ALBANY — Gov. Kathy Hochul’s signature initiative this year was a plan to build 800,000 units of housing in New York over a decade. In her State of the State in January, Hochul said that “solving our housing crisis would be a huge step toward making New York more affordable.”

But amid fierce resistance from the State Legislature, Hochul is no longer making her housing plan a priority in state budget negotiations.

That removes a major hurdle to passing a state budget, but means New York will likely not pass any major housing initiatives in 2023. Indeed, Hochul is refusing to go along with the alternative plan put forward by the Legislature, arguing it would not be successful. By not accepting the Legislature’s plan, Hochul is preserving the option of fighting to push through her own initiative at a future time.

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Housing agenda

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Housing had been a key sticking point contributing to a lengthy delay in passing a state budget that was due April 1. While Hochul has said passing a good budget is more important than a timely one, it became clear that the Legislature was not budging.

Hochul has argued that New York has among the most restrictive land use policies and building approval processes in the country, which inhibit the development of multifamily housing and add significant costs to building homes. The centerpiece of the Hochul plan, called the “New York Housing Compact,” created targets for home creation running in three-year cycles, which will apply to all municipalities: villages, towns and cities.

In downstate New York, municipalities would have had a target of 3% growth in new homes over three years. For municipalities in upstate New York, the target would have been 1%.

The most contentious aspect of Hochul’s plan would have allowed developers to bypass local zoning restrictions if housing growth did not occur quickly enough in a locality.

The Assembly and Senate scrapped Hochul’s idea in their one-house budget proposals in mid-March. Instead, legislative Democrats wanted to provide $500 million in incentives for local governments to hit growth goals. But supporters of Hochul’s plan say that, especially for affluent suburbs prone to resisting new development, the incentive will not work.

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Housing official: Hochul to de-emphasize issue

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In a statement on Tuesday, Hochul said that, “After weeks of negotiations, the Legislature continues to oppose core elements of the Housing Compact, including the requirement that communities across the state meet growth targets.”

“We have not yet come to a final agreement, but it remains clear that merely providing incentives will not make the meaningful change that New Yorkers deserve,” Hochul said. “I will continue to discuss other elements of the plan and policy changes that will increase supply and make housing more affordable.”

Rachel Fee, executive director of the New York Housing Conference, said Hochul’s office reached out Tuesday morning to inform the group of the governor’s decision to de-emphasize housing during negotiations.

The New York Housing Conference, a nonprofit affordable housing policy and advocacy organization, supported Hochul’s plan. Fee says Hochul was right not to go along with the Legislature’s incentive-based approach, calling the plan a “waste of taxpayer money” that had proven not viable in other states and would simply subsidize housing that would be built anyway.

“We think she did the right thing by not adopting a program that was destined to fail,” Fee said.

Many local elected officials throughout New York were opposed to Hochul’s plan, and Senate Majority Leader Andrea Stewart-Cousins recently stated that lawmakers were struggling to sell the proposal to their constituents.

After the budget is passed, Hochul will have less leverage to push through priorities for the rest of the 2023 legislative session, including housing. Fee believes Hochul’s plan is unlikely to be revived before year’s end, but also thinks Hochul’s proposal this year could have a longer-term impact.

“I think that the governor put out a really bold proposal, and this is going to be part of a push in New York where voters are going to demand action on the housing supply,” Fee said.

Based on her conversation with the governor’s office, Fee believes a number of other housing issues remain part of budget negotiations, although it’s unlikely any will significantly move the needle on increasing housing supply. Many of the major outstanding issues primarily impact New York City, although potential changes to two — the Emergency Rental Assistance Program and the Housing Access Voucher Program — have statewide ramifications, Fee said.

Hochul had much more success pushing through her other major budget priority, a change in the state’s bail laws clarifying judges’ discretion to set bail. The change Hochul sought is very likely to be part of the final budget agreement.