On Tuesday January 10, 2023, New York Governor Kathy Hochul announced an ambitious, strategic plan to address New York’s statewide housing shortage. The proposal, called the New York Housing Compact (“Housing Compact”), requires all cities, towns and villages to participate. The Housing Compact sets new housing targets that would help support the creation of 800,000 new housing units statewide over the next ten years.

Under the Housing Compact, municipalities in Upstate New York would be required to increase their number of housing units by 1% every three years over the next decade. New York City and municipalities Downstate, meaning those served by the Metropolitan Transportation Authority (“MTA”), would need to increase numbers by 3% every three years over the next decade. Localities will determine the best way to achieve these goals (“New Homes Targets”) in their specific regions, but the plan includes some incentives for particular types of development, such as affordable housing units or proximity to an MTA rail station.

Affordable Housing

The Housing Compact proposes several new ways to help municipalities achieve their respective New Homes Targets. For example, the development of new affordable housing units is encouraged. Affordable housing units will be given extra weight when calculating a locality’s progress toward the three-year goals. The governor will direct New York Homes and Community Renewal to set aside $5 million for State Low Income Housing Tax Credits. Projects proposed to help meet New Homes Targets would benefit from specific environmental relief to expedite the rezoning process and accelerate development. To complement the expedited development efforts, the Housing Compact provides for a $250 million Infrastructure Fund and a $20 million Planning Fund available for local municipalities.

Housing developers may be able to overcome local zoning barriers using the governor’s proposed “fast-track approval” process. If localities fail to meet the New Homes Targets after three years, some developers could appeal rejected projects to a new State Housing Approval Board. This new fast-track approval process would allow projects meeting particular affordability criteria to move forward, despite opposition by a local municipality. Unless the locality can show an otherwise eligible project violates valid health and safety requirements, it must be approved.

Safe and Healthy Housing, Including Lead Risk Assessments

In addition to encouraging the development of new housing, the Housing Compact aims to protect and strengthen the state’s existing housing supply through health and safety initiatives. Gov. Hochul announced she will propose legislation to reduce lead exposure risk in rental housing outside of New York City, requiring multi-family rental units to undergo lead risk assessments every three years. Eligible landlords could apply for grants to cover costs of any mandatory remediation efforts. Hochul also wants to propose legislation to update existing laws enabling local governments to take ownership of certain dangerous, abandoned properties. Lastly, the Housing Compact increases funding for the State’s Tenant Protection Unit and establishes a targeted initiative to finance home repairs in communities with high levels of low-income homeowners of color and homeowner distress.

There are also special initiatives in the proposed Housing Compact that only apply to New York City. These initiatives include incentives for “Transit-Oriented” project proposals, which require localities with rail stations run by the MTA to rezone areas within a half mile of the station to allow for higher density multifamily development. The plan also proposes new property tax exemptions in the City and potential legislation to serve as a successor to the 421-a program that expired in 2022.

Should you have questions about the New York Housing Compact or related issues or would like to be informed of any future developments on this topic, please feel free to reach out to Michael E. Condon at (585) 419-8603 or mcondon@harrisbeach.com; Melanie C. Marotto at (716) 200-5230 or mmarotto@harrisbeach.com; or Charles W. Russell at (585) 419-8635 or crussell@harrisbeach.com.

This alert does not purport to be a substitute for advice of counsel on specific matters.

Harris Beach has offices throughout New York State, including Albany, Buffalo, Ithaca, Long Island, New York City, Rochester, Saratoga Springs, Syracuse and White Plains, as well as New Haven, Connecticut, Washington, D.C. and Newark, New Jersey.