Lawmakers Target Malls for Housing, AI Regulation Advances

Hi, let’s get into today’s news at the intersection of policy and real estate:

A new state bill wants developers to turn underused malls, office complexes and parking lots into housing.
An Assembly bill to regulate AI in apartment screenings is gaining ground.
Co-op advocates are pushing back on a bill that would create new rules for boards.
Upstate lawmakers aim to create two new office-to-residential conversion tax credits for projects outside of New York City.

In this edition we mention: State Sen. James Skoufis, Assembly member Linda Rosenthal, Council of New York Cooperatives and Condominiums’ executive board president Peter Varsalona and others.

Malls to apartments: Orange County State Sen. James Skoufis and Long Island Assembly member Michaelle Solages introduced a new bill Thursday designed to spur residential redevelopment at so-called stranded assets, including mostly empty malls, office complexes and parking lots. The Redeveloping Empty and Vacant Infrastructure for Vibrant Economies, or REVIVE, Act aims to develop a new tool to help municipalities tackle the housing crisis, said Skoufis. “You’d be turning an already paved-over blight that exists in a commercial part of town, or a city, into a viable place where people can live and then walk to opportunities,” he said. Skoufis’ office drew inspiration from existing programs in California, Oregon, Montana, Texas, Florida, Rhode Island and Connecticut. His team also worked closely with Open New York and the New York Building Association on the bill. Stay tuned for a deeper dive into this bill from PolicyPro.

AI housing bill advances: A bill is gaining ground that would regulate landlords' use of artificial intelligence when screening applicants for units. The bill, sponsored by Assembly member and housing committee chair Linda Rosenthal, is currently on the floor calendar of the Assembly. That means the chamber’s committees approved it and it is now eligible for debate and a full Assembly vote. That's notably further than a 2023 version of the bill got. The progress comes after the State Legislature passed a bill last year, also sponsored by Rosenthal, making it illegal for property owners and managers to use AI to set rents. Gov. Kathy Hochul signed the bill into law in October. Rosenthal’s latest proposal would allow landlords to use AI in the screening process so long as an independent auditor conducts an annual “disparate impact analysis” to ensure automated tools are not discriminating against applicants. “Especially during a housing crisis we don’t want people to be eliminated unfairly before they even get their foot in the door,” said Rosenthal.

Co-op concerns: Westchester State Sen. Shelley Mayer and Bronx Assembly member Karines Reyes are pushing a bill to create new rules for co-op boards and how they interact with their members, including giving members greater power to remove management companies, setting minimum meeting requirements, and mandating a “plain language” annual budget. The bill also calls for new bidding procedures for non-emergency projects over $50,000. The Council of New York Cooperatives and Condominiums says it is not a fan of stacking new mandates on volunteer boards. “By adding more and more burdens it makes it harder to get people to run for the board,” said Peter Varsalona, the president of the council’s executive board. He added that limiting a board’s ability to operate a building could have “unforeseen negative consequences” for a co-op and its shareholders. Kate Herlihy, of the Albany-based firm Whiteman Osterman and Hanna, is actively lobbying against the legislation on behalf of the group’s more than 2,300 members, said Varsalona.

Office-to-residential tax credits: Upstate lawmakers Assembly member Crystal Peoples-Stokes and State Sen. Patricia Fahy seek to create two new tax credits to help office-to-residential projects pencil out. Under their proposed bill, a 10 percent tax credit would apply to projects over 25,000 square feet and that were at least 50 percent vacant by Jan. 1, among other requirements. The Empire State Development Corp. would oversee the program. A second tax credit would also cover 10 percent of project expenses if the conversion is happening in a historic building. The State Historic Preservation Office would certify the rehabilitation and credit program. Crucially, the bill is focused on municipalities with a population under one million residents, effectively encouraging areas outside of New York City to embrace such projects

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Bill Tracker

Bill Number	Lead Sponsor(s)	Summary	Committee	Last Action Date / Status	Next Scheduled Event
S9423/ Assembly bill number to come	State Sen. James Skoufis/Assembly member Michaelle Solages	Would create a process for developers to turn underused malls, office complexes and other “stranded assets” into housing	Referred to the Housing, Construction and Community Development committee	March 11	None yet
A3125A/ S6471	Assembly member Linda Rosenthal/ State Sen. Cordell Cleare	Would regulate landlords’ use of artificial intelligence when screening applicants for units	Ordered to the third reading calendar in the Assembly. Referred to the Investigations and Government Operations Committee in the State Senate	Currently on the floor calendar of the Assembly	Eligible for debate and a full Assembly vote
S8912/ A10283	State Sen. Shelley Mayer/ Assembly member Karines Reyes	Would create new rules for how coop boards operate and how they interact with their members	Referred to the Corporations, Authorities, and Commissions Committee in the State Senate. Referred to the Committee on Housing in the Assembly	Feb. 20	None yet
A10192/ S9259	Assembly member Crystal Peoples-Stokes/ State Sen. Patricia Fahy	Would create two new tax credits to support office-to-residential projects outside of New York City	Referred to the Investigations and Government Operations Committee in the State Senate. Referred to the Ways and Means Committee in the Assembly	Feb. 19	None yet

Who’s Who

Want to know more about Assembly member Linda Rosenthal, chair of the Committee on Housing and Buildings? Read on:

Life-long Upper West Side resident Rosenthal has served the Assembly’s District 67, which covers the UWS and part of Hell’s Kitchen, since 2006. She ran for the seat after a 12-year stint as the Manhattan district director and director of special projects for Rep. Jerry Nadler. Before her time in government, she received a B.A. in history from the University of Rochester.

Since landing in the Assembly, Rosenthal has passed well over 100 bills, with several focused on housing, including a bill to repeal high-rent vacancy deregulation in the 2019 package of rent reforms. Rosenthal, who resides in a rent-stabilized apartment, in a 2023 interview with political reporter Ben Max, infamously declared, “I’m really not worried about the supply of market-rate housing.” It wasn’t until 2024 that the Assembly appointed Rosenthal the chair of the chamber’s influential Committee on Housing. Her current focus, she said, is to secure additional funds for a Section 8-inspired state voucher she created, the Housing Access Voucher Program, and getting Gov. Hochul to codify the Homeowner Protection Program, or HOP, into state law.

Around Town

On Tuesday, March 17 at 12:30 p.m. the City Council’s Committee on Economic Development holds a preliminary budget hearing. Tune into the live stream or join in person at 250 Broadway on the eighth floor in hearing room three.

On Wednesday, March 18 at 10 a.m. the City Council’s Subcommittee on Landmarks hosts a hearing. Join the live stream or go in person at 250 Broadway on the eighth floor in hearing room three.

On Wednesday, March 18 at 11 a.m. the City Council’s Subcommittee on Zoning hosts a hearing. Watch the live stream or join in person at 250 Broadway on the eighth floor in hearing room three.

The Catch-Up

New York City apartments built in the near future will be larger than those being completed today and more expensive, thanks to the multifamily tax break 485x, writes The Real Deal’s columnist Erik Engquist.

The City Council has blocked a proposal to temporarily suspend New York City’s short-term rental regulations for the FIFA World Cup this summer. Eight matches are coming to New Jersey in June and July, including the tournament final.

Mayor Zohran Mamdani suspended New York City’s annual tax lien sale, signaling a potential permanent end to the decades-old practice of selling municipal debt to private investors.

New Jersey is once again considering legalizing full casinos outside the bounds of Atlantic City, reports the New York Times.

The Kicker

“We put a stake in the ground in certain positions. But we’re not building the building until the three of us can agree where it goes,” said State Sen. Energy Committee chair Kevin Park on the political squabbling over potential changes to the state’s 2019 climate law.