Why New York lawmakers aren’t budging on real estate

Legislature plans to keep stalling development, despite dire need

Handicapping Housing: Forecast for NY Real Estate Policy
Assembly member Linda Rosenthal and state Senator Brian Kavanagh (Getty)

Seven weeks into the legislative session, not a lick of progress has been made on real estate issues.

Get used to it.

Although Kathy Hochul has helped build a consensus that New York desperately needs more housing, getting the legislature to do something remains a tall task.

Chances are, no housing policies will make it into the state budget, due April 1, because non-fiscal matters have a later deadline — June 6, when legislators adjourn for the year. The old strategy of tucking controversial measures into the budget hasn’t worked for a while.

Unfortunately, odds are June 6 will also come and go with little or no progress on development. Why?

Don’t blame the election. Yes, election year politics are tricky, which is why Hochul removed from her 2024 agenda a builders’ remedy proposal, which would create an alternative, state-run approval process for residential projects blocked by not-in-my-backyard localities.

But lawmakers do like to have a record to run on, and most do want to pass meaningful bills before Election Day.

The problem is, what they want to pass lacks support either from their colleagues or from the governor — and for good reason.

Take Assembly member Linda Rosenthal’s bill to punish landlords for not renting out vacant, rent-stabilized apartments, even when — thanks to her own law — necessary renovations would cost far more than owners could ever recover in rent.

Government can’t force businesses to lose money. Imagine fining airlines for not running hourly flights to Siberia, or requiring nightclubs to open weekdays at 9 a.m.

Meanwhile, sensible reforms run into political problems. Here’s a rundown of real estate measures that almost certainly won’t pass:

421a. Getting some version of this tax break for rental projects through Albany is like walking across a minefield with tennis balls balanced on a broomstick. First, the Real Estate Board of New York and unions must agree on a plan. Last time 421 was up, that took them a year. By the time the new version expired in 2022, legislators had little interest in renewing it. That hasn’t changed.

Sign Up for the undefined Newsletter

Even if, by some miracle, everyone managed to agree on all the tax break’s moving parts — construction and building-service wages, geography, apartment affordability, etc. — some lawmakers wouldn’t approve it unless a similarly controversial “good cause eviction” bill is also passed.

Landlords would sooner jump into a vat of hot tar than agree to that.

Not only do building owners detest good cause, but they don’t like 421a either. The tax break creates competition for their rentals. Yet people still talk about a good cause/421a deal as if both sides are getting something.

421a construction deadline. Lawmakers who gleefully let 421a expire are not motivated to give a reprieve for projects still eligible to receive it but not likely to finish by the June 2026 deadline. Hochul doesn’t want to let legislators off the hook by expanding her Gowanus 421a workaround to the rest of New York City, but she may have to. Projects offering thousands of mixed-income housing units, such as Innovations QNS and Halletts North, depend on it.

Good cause eviction. See above. Landlords, who still have political pull in New York’s suburbs and rural areas, hate good cause. “Do you want New York City-style rent control coming to your town?” is an effective argument in much of the state. Not once has Hochul even hinted that she would accept good cause as a way to get her housing agenda through.

Passing a watered-down version of good cause, like those enacted in California and New Jersey, would take the issue off the table for New York real estate. However, it’s hard to see tenant advocates accepting that.

Office conversions. To make it feasible to turn lots of empty cubicles into apartments, lawmakers need to change zoning and building codes, such as the rule requiring windows in residences to open from the inside. Philadelphia and Washington, D.C., have already amended their window rules, and San Francisco and Honolulu are considering doing so, the 5BORO Institute reported.

But some Democrats are unwilling to pass laws that benefit the real estate industry, even if society as a whole will also benefit. They fear getting primaried by the Democratic Socialists of America. Others want to require levels of affordability that would render conversions unprofitable and thus impossible to finance.

FAR cap. Allowing higher floor-area ratio for New York City apartment buildings, which already exists for office buildings, is the easiest housing-booster to pass. The reform would allow for more office conversions and larger ground-up projects. No rational arguments against it have emerged, although one irrational one has: Some city legislators don’t like tall buildings.

Why, then, are these folks living in Manhattan and not Iowa? Perhaps, like Linda Rosenthal, they have sweet deals on rent-stabilized apartments. Rosenthal has said she sees no need for market-rate development because its customers can already afford housing. Incredibly, it hasn’t occurred to her that otherwise, they compete for existing housing, raising prices and accelerating displacement.

Vacant units. Tens of thousands of rent-stabilized apartments needing major renovations remain empty because their legal rents are too low to justify doing the work.

Only one bill has been introduced to remedy this, but anything considered an erosion of tenant protections is fiercely opposed by Legal Aid, Housing Justice for All, Met Council for Housing and other tenant activists. They have spread the myth that landlords are “warehousing” these units — collecting zero rent — to pressure lawmakers into allowing a rent hike.

Landlord group head Jay Martin repeatedly exposes the absurdity of this notion, but progress on his rent-reset bill has been halting at best.