When Gov. Kathy Hochul stood on a stage a year ago, praising the real estate industry and musing that any elected official absent from the Real Estate Board of New York’s annual gala was “missing a damn good party,” then-mayoral hopeful Zohran Mamdani was on the street outside the event.
The protestors with whom he gathered held signs that read “Rent Freeze” and “REBNY Raised My Rent.”
A lot has happened since that party. Mamdani now acknowledges that his view of the private sector’s role in the housing market has shifted, making his case to the city’s business community in closed-door meetings. Hochul endorsed Mamdani in September and seems more open than in the past to raising the money the new mayor needs to fund key parts of his agenda.
As Mamdani begins his term and Hochul intensifies her reelection campaign, their attempts not to alienate the constituents on either side at last year’s REBNY gala has generated a powerful dynamic, not just for Mamdani’s early days or Hochul’s chances at reelection, but also for what legislation will get done this year and how real estate industry priorities will fare.
Good alternatives
At least rhetorically, the mayor is likely to play a big part in the governor’s race.
Mamdani has pitched raising taxes on the city’s highest earners and corporations to fund universal childcare and free buses. Hochul has been against both, though reportedly she has softened on corporate tax rate increases.
Doing so, however, threatens to anger high-earning donors, including those in the real estate industry. They could turn to Trump-backed Republican Nassau executive Bruce Blakeman, one challenger. Another, Rep. Elise Stefanik, announced in December that she was dropping out of the race.
“You have two strong Republicans running against the governor, both very close to Trump,” lobbyist Suri Kasirer said during an interview before Stefanik dropped out. “Their argument is likely going to be: We’re close to Trump, and we can prevent the policies that Zohran has promised.”
And for those who supported Mamdani, there’s Lieutenant Gov. Antonio Delgado, who has also used Mamdani as a lodestar, telling Politico that he viewed Mamdani’s win as a “confirmation” of his run for governor. A “big reason” he is running is that he believes “the status quo is broken.”
Beyond the governor’s race, political events this year could show where the Democratic party stands in New York. In the wake of Mamdani’s win, moderate candidates saw early success in key contests, at times with the help of the mayor-elect.
For example, Council member Julie Menin declared victory in the City Council speaker’s race even before she officially won on Jan. 7. And Council member Chi Ossé backed off his bid to challenge House Democratic Leader Hakeem Jeffries, after failing to secure support from the Democratic Socialists of America. Mamdani reportedly urged the DSA against endorsing Ossé.
Mamdani also endorsed City Comptroller Brad Lander, who is running to unseat Rep. Dan Goldman over the DSA-endorsed Council Member Alexa Avilés, who has decided not to run.
Not a housing year
Hochul’s primary and general election challenges, as well as the danger of angering the voters who made Mamdani mayor, could influence what policies the governor and the state legislature tackle.
“Because of that push and pull on either side, I’m not confident that a lot will get done on housing this year,” George Fontas, a lobbyist whose firm represented a coalition that fought against the good cause eviction bill, said. (A version of the bill passed in 2024.)
Developers have argued that the property tax break 485x needs to be amended to encourage more housing construction. Since the incentive was enacted, developers have favored projects with 99 housing units or fewer, to avoid paying construction wages that kick in at 100 units, and then become higher in certain areas of the city at 150 units.
Changing those thresholds or reducing the wages would be a major fight that would outrage New York’s construction unions, something the governor would likely be loath to do in an election year. Delgado has made clear that he thinks the state’s existing housing tax credit and subsidy programs do not work.
“I don’t think that’s a can of worms anyone is looking to open this year,” one real estate consultant said, on the condition of anonymity. “If she goes too far on the developer’s side, she runs the risk of losing labor, and that is critical for her.”
Kasirer said it’s probably too early to tell if the legislature will pick up 485x. Lawmakers have tended to wait until such programs expire before amending them, but 485x has a longer runway than its predecessors and doesn’t expire until June 2034.
Tweaks to the state’s rent laws would also be a tough sell in an election year, Fontas said. Reforms to elements of the law, like the Individual Apartment Improvement and Major Capital Improvement programs, could help landlords increase rents on stabilized apartments after completing renovations.
Some streamlining of the state’s environmental review process and increased resources for housing courts may be achievable, however, Fontas added.
But Kenny Burgos, CEO of the New York Apartment Association, said he doesn’t know how much longer the legislature can “ignore” the deterioration of the city’s rent stabilization stock. He noted that Mamdani has “elevated the issue of rent-stabilized housing and its overall operations to almost national proportions,” through his pledge to freeze rents for stabilized housing.
On the bright side, Mamdani has spoken about the need to address landlord costs through property tax and insurance reform.
“There’s been an acknowledgement that you cannot simply freeze the rents and expect good results to happen in this housing stock,” Burgos said.
Whether those talking points turn into action at the state level remains to be seen.
Some in the industry fear that the Tenant Opportunity to Purchase Act, which would give tenants first dibs on buying their building if their landlord decides to sell, will gain traction this year, especially after the city passed a version that applies to nonprofits and other entities. Eric Adams vetoed the bill, COPA, on his final day in office.
The New York State Tenant Bloc, a DSA-affiliated group, formed last year to organize tenants to only vote for mayoral candidates who supported a rent freeze. This year, it is focused on expanding rent stabilization throughout the state, said spokesperson Ritti Singh. That includes pushing for a measure that would make it easier for localities outside of New York City to adopt rent stabilization.
Singh said securing more funding for the state’s housing voucher program will also be a top priority.
She doesn’t think the fact that it’s an election year will necessarily deter the governor and lawmakers from tackling controversial issues.
“We thought in 2024, there would be no housing deal for this reason,” she said, referring to the state’s budget that year, which included 485x and good cause eviction, along with several other housing-related policies.
She pointed to Mamdani’s win, and the fact that he ran on a promise to freeze rents for stabilized apartments as a key reason the governor and lawmakers can’t ignore this part of the affordability agenda.
“Zohran Mamdani just ran on a rent freeze,” she said. “To me, that’s a mandate.”