New Issue Brief: Hochul’s Housing “Win”

New York’s legislative deal will help the Big Apple’s housing crisis, but not solve it

New York, NY – Every New Yorker knows that housing in the city is in short supply, driving market rents to crisis levels. But in April, Governor Kathy Hochul scored a notable and surprising achievement, negotiating a housing deal that acknowledges the previously verboten notion that profit-motivated private investment has a role to play in fixing the problem.

This marks a significant shift for the Democratic supermajorities in the state legislature, writes Manhattan Institute senior fellow Eric Kober in a new analysis of the legislation. However, while the newfound ideological flexibility is a win, the deal still falls short of providing a comprehensive solution, he warns.

Key findings of Kober’s analysis include:

• The legislation trades a New York City property-tax exemption for new housing, replacing an expired program, for loose rent controls on previously market-rate units.
• The new tax exemption, known as “485-x,” is designed to ensure the construction of new privately financed rental housing but comes with substantial costs and conditions.
• The "good-cause eviction" law introduces a form of rent control that benefits affluent households more than those in dire need, potentially exacerbating the city’s low rental vacancy rates.
• The deal includes useful provisions such as an extension for 421-a tax benefits. Other changes, such as waiving building size-caps, and limited amnesty for illegal basement units, are poorly designed and won’t work well.
• The deal leaves out important reforms in areas like exclusionary zoning reform and environmental review requirements.

Kober argues that while these measures will provide some relief, they will not significantly alleviate the housing crisis, which remains a constraint on job growth and economic opportunity, and a financial burden on the poor and working class. He calls for New Yorkers to advocate for more effective legislation in the coming years.

Click here to read the full report.