Governor Kathy Hochul has recently celebrated the passage of a new housing deal within the FY 2025 Enacted Budget. This ambitious package aims to stimulate housing production, enhance affordability, and fortify tenant protections.
At a gathering with state leaders and labor representatives, Hochul hailed the agreement as a historic victory that “will transform lives and put working families first.” However, the modifications introduced, especially around the controversial 485-x tax incentive, evoke mixed feelings across the real estate and tenant advocacy spectrums.
One of the key elements of the deal is the extension of the previously expired 421-a tax abatement, now modified and extended to rejuvenate stalled projects. This provision alone could revive up to 72 projects in New York City, potentially adding 33,000 housing units. Daniel Bernstein, a real estate lawyer, shared his optimism about the immediate impact of the extension, noting, “I’ve already had many conversations with people who could use the extension to easily produce thousands of units if they can get financing and resume construction.”
However, the reception among developers regarding the new 485-x tax break is lukewarm at best. Scott Rechler, CEO of developer RXR, pointed out the financial viability challenges posed by the required affordability levels and increased labor costs, which he estimates could increase by about 20 percent on average. “It’s hard with the labor numbers where they are,” Rechler explained, underscoring the financial constraints developers face under the new framework.
Tenant advocates, meanwhile, express deep reservations about the effectiveness of the new tenant protections. Cea Weaver from Housing Justice for All criticized the governor’s approach, arguing, “Governor Hochul did not solve the housing crisis — instead she pushed through a housing deal written by the real estate industry to