Governor Hochul talks housing affordability (photo: Governor's Office)

For much of the 10-year Reign of Terror that was the governorship of Andrew Cuomo, New York’s State Senate and Assembly were subservient to his will (the strengthening of rent regulation in 2019 was the most notable policy exception). Kathy Hochul, New York’s current Governor, has had a quite different experience: in the first six months of her first full term, the Legislature flexed its muscles by rejecting Hochul’s initial nominee to become Chief Judge of the state’s highest court, and then went on to toss her signature proposal to deal with New York’s housing shortage – a production-focused “Housing Compact” – into the garbage.

If Hochul expects to achieve better results – particularly but not exclusively in the sphere of housing – she needs to make the Senate and Assembly understand something very basic: “I’m the Governor – It would have been in your interest to work with me and take my Housing Compact proposal seriously. Maybe you’ll realize that now.”

Legislative Failure on Housing
As the legislative session ends this month (those not familiar with Albany politics are often surprised that the Legislature of the fourth largest state only meets for half the year), little has been accomplished to address New York’s housing crisis. This despite near-universal agreement that extensive action was needed urgently.

The leaders of the Senate and the Assembly put out a bulleted list of broad housing policies on which there was apparently legislative agreement in principle. But neither house voted on a bill (whether because it was known that there were not the votes to overcome a Hochul veto or for other reasons is not clear), and, it turns out, there wasn’t really anything to vote on: detailed legislative text had yet to be finalized.

There is a lot of finger-pointing going on now, but the legislative treatment of Hochul’s Housing Compact is quite striking. The proposal was designed to get every locality to begin pulling its weight in terms of housing production. After 50 years of seeing that the exhortation method had no impact on resistant municipalities, Hochul’s proposal had some teeth. 

But the Senate and Assembly did not negotiate with Hochul on those mandates, nor did they address some of the weaknesses of the proposal, including inadequate requirements for affordability. Instead they rejected the fundamental idea of mandated growth altogether, ignoring history, pretending that there isn’t a problem with inadequate housing supply, and treating the interlinked crises of residential segregation and exclusionary zoning as unimportant.

They did this first during the budget negotiations, and got away with it. Then, in the race-to-adjourn they did it again: there was to be horse-trading on some housing policies, in the Legislature’s view, but Hochul was expected to proceed with the torpedoing of her central initiative taken as a given.

Notably, while the rejectionist stand on mandates from New York’s Democratic supermajorities was attributed to suburban Senators and Assembly members (joining with rock-solid defense of exclusionary zoning from their GOP colleagues), there was very little support for the Housing Compact heard from legislators based in New York City, either.

Avoiding Lame-Duck Status
Hochul has three-and-a-half years left in her first full term. If she doesn’t want to be in the sorry position of a very premature lame duck – not with the power of a newly ascendant governor, but with the limited power associated with being at the end of one’s tenure – she needs to force the Legislature back to the negotiating table on her terms.

Her spokesperson said last week that the governor “will continue fighting to address our housing crisis, including through Executive Action in the weeks ahead.” If the Governor is serious, though, the executive actions can’t be modest, she can’t fiddle at the margins. Hochul needs to roll out initiatives that are more aggressive than the original Housing Compact.

At the foundation are two facts. First, the federal Fair Housing Act does actually apply in New York State and does continue to prohibit exclusionary zoning (and other local government maneuvers) that either perpetuate segregation or cause racially disparate impacts.

Second, longstanding New York State case law (what is called the “County of Monroe” doctrine) already allows a superior interest of the state to override local zoning restrictions. It is not conceivable that a desperate statewide need for more affordable housing would not be seen as the superior interest.

The Program
Step 1: Solicit expressions of interest from for-profit and not-for-profit developers who would be prepared to build mixed-income housing in localities that: (a) have resisted affordable housing construction; (b) have median household income in the top 25 percent in the state; and (c) are characterized by sharp residential segregation.

One key here is the “mixed-income” part. The original Hochul plan was profoundly deficient in its failure to specify affordability requirements, including a portion of deeply affordable units, in all projects.

Step 2: Retool the large pool of federal housing assistance that comes to New York State to be used directly or passed along to municipalities. Make funds available to help subsidize the affordable units that are part of this “bust exclusion” project.

Step 3: Establish a process where developers would act as the agent of New York (so County of Monroe would be clearly applicable) and provide funding for litigation challenges that wind up having to be made to exclusionary local rules. Unlike the Housing Compact, there would not be a multi-year “safe harbor” before projects could begin – there would be no safe harbor for localities who had not in the last three years met the modest but important annual targets like those in the Housing Compact.

