Hochul Announces Plan For New 421-a, Lifting NYC's Density Cap In State Of The State

New York Gov. Kathy Hochul left last year’s legislative session without any of the housing fixes she proposed, but she is trying again to implement changes long sought by real estate developers in new proposals announced during her 2024 State of the State address Tuesday afternoon.

A short supply of housing and high shelter costs for renters and homeowners alike have created an affordability crisis in the state, with housing remaining among the top concerns for New Yorkers. While Hochul attempted to introduce an ambitious housing agenda last year and was ultimately unsuccessful, her 2024 proposals demonstrate a slightly different approach.

Leading Hochul’s proposals is an expansion of the pilot 421-a tax break extension she made available for developers only in Brooklyn’s Gowanus neighborhood. Hochul’s office ran the program in July last year replicating 421-a, resulting in 19 applications with the potential to create 5,500 units, including 1,400 affordable apartments, according to the governor’s office. 

Now, Hochul’s office wants to pass legislation extending the program across the city — although similar attempts made last year were rejected by lawmakers. The program, which facilitates the development of mixed-income housing by requiring developers to set aside a certain percentage of housing for lower- or middle-income tenants in exchange for a tax abatement, expired in June 2022.

Other bills that Hochul plans to introduce will include incentives for office-to-residential conversions, plus legalizing basement and cellar apartments and lifting the city's floor-area-ratio cap for certain housing projects, according to her State of the State policy book.

Hochul also plans to introduce a bill that will ban multifamily insurance carriers from inquiring about how tenants pay rent in a move to stem discrimination over Section 8 vouchers, which Gothamist reported was stopping low-income New Yorkers from signing leases.

“It has been clear from the beginning of Gov. Hochul’s tenure that housing is and continues to be a priority for her and her administration,” Community Housing Improvement Program Executive Director Jay Martin said in a statement. “We are happy to see the governor taking on insurance companies, which have been price gouging rent-stabilized housing providers for years and jeopardizing the well-being of millions of renters.”

Outside of the five boroughs, Hochul signed an executive order unlocking up to $650M in state discretionary funding to reward municipalities that adopt measures like streamlining permitting to facilitate housing development.

The incentive follows an attempt last year to force municipalities to increase their housing supply by a small percentage every few years, with the threat that the state would step in and take over if municipalities failed to do so. The program, hailed by housing advocates as a way to ensure the city's transit-oriented suburbs finally start to close the housing shortage, was deeply unpopular with local lawmakers.

Another incentive to develop housing comes in the form of a $500M capital fund to support the development of housing on land owned by state entities. After carrying out research following an executive order from Hochul in July, state agencies identified sites that could bring a total of 15,000 new housing units, some of which will be eligible for funding as long as Hochul can get an appropriation for the fund approved.

Developers and politicians alike argue that the best way to reduce housing costs is to build more housing, but just like last year, it is unclear how much of Hochul's plans can generate majority support in the legislature. Senate President Andrea Stewart-Cousins said new sweeping housing policy would have to include a form of “good cause” eviction protection, The Real Deal reported, an idea the real estate industry vehemently opposes.

“The Building Congress will work closely with our elected partners to make this vision a reality, which starts with the governor’s proposals to incentivize the construction of new homes through a thoughtful replacement of the 421-a program, eliminating the FAR cap and supporting creative solutions like office-to-residential conversions,” New York Building Congress CEO Carlo Scissura said in a statement. “Gov. Hochul proclaimed, 'Let them build,' and that’s exactly what our members intend to do once these forward-thinking policies are in place.”