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Hochul Takes Aim At 'Corporate Landlords' In State Of The State Speech

Gov. Kathy Hochul has enjoyed the support of the real estate industry since taking office in 2021, delivering last year on a package of bills designed to make it easier for developers to build.  

In her annual State of the State address Tuesday, Hochul again promised to back more development, but she also took aim at the business practices of the industry that have been blamed for driving up the cost of housing.

Among the ways she said she plans to decrease rent is by tackling platforms that use algorithms to inform rent pricing, such as RealPage, which, alongside a group of real estate giants, is the subject of an antitrust lawsuit by the Department of Justice.

“We'll also ban the price-fixing software that inflates rents and costs tenants $3.5B a year,” Hochul said. “As you see with our past battles, we can't unleash the full potential of the housing market without a fight.”

A RealPage spokesperson, reached for comment after Hochul's speech, said that the $3.5B figure Hochul referenced is based on a White House Council of Economic Advisers report. The company claims that the report is “is riddled with flawed assumptions” and based on an incorrect analysis.

RealPage’s penetration rate in New York City is 1.4%, the spokesperson said.

Hochul's speech was largely focused on middle-class New Yorkers, promising sweeping tax cuts and addressing rising inflation. She also announced plans to fund more police on the subways amid an increase in violent crime on the system. At the same time, she took jabs at private equity and corporate landlords, while still promising to build more housing.

“I’m not the first one to say this, but the rent is too damn high, and that goes for people's mortgages as well,” Hochul said. “Housing is the No. 1 driver of our affordability crisis, and the only way to decrease housing costs is to increase supply.”

Hochul also proposed investing $100M to build starter homes and provide assistance for first-time homebuyers. In doing so, she also said she would streamline approvals of the construction of those homes.

At the same time, she said she plans to limit “corporate landlords [that] co-opt our housing stock.” 

New York could become the first state to limit private equity activity in the homebuying market by banning large players from bidding on single-family homes during the first 75 days that a house is for sale, she said.

“A young family finds the home they've been searching for. They're so excited. They scrap together every dollar they have,” Hochul said. “Then they lose out to an all-cash offer from a faceless, nameless corporation with no connection to the community.”

But on the multifamily front, Hochul acknowledged a lack of supply but didn't detail plans to create more.

“We need to build and build and build some more,” Hochul said.

Last year, Hochul finally created a replacement for the expired 421-a tax abatement program as part of a $237B budget deal. She proposed a more ambitious plan in 2023, but that met pushback from lawmakers and eventually collapsed.

The new incentive, 485-x, was long in the making, but it has since drawn frustrations from the real estate industry. The abatement has lower rent caps and mandates higher wages for construction workers than its predecessor, which developers say will limit the creation of new housing stock.

Also part of last year's budget deal was the lifting of density caps, which has paved the way for new initiatives, such as the city's Midtown South rezoning proposal.

Hochul’s speech comes a week after New York City Mayor Eric Adams’ State of the City address and a month after the passage of the City of Yes for Housing Opportunity zoning overhaul. During Adams’ speech, he introduced goals for the creation of 100,000 new housing units in Manhattan, as well as plans to build housing on city-owned sites in all five boroughs.

Both speeches took place after a series of violent assaults occurred on the subways and in the days after congestion pricing took effect for cars driving into the heart of Manhattan. 

To improve safety, Hochul said the state will financially support subway improvements, including installing LED lighting in stations, barriers between the train and the platform at more stops, and cameras in train cars. She also said police officers will patrol every overnight train, starting at 9 p.m. and ending at 5 a.m, for the next six months. 

In addition, she announced new efforts to prevent toll evaders by modernizing the subway gates. 

Those goals come as the city and state attempt to allocate funding for other large infrastructure projects and improvements, such as the Interborough Express. The new train line was introduced as part of Hochul’s 2023 address, with $2.75B of the estimated $5.5B price tag included in the Metropolitan Transportation Authority’s next five-year spending program. 

“I love to build, I love transportation, I love infrastructure,” Hochul said. “We have a lot to do.”

UPDATE, JAN. 15, 11 A.M. ET: This story has been updated to include a statement from RealPage.

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