Step 4: Establish November 1, 2023, as the commencement date for the actions described.

Step 5: Call a special session of the Legislature for the first Monday in October and see if the Legislature has begun to see the light.

(I would also suggest that the Governor, legislators, and others review the very useful recent piece by James Lloyd, director of policy for the New York State Association for Affordable Housing, on executive actions Hochul should take on housing.)

The Other Side of the Equation
Just as the Legislature needs to recognize the Governor as a co-equal negotiating partner, so the Governor must do the same. Part of that is not playing the retrograde Albany game of holding cards close to the vest, but rather letting the public know what you are prepared to do to meet the priorities of others (or at least most of what you are prepared to do).

Significantly increasing the number of housing vouchers should be an easy one given the extreme scope of need.

Recognizing that the 421-a developer tax break for some affordable housing was too much of a giveaway as it had existed should also not be too much of a lift.

It is finally widely recognized that the way out of the affordable housing crisis and the residential segregation crisis is building new housing where you haven’t been building (while rehabilitating housing and making non-housing community investments in areas of poverty).

This is at the heart of the U.S. Department of Housing and Urban Development’s proposed new “affirmatively furthering fair housing” regulation. Thus, new affordable housing construction needs to happen in wealthier communities and neighborhoods. Those are areas where market-rate units will be able to generate more cross-subsidy to support affordable housing than those units do when located in less wealthy areas. That gives plenty of room for some combination of less of a windfall for developers and/or deeper affordability for some units.

The Governor should drop her resistance to enacting new protections against eviction and limitless rent increases for the huge number of tenants who are currently not already protected by rent regulation. (I first wrote about the disastrous false premises of deregulation nearly 20 years ago.) Accepting “good cause” should not be a matter of “giving up” something. But the reality is that: (a) agreeing to a version of good-cause is a “give up” from Hochul’s perspective; and (b) neither the Senate nor the Assembly would appear to have the two-thirds majority necessary to pass such legislation over a Hochul veto.

A short-term compromise that should be acceptable to Hochul, and one she should propose, is fully funded statewide right-to-counsel in lieu of good-cause: providing attorneys for tenants threatened with eviction. This certainly does not do the job that good-cause would, but it would help very substantial numbers of tenants. (That right-to-counsel is a powerful way to bring evictions down has been demonstrated in New York City under its landmark – but nowhere-close-to-fully-funded right-to-counsel law.)

All parties, including advocates, should be aware that it is more likely than not that the Supreme Court will, unless its composition changes dramatically, strike down rent regulation in its entirety. The real estate industry and its allies, in fact, are trying right now to have the Supreme Court take on the cases to act as such a vehicle. (The June 9, 2023 amicus brief in support of the petitions for certiorari filed by the U.S. Chamber of Commerce is here. These may not turn out to be the cases that the Supreme Court takes, but it is dangerous and naïve not to believe that the risk is real and that planning for that eventuality needs to happen now. Presumably, that would take two forms: first, rent regulation as a condition of government tax-break or other subsidy; two, a substantially higher default tax rate that would be lowered for those landlords opting in to a rent regulation system.)

In other words, there may have to be a wholesale revision of the way to retain and expand rent regulation, and it may be the case that the best course right now is a combination of expansive right-to-counsel and planning for an alternative rent-regulation system. The contours of that new system – including the extent to which it would cover some or all of those who would be covered by good-cause – would be the subject of intense debate and need the kind of advocacy that won the day for tenants in 2019. 

Time to Act Boldly
The affordable housing crisis is not going away. The segregation crisis is not going away. As the recent New York State draft fair housing report states (p. 156):

Exclusionary zoning was widely described as the factor that precludes the development of affordable housing in areas of opportunity, limiting opportunities for protected classes, particularly people of color and families with children, to move to these areas. Well-resourced areas, including suburban areas, often have zoning regulations in place that limit possibilities to build affordable multifamily housing. Allocating affordable housing in a more equitable way through zoning would increase opportunities for low-income families and families of color. 

Failing to push a bold approach would be a disaster for New York State, would violate New York’s own affirmatively furthering fair housing law,  and would signal to the legislature that it can continue to ignore the Housing Compact that, for Hochul, would be a historic achievement. 

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Craig Gurian is executive director of the Anti-Discrimination Center. On Twitter @pursuethefacts.