In her 2023 State of the State address on Jan. 10 in Albany, New York Gov. Kathy Hochul outlined key initiatives to reduce crime and gun violence, enhance mental health services and address the affordability crisis in the state.

The governor introduced her “New York Housing Compact,” a groundbreaking strategy to catalyze housing development that has a goal of creating 800,000 new units in the next decade. She said the state will provide assistance to localities to meet the housing goal by offering “substantial new funding for infrastructure like schools, roads, and sewers needed to support growing communities.”

Every single locality across the state will have a target for building new homes, she noted. Upstate, the target is for the current housing stock to grow by 1% every three years. Downstate, 3% every three years. She added that as part of the compact, any municipality with a train station should rezone the area within a half-mile of the station, to allow for the creation of new housing within the next three years. Gov. Hochul also promised a replacement for the 421a tax exemption in New York City.

Orange County Partnership President and CEO Maureen Halahan applauded the governor’s “New York Housing Compact” plan, noting that to truly incentivize affordable housing development, the state must partner with local municipalities to change zoning laws that restrict such development.

“Orange County continues to attract major investors in key growth industries. However, our future economic growth will be determined in large part on the availability of a qualified local workforce,” Halahan said. “Our future hinges on providing our residents, including our children, an opportunity to secure quality and affordable housing here or we risk losing these workers and future capital investment to less costly areas of the country.”

Highlights of the Governor’s ‘New York Housing Compact’

Under the compact, localities will decide how to best meet their new home construction targets. From repurposing underutilized office parks and strip malls to offering new incentives towards multifamily buildings, localities can choose how to tailor their strategies to increase housing supply. To encourage the inclusion of affordable housing as part of the new growth, affordable units will be assigned extra weight in calculating localities’ progress toward their goals.

Localities that do not meet targets can achieve Safe Harbor status for one three-year cycle by implementing certain good faith actions—or “Preferred Actions”—that create zoning capacity to achieve the growth targets. In municipalities where there is no market demand for new housing there will be no practical effect if localities fall short of their targets.

The New York Housing Compact will make available a $250-million Infrastructure Fund and a $20-million Planning Fund to support new housing production statewide. Municipalities may submit requests for planning funding to undertake either required Transit-Oriented Development rezonings or Preferred Actions to help them hit their growth targets. The plan will also create a new Housing Planning Office within New York State Homes and Community Renewal to provide municipalities with support and guidance.

The New York Housing Compact will require that localities with rail stations run by the MTA undertake a local rezoning or higher density multifamily development within half a mile of the station unless they already meet the density level. By expanding housing potential in these transit-oriented communities, more families will be able to enjoy improved access to jobs and thriving sustainable communities, state officials said.

After three years, in localities that do not meet growth targets or do not take steps to implement Preferred Actions, proposed housing developments that meet particular affordability criteria, but may not conform to existing zoning, may take advantage of a fast-track housing approval process if the locality denies the permit. The appeal can be made to a new State Housing Approval Board or through the courts. Appealed projects will be approved unless a locality can demonstrate a valid health or safety reason for denying the application.

To expedite rezoning and development of new homes, specific relief from environmental review will be included in the New Homes Targets and Transit Oriented Development proposals. The state will continue to exercise crucial safeguards that prevent environmental harm and ensure that public health remains a top priority.

Gov. Hochul unveiled a series of new proposals to incentivize new housing construction and the rehabilitation of existing housing. This includes new property tax exemptions to encourage mixed income housing development near train stations and incentivize affordable housing in commercial buildings that are converted to residential use in New York City. This also includes updated property tax exemptions offered by local option to support homeowners that build Accessory Dwelling Units and for property owners who need support undertaking certain renovations in New York City.

To support the development of mixed-income housing outside of New York City, Gov. Hochul will direct New York State Homes and Community Renewal to make $5 million in State Low Income Housing Tax Credits available.

Gov. Hochul will also make necessary changes to ensure that localities where new housing developments utilize Payment in Lieu of Taxes agreements are not penalized in tax cap calculations.

The governor will work with the State Legislature to develop a successor for the 421-a property tax exemption program that expired last year to stimulate production of new rental housing in New York City.

The governor announced additional proposals to increase the state’s supply of safe, stable, comfortable housing for all New Yorkers.

Gov. Hochul will propose legislation to create a program that builds on proven models to drastically reduce lead exposure risk in rental housing outside of New York City, targeting areas classified as “high-risk” for lead exposure based on incidence of childhood elevated blood lead levels. This will require multi-family rental units in such areas that were built prior to 1980 to undergo a lead risk assessment every three years—if lead hazards are found, the landlord will be required to remediate the housing unit. There will be grant funding for eligible landlords to help cover the cost of these assessments and the remediation of identified hazards.

The governor will also propose legislation that will update the existing law that enables local governments to take ownership of certain dangerous abandoned properties. This legislation will help localities reduce public health risks, improve property values for neighboring homeowners, increase property tax revenues and create new housing opportunities.