State stalls on new housing policies, including 421-a extension likely contemplated by Atlantic Yards developer as necessary for next tower

Maybe it isn't over--legislators are expected to return to Albany later this month for an additional session--but a complicated set of negotiations and, apparently, differences with Gov. Kathy Hochul, meant that no new major housing policies were passed by the state Legislature.

In N.Y. Democrats, at Odds Over Tenant Protections, Fail to Reach Housing Deal, the New York Times reported:

Democratic lawmakers in New York had scrambled this week to assemble a plan to tackle the state’s housing crisis: They said it included measures to protect tenants from eviction and cap rent increases, incentives to remodel empty offices into apartments and an extension of a tax break for developers to build affordable housing.

But it all unraveled on Thursday, when Democrats who control the State Legislature and Gov. Kathy Hochul failed to reach a deal, leading to a new round of finger pointing among Democrats in Albany.

Lawmakers blamed Ms. Hochul for opposing their housing measures, particularly those to protect tenants, while the governor said lawmakers never presented her with any housing bills to approve.

This package did not include Hochul's previous plan to require suburbs to allow more density, including near transit hubs.

The Times reported that Hochul threatened to veto the housing package, given that the "good cause eviction" measure is opposed by the real estate industry, but the legislature didn't test her by passing it and then--not assured--mustering a supermajority to override a veto.

Atlantic Yards in limbo

The bottom line for Atlantic Yards/Pacific Park is that the 421-a tax break has not been extended or renewed, which means, at least for now, that it wouldn't apply to the first tower over the railyard (B5, aka 700 Atlantic Avenue), which wouldn't rise unless developer Greenland Forest City Partners moves forward with the first phase of an expensive platform.

That platform was supposed to start last year, with B5 starting a year later. Greenland said it had done preliminary work on the tower footings that could qualify the tower for the tax break, which--at least before any potential extension--required buildings to be finished by June 15, 2026. 

But it's a "never-say-never" project and the measure may return.

Advice beforehand

Before the end of the session, in New York Has a Housing Crisis. So Why Won’t Albany Act?, New York magazine columnist (and NY1 anchor) Errol Louis, had urged a compromise, citing nonprofit housing advocates regarding 421-a:

“There are dozens of projects that are at risk of stalling out,” Michelle de la Uz, executive director of the Fifth Avenue Committee, a Brooklyn-based nonprofit developer, told me. “Two-thousand of the 3,000 affordable units that are to be built as part of the Gowanus areawide rezoning are the ones that are really at risk.” Losing the state subsidy would leave many developers stuck mid-project.

New York Times columnist Mara Gay wrote There Are Better Ways to Solve a Housing Crisis Than This, urging support of the compromise: allowing Hochul to ensure suburban cooperation while giving retners security.

She also backed extension of 421-a and allowing bigger buildings in New York City, and pointed to more robust staffing for city housing agencies.

The 421-a question

Of course 421-a, as critics have pointed out, is not an efficient way to spin off affordable housing. The problem is that it is seen by developers as crucial in the absence of property tax reform--another policy stalled by legislative gridlock.

The Community Service Society suggested:

Because 421-a is so expensive and ill-targeted, and because several previous efforts to reign in and refocus the program have failed, the most productive thing for the legislature to do would be to allow the program to expire in June of 2022. Rather than wrangle over a new manifestation of 421-a, the legislature would better serve the public by revising the property tax system as a whole (so that expensive condominiums are not grievously undertaxed compared to rental buildings) and by designing new tools to provide public support for public, social and supportive housing. Any new incentive programs the state might consider in the future should be designed to provide developers benefits in direct proportion to social benefits—i.e., to the amount and cost of the affordable housing they produce.