Eric Adams reportedly made a pitch for lawmakers to include the program in the budget, but some suggested he had left it too late to lobby his position.

“While I commend the Legislature and the governor for making some progress on public safety, it is also evident that a good deal more work will be needed on this issue, as well as on mayoral accountability, housing, and other city priorities in the ongoing legislative session, which is only half over,” Adams said in a statement Friday.

Real estate groups gave a warmer reception to the news of fresh funds for the state’s ailing Emergency Rental Assistance Program. Lawmakers have agreed to put an extra $800M into the fund after the U.S. Treasury Department provided an extra $119M to the program last month.

“The Governor and Albany lawmakers heard our plea for rent relief funding to help thousands of financially distressed tenants and owners who were left high and dry by the federal government’s denial of the state’s request for additional ERAP funds,” Rent Stabilization Association President Joseph Strasburg said in a statement.

"We urge the state to fast-track ERAP applications that were left in limbo after federal money dried up. We have said all along that government rental assistance is what keeps tenants in their homes and enables building owners to catch up on their property tax payments and other expenses, as well as maintain their properties.”

Meanwhile, restaurateurs described the return of the drinks to go program as a “lifeline” for hospitality businesses. New legislation would allow businesses with liquor licenses to sell takeout and delivery alcohol, as long as it is accompanying a food order.

“While we recognize that the budget still requires a final vote by the legislature, we toast the leadership of Governor Hochul, Senators’ Comrie and Ramos, and Assemblyman Cymbrowitz, along with all the elected leaders who’ve worked to reinstate this balanced and reasonable 'drinks to go' policy that will aid in the restaurant industry’s recovery, update our antiquated prohibition-era liquor laws, and return a popular policy to New Yorkers," NYC Hospitality Alliance Executive Director Andrew Rigie said in a statement.