Hochul to abandon required construction mandates in ambitious housing plan

Gov. Kathy Hochul will not continue to pursue legislation to require housing growth across New York when she releases her 2024 agenda, according to several sources familiar with the governor’s deliberations. Attempting to take on the state’s housing supply and affordability crisis, Hochul made housing a top priority last session after winning her first election to the governor’s office.

But Hochul’s ambitious plan, particularly the notion of mandating housing construction that she and many housing experts say is essential to digging the state out of its severe supply deficit, met significant opposition in the state Legislature and beyond, and the governor is now setting aside the centerpiece of her “New York Housing Compact.”

There are many other planks to Hochul’s sweeping housing platform to build 800,000 new homes over a decade. Most are expected to remain part of her 2024 agenda, such as a replacement for the expired 421-a tax break to spur rental housing development that includes some affordable housing.

But retreat from a proposal for “transformational change,” as Hochul put it, on the top crisis facing New York is undoubtedly a setback for the pro-housing movement that the governor took leadership of despite daunting terrain.

The decision comes amid Democrats’ developing plans to win half a dozen key congressional swing seats in the 2024 elections, races that could go a long way to determining which party controls the U.S. House of Representatives come 2025. With Hochul atop the Democratic ticket, securing a surprisingly narrow victory over Republican Lee Zeldin, the New York GOP overperformed expectations in 2022, winning a handful of those seats and helping deliver the House into Republican hands.

Most of the swing seats are in the New York City suburbs of Long Island and the Hudson Valley, areas of the state where housing growth has mostly been anemic and Hochul’s proposal was seen as both most necessary and most controversial. Democrats fear giving Republicans any additional cudgels as the crucial elections unfold – earlier this year, Republicans and even some Democrats in the suburbs and parts of New York City rallied for “local control not Hochul control” in opposing the housing compact mandates and overrides.

Hochul’s decision is largely the result of the combination of stiff legislative opposition and those electoral considerations, according to multiple sources, who declined to speak on the record to maintain good relationships with the executive branch. Why fight for a controversial policy that could undermine Democratic candidates in highly competitive and consequential races, the thinking goes, when it has very little chance to pass the Legislature anyway.

"Like 73% of New Yorkers, Governor Hochul believes housing affordability is a major problem,” said Avi Small, a spokesperson for the governor, in response to an inquiry for this article. “The housing crisis is pushing New Yorkers out-of-state to places like Connecticut and New Jersey that have built thousands more homes over the last decade than New York has. That's why Governor Hochul proposed the boldest plan in a generation to drive down housing costs by building more supply. After the Legislature flatly rejected it and failed to introduce a viable alternative, Governor Hochul refocused her efforts on sweeping Executive Action that took effect in July. Until the Legislature is ready to come back to the table with a serious approach to build more housing in New York, the Governor is focusing on using her executive powers to address the housing crisis."

Hochul first outlined The New York Housing Compact in January, and it was hailed by housing advocates and many others, including some elected officials, as an essential plan to help New York catch up on building the new homes needed to meet demand and make a dent in the gripping affordability crisis that is most acute downstate. Hochul pitched it, albeit too timidly for some, at events across the state, also highlighting the plan as an economic development engine and a way to reverse state population loss.

The compact requires, in three-year cycles, 3% growth in housing units across localities downstate and 1% growth upstate. If that growth was not being met due to exclusionary policies and anti-growth decision-making at the local level, developers would be able to work with the state to win approvals. It also included a wide variety of other policies to encourage housing growth and help meet those targets that advocates hope will be among Hochul’s top priorities next year, like zoning mechanisms to boost housing development near mass transit stops and the legalization of accessory dwelling units.

Despite Hochul making the Housing Compact her marquee proposal and both Democratic supermajorities in the Legislature naming housing as a top priority, a bruising 2023 state budget and legislative session concluded in June with a lot of finger-pointing but no major housing policy passed. The governor repeatedly pledged to keep fighting for the core pieces of the compact.

Brooklyn State Sen. Julia Salazar – one of the few legislators who has expressed support for an all-of-the-above grand housing bargain that includes her “good cause” eviction bill (that Hochul has opposed) as well as Hochul’s compact, a state rent voucher program, and more – said she can understand the calculation Hochul is making in dropping the mandate-override proposal.

There’s “strong appetite” in the Legislature for a major housing policy package, Salazar said on Tuesday. “I’m certainly going to continue to insist that just as it is crucial for us to build exceedingly more housing as quickly and responsibly as we can, that people can actually afford to live in,” she said, “we also need to keep people in their homes.”

“It’s very important that we change exclusionary zoning laws,” said Salazar, a Democrat, “not only for the ability to reach the necessarily ambitious housing growth goals, but it’s the right thing to do.” Perhaps sufficient growth is possible without requirements, she said, but “at the moment it’s hard for me to imagine being able to do this at the scale that we need to without mandates that people are maybe going to be unhappy with in the short term, but may be necessary.” She wants Hochul and the Legislature to move quickly on housing policy early in 2024, she said, in part because it is also a year when all 213 state legislative seats are on the ballot.

One housing advocate said they were not surprised to see Hochul back away from the mandates given the legislative response this year. “We need real concrete steps in 2024 that build momentum for the bigger policy change we need to see,” the advocate said, noting, as Hochul has, that it’s taken many years in some states to enact essential compact-like growth policies. “It needs to start in both branches.”

“The fact that nothing passed on housing last session is not a representation of popular will,” the advocate added. “It was a lack of political will from both branches of government.”

As the governor’s spokesperson referenced, new polling reinforces longstanding concerns among New Yorkers about housing availability and affordability – challenges Hochul aggressively took on when crafting her 2023 agenda after they had largely been ignored by her predecessors.

According to a new Marist College survey, 81% of urban residents, 69% of suburban residents, and 67% of rural residents called the lack of housing in New York a serious issue, per the Times Union. Additionally, 71% of New Yorkers believe state government is “not providing enough resources to address the lack of affordable housing.”

Siena College polling earlier this year showed overall support for Hochul’s proposed housing growth mandates, but not in the suburbs, while voters preferred incentivizing growth to mandating it – part of what Hochul is now doing by executive action, though the governor and outside experts say it will never produce the scale and spread of housing supply New York needs.