New Issue Brief: Rebooting the New York Housing Compact
What are the legislative options in 2024 for boosting housing in the state of New York?
NEW YORK, NY – As the New York State Legislature returns to session in January amid statewide economic stagnation, a growing fiscal deficit, and a housing crisis, Governor Kathy Hochul must decide whether to submit a new version of her “New York Housing Compact” plan. In a new Manhattan Institute issue brief, senior fellow Eric Kober argues that Hochul should propose a pragmatic 2024 housing production package that would include three categories of legislation: supporting New York City’s “Zoning for Housing Opportunity” proposal; helping the city in future phases of zoning reform; and leading to land-use and zoning reform in the downstate region, outside the city, or perhaps statewide.
Record high rents in New York City are the result of policies, such as rent control and restrictive zoning, that increase housing demand in the downstate region while constraining supply. The legislature can rectify this issue by removing parts of the state law that prevent the city from addressing its housing shortfalls and by prodding suburban communities to help address the shortfalls by using the tools at their disposal. Building more housing will increase tax revenues and thereby restore the city’s budget balance through sales taxes on construction materials, income taxes paid by construction workers, and with appropriate policies, even generating property taxes.
Kober suggests specific policies to effectuate these changes: reinstatement of the “Section 421a” tax exemption for new mixed-income housing in New York City, expanded conversion of nonresidential buildings in the city, elimination of the state limit on the size of new apartment buildings, State Environmental Quality Review (SEQR) reform, and regional or statewide zoning reforms including allowing accessory dwelling units (ADUs) and capping minimum lot size. This agenda would address New York City’s urgent needs and help ensure that every community in the state is open to moderate amounts of housing growth.