Hochul announces budget agreement, with ‘landmark’ housing deal

State lawmakers reached a “conceptual” agreement on the 2025 budget on Monday, according to Gov. Kathy Hochul, who hosted a celebratory press conference touting the deal. Since the bills have not been printed yet, details remain scarce. However, according to the governor, the $237 billion budget, now over two weeks late, includes “landmark” policies to address the dire housing crisis statewide, particularly in New York City. Hochul announced efforts to boost housing production, including a new tax break to succeed 421-a, and protect tenants, with the framework for “good cause” eviction included in the deal.

Hochul on Monday announced a new tax incentive to spur affordable housing construction. The program, called 485-x, would be a “successor program” to 421-a, a now-lapsed program that gave developers constructing residential buildings a tax break in exchange for designating a portion of the homes affordable.

The deal also includes extending 421-a for six years, “unlocking previously approved projects that were stalled” when the tax credit expired, according to the governor.

Real estate developers blamed the end of 421-a on the lack of housing production in New York City, which significantly declined since the program lapsed. In 2023, developers filed 285 multi-family foundation plan applications with just 9,909 apartments proposed, a 78 percent drop in total unit filings from 2022 when there were over 45,500 units proposed, according to a Real Estate Board of New York (REBNY) report.

The governor mentioned several housing policies advocated for by Mayor Eric Adams, like allowing the conversion of offices into housing, lifting the state-imposed floor-to-area ratio (FAR) cap for residential towers, and creating a path toward legalizing basement apartments.

“Taken together, these new measures represent the most comprehensive new housing policy our state has seen in three generations. This is a landmark deal, and I’m really proud of it,” Hochul said on Monday.

“It’s a culmination of two years of robust community engagement, and I will say intense, spirited debate. But they all reflect our understanding that housing is not a privilege, it’s a right. But I’ll say this, to truly enjoy their homes and their communities, New Yorkers must also feel safe and be safe in their homes – that is my number one priority.”

Hochul also announced an agreement to protect tenants from “price gouging.” A priority for state Democrats and housing advocates for many years, “good cause” eviction gives tenants the right to challenge a rent hike in court if above a certain amount. According to the New York Times, the deal includes several carve-outs to good cause, including applying protections only to apartments renting below certain levels, like $6,000 for a one-bedroom in NYC.

Plus, according to City & State, the potential protections would: only apply to municipalities who opt-in, exempt new construction for 30 years, spare owner-occupied buildings with eight or fewer units, and exempt landlords who own 10 or fewer units. Sources also told City & State that landlords of buildings not rent-stabilized could raise rents by either 5 or 10 percent plus the consumer price index. Only if the rent hike is above that threshold would it be constituted “unreasonable” and be used to fight an eviction in court.

As City & State reported, the budget deal makes changes to the 2019 tenant protection law, including increasing the amount landlords of rent-stabilized apartments can increase rent after conducting individual apartment renovations. The deal proposes increasing the amount a landlord can recoup for repair work from $15,000 to at least $30,000, which could raise monthly rent by $167.

If an apartment is vacated by tenants of 25 years or more, the cap would be lifted to $50,000 recovered for the improvements. The rent increases would be permanent.

Cea Weaver, the director of Housing Justice for All, a statewide coalition of tenant groups and homeless advocates, denounced Hochul’s budget.

“Governor Hochul is pushing through a housing deal written by the real estate industry to ensure they keep getting richer off the backs of hardworking tenants,” Weaver said in a statement. “Instead of protecting their constituents, our state leaders are allowing foxes inside the hen house. Hochul’s Good Cause would be the weakest in the country as well as essentially unenforceable, denying millions of renters across the state basic protections from unfair rent hikes and evictions.”

Weaver continued: “This sham of a housing deal will do absolutely nothing to make housing more affordable and keep New Yorkers in their homes. It is nothing more than a massive giveaway to the real estate industry.”

Although supportive of the extension of 421-a, REBNY also found fault with the governor’s deal, particularly the proposed 485-x program and the good cause eviction. “And while there were several modifications to the original legislation, good cause eviction will still create significant new risks for owners, developers and funders,” James Whelan, president of REBNY, said in a statement.

“We are confident that this package falls far short of addressing the city’s housing needs and must be reassessed in the coming years to put the rental housing market on a solid footing.”

The agreement also includes $2.4 billion for New York City’s current migrant crisis and updates on how cannabis is taxed and regulated in an attempt to crack down on illegal smoke shops.

RELATED:

• Hochul calls for replacement and extension of 421-a tax abatement in NYC
• NYC rental vacancy rate drops to 1.4%, lowest in 50+ years