To fix a housing crisis, New York leaders seek to revive a 1950s idea

To address a growing housing crisis, leaders in New York’s state Senate are set to propose sweeping legislation that would encourage new construction, establish new tenant protections and also revive some older ideas for building affordable housing.

Among them: the creation of a new public benefit corporation that would finance housing construction on state-owned land. Leaders are framing it as a successor to the popular mid-century programme known as Mitchell-Lama.

New York has faced rising rents and a homelessness crisis, exacerbated by an influx of migrants. There is broad consensus that the state needs to act. But leaders have struggled to find a compromise that could unite a fractious group of stakeholders behind a housing programme that meets the state’s needs.

Lawmakers in the Senate are hoping that by incorporating ideas prized by tenant groups, unions and big developers, this year’s proposal might finally help to break the logjam.

Last year, Governor Kathy Hochul laid out an ambitious plan that would have forced suburbs and other communities to allow for more development, among other pro-growth measures. Lawmakers representing various constituencies balked, and little progress was made.

The Senate’s proposal, which will be released in its One House Budget bill on Monday (Mar 11), can be understood as an opening bid in the coming Budget negotiations: Each year, the governor and both Houses of the Legislature propose their own visions for the state. Leaders in Albany have until the Apr 1 Budget deadline to come to an agreement.

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A successful plan must incentivise vast amounts of new development while supporting landlords and tenants, said Andrea Stewart-Cousins, Senate majority leader. She called for a “big idea” that would holistically address affordability for generations of New Yorkers.

“I want my kids and grandkids to be able to hang around,” she said. “I want to be able to hang around!”

The Senate plan will call for a new developer tax break with more robust affordability protections than its predecessor, known as 421a, which expired in 2022.

Critics called the previous programme a giveaway to developers, who were able to secure millions of dollars in tax write-offs in exchange for building some units with lower rents. But in the years since it expired, construction has fallen off, underscoring the need to bring developers to the table.

One crucial element for enticing the left wing of the party is the inclusion of legislation known as “good cause eviction”, which has long been a progressive priority.

Senate leaders say a housing package must include some version of this legislation, which restricts landlords’ ability to evict tenants. It also requires most landlords to offer tenants automatic lease renewals and forces them to justify rent increases beyond certain thresholds.

But the legislation, which landlord groups say would suppress development and make it hard for them to care for their properties, is divisive, particularly in the State Assembly.

For an item to be included in the Budget, it requires the support of both Houses of the Legislature, as well as the governor.

And although Hochul has said she supports tenant protections, she has been resistant to the “good cause” legislation, a stance that played a role in the collapse of last year’s housing deal.

The plan to be proposed on Monday also includes smaller but still consequential proposals, including a push for more construction of bigger residential buildings in Manhattan and the legalisation of basement units. Both are top priorities on city officials’ and housing advocates’ wish lists.

But perhaps the boldest idea is also one of the oldest, tracing its roots back nearly 70 years.

The US$250 million proposal is modelled on the Mitchell-Lama legislation, passed in 1955. Taking its name from the two state legislators who were its main sponsors – Sen MacNeil Mitchell, a Republican, and Assemblyman Alfred A Lama, a Democrat – that programme helped transform New York’s housing landscape after World War II by enabling the construction of more than 100,000 units of middle-income housing at a time when the city was experiencing a housing crisis exacerbated by an influx of returning service members as well as immigrants and refugees. It aimed to spur affordability for both renters and homeowners by using developer incentives to create a protected supply of homes available to residents with incomes beneath a certain threshold.

The new version, which lawmakers are calling “Mitchell-Lama 2.0”, would differ in several key ways. Among other things, it would form a new state entity that could finance developments on state-owned land.

The state would give developers cheap leases on state land, which would be exempted from taxes and from certain elements of the public review process. The state would also lend money to developers, to make building quick and inexpensive for companies.

Condos and rentals built through the programme would have to be affordable to middle-income households. For example, in New York City, the housing would need to be affordable to a family of four that earns US$232,980.

It is not yet clear how many units the programme could yield.

The Senate’s proposal is in some ways a response to what Hochul and others have already proposed. Hochul, for example, is exploring building apartments on state-owned land and called for the new tax incentive as part of her budget proposal this year.

As with many things in Albany, the details of the Senate’s proposal will determine how much of an effect it can have and whether it will be embraced by the governor and the Assembly. NYTimes