Hochulâs Housing Compact, ERAP Ending, and Brandon's Whisper
Big Picture
Kathy Hochulâs Housing Plan Launch Did Not Land Well
At the State of the State address this year, the Governor placed responding to the housing crisis at the front of her legislative agenda, indicating she & the Dems view this issue as electorally important. She wants to build 800k new units of housing in 10 years with a combination of zoning and tax interventions. To a moderate, there are three problems with her plan: 1) 10 years is a long time and doesnât meet the urgency NYers are feeling, 2) no tenant protections or affordable housing subsidies means new units will not be affordable and new construction will gentrify/displace existing neighborhoods, 3) racist suburban downstate political machines & reps will fight it tooth and nail. Another problem is she made the Democratic Party her enemy with the failed LaSalle nomination, uniting moderates, progressives, organized labor, and Peter F. Martin against her in the process. Hochul needs some progressive support, and progressives want immediate interventions. We have a window. More on this below.
ERAP Is Ending, Cutting Off Tenantsâ Main Line of Eviction Defense
The Emergency Rental Assistance Program has allowed tenants facing nonpayment evictions to apply for pandemic-related rental assistance for up to 12 months of arrears. There is not enough money allocated to cover these arrears, but tenant groups like ERAP because having an ERAP application number indefinitely stays your eviction hearing. Last Thursday in Ithaca, there were 9 evictions on the docket and all 9 were stayed because of ERAP. This week, that wonât be an option. Landlords are celebrating. Unfortunately, this is a dying lockdown-era temporary protection, and while we should use this programâs shuttering to highlight the need for permanent rental assistance (HAVP), the eviction protections that ERAP gave from the moment of filing an application was crucial. Itâs a good policy blueprint for homelessness prevention via rent assistance and we shouldnât forget about it.
Housing Market Holding as Rate Hikes Slow, Testing Investorsâ Patience
The Federal Reserve did a lot of 0.75% interest rate hikes last year, a 0.5% hike in December, and is going to do a 0.25% hike at the end of the month. This means that investors still arenât excited about borrowing money (and by extension investing) the way they were when it was cheap, but they arenât panicking that much because they see possible relief on the horizon. Still panicking a little, in part because the fed has indicated theyâre not going to stop hiking for a while. Blackstone, for its part, has assured spooked investors from last month that it will stabilize its Real Estate Income Trust with a plan the Financial Times summarizes as âBasically, aggressively ratchet up rents and restart evictionsâ.
Brandonâs Whisper
White House spokesperson Robyn Patterson says the Biden admin is âexploring a broad set of administrative actions that further our commitment to ensuring a fair and affordable market for renters across the nationâ. Politico and Bloomberg have totally different speculations on what Biden will do, except they both mention right to counsel, a thing that is definitely too expensive and logistically complex for us to ever get for free. So who knows. Peopleâs Action, who are behind this whole push, are asking Biden to sign this executive order, Bowman is asking for rent hike caps in buildings backed by federal mortgages, and the White House is apparently still asking them both for recommendations on what to announce this week â not a sign of big plans. Money to fund fair housing discrimination investigations is happening, at the very least.
Hochulâs Housing Compact
Ok letâs get into this. Hochul wants to âcreateâ 800k new units of housing. By âcreateâ, she means âentice developers to createâ, because the state building its own housing would of course be insane. This is being marketed as a thing sheâs doing by overriding racist zoning practices left over from the redlining era â but thatâs a half-truth. A less-than-half truth actually, because only about 20% of this unit growth is projected to come from zoning interventions. Over half actually comes from a plan to re-introduce the 421-a tax break, a âby-rightâ (automatic) tax break for developers which mostly has no affordability requirements. In fact, none of Hochulâs proposed housing measures have any affordable housing incentives or subsidies, which is a major weakness for her and an opportunity for us. Hochul is riding the YIMBY ideology wave that says building housing for rich people will cause price reductions to trickle down to the poor. Normal people donât buy this because it sounds dumb, and also because the vacancy rates in the pricy segments of the market are already many times higher than affordable segments and the market still sucks:
So what is Hochulâs plan exactly? Sheâs proposing to:
Reinstate the 421-A tax break in NYC
Create unit growth targets statewide, 3%/yr for downstate (defined as the area served by the MTA) and 1%/yr upstate
If growth targets arenât met:
State overrides local zoning to allow for more, denser construction
Developers get to basically build what they want for 3 years
âTransit Oriented Developmentâ in the MTA-covered region, meaning that within 0.5 miles of MTA stations, zoning has to change to allow for larger buildings. Lots of unanswered questions about how this will work and how much input local gov has.
Legalize Accessory Dwelling Units (ADUs) in NYC, including basement apartments
Legalize conversions of commercial buildings into apartments
Remove zoning caps on building size in certain, more suburban parts of NYC
All the zoning stuff is actually good (except that it doesnât protect anyone from displacement during rezoning), and for that reason, it will be aggressively fought by conservative dems, especially in Long Island and Westchester. White suburbanites tend to oppose zoning deregulation, because it allows ~people who canât afford a house~ into their enclaves. So theyâll fight this plan very hard. Itâs going to be a lift to pass, probably will get negotiated down, and requires progressive momentum to pass. The problem is, thereâs no tenant protections (very important for rezoning to not become aggressive gentrification) or incentivization/subsidy of affordable housing in her plan, so progressives like us arenât excited about it. We want to respond to her opening move by pushing for the plan to include Good Cause (tenant protections), HAVP (affordability subsidy), TOPA (more affordability & tenant protections), and our other bills.