Housing deal in Gov. Hochul’s new budget outline leaves both landlords, tenants unhappy

Gov. Hochul announced a budget outline including a long-awaited housing deal on Monday, drawing strong criticism from landlord and tenant groups alike.

The governor and fellow Dems who lead the state legislature have yet to strike a final deal, but she gave broad strokes of the overdue budget including a six-year extension of the expired 421-a construction tax break and approval of 485-x, its proposed successor, along with “good cause” protections from evictions that advocates described as watered-down.

“New York is in the throes of a housing crisis, and the consequences are so painfully evident,” said Hochul, who noted the situation is worst in New York City. “Taken together, these new measures represent the most comprehensive new housing policy our state has seen in three generations.”

The draft deal she related at an Albany press conference included few surprises. The housing components were largely unchanged from last week, when they were also attacked.

Hochul announced items such as incentivizing conversions of underused office buildings to housing and creating a pathway for legalizing basement apartments — previously anticipated policies that are widely considered uncontroversial.

Critics seized on the tax breaks and tenant protections, though.

While real estate industry groups have long been asking for a revival of 421-a, they seemed unsatisfied with it and 485-x.

“We are confident that this package falls far short of addressing the city’s housing needs and must be reassessed in the coming years to put the rental housing market on a solid footing,” said James Whelan, president of the Real Estate Board of New York.

While he praised the office conversion and 421-a extensions — both championed by industry groups — he said 485-x will produce less housing than its predecessor and the “minor changes” to rent stabilization rules wouldn’t do enough to help landlords.

Hochul previously described 485-x as a placeholder. While many of the specifics remain unclear, it was recently reported that unions, developers and state officials reached a wage agreement for workers on eligible projects.

Tenants and housing groups immediately denounced Hochul’s version of “good cause” tenant protections, which are intended to limit landlords’ ability to evict residents or sharply hike rents.

“This sham of a housing deal will do absolutely nothing to make housing more affordable and keep New Yorkers in their homes,” said Cea Weaver, director of the Housing Justice for All coalition. “It is nothing more than a massive giveaway to the real estate industry.”

Weaver predicted Hochul’s form of “good cause” “would be the weakest in the country, as well as essentially unenforceable.” She also slammed the proposal to bring warehoused rent-stabilized apartments onto the marketplace, which she said will “put a target” on tenants’ backs.

The governor, a centrist, and the more left-leaning lawmakers who run the Legislature have been buffeted on the one side by progressives who want stronger tenant protections and on the other by a real estate industry that is resistant to such measures.

Mayor Adams seemed to strike a more optimistic tone on Monday. Hochul’s package fulfills many of the housing asks his administration has been making for months.

“New York City finally has the tools to build the critically-needed affordable housing New Yorkers need and deserve to continue to live in the greatest city in the world,” he said in a statement. “This package reflects all of the housing priorities our administration has long called for.”

The Adams administration previously set a “moonshot” housing goal of creating 500,000 new homes over the next decade. The mayor’s cornerstone housing plan, City of Yes for Housing Opportunity, is designed to spur more housing by loosening zoning restrictions. But it faced opposition even before a full draft text was released last week.

The plan will begin formal public review later this year.

The Albany housing negotiations come as New York City grapples with a severe housing crunch that has hit working-class residents especially hard. Rental apartment vacancy is the lowest it has been in more than five decades, and half of New Yorkers are struggling to afford the basics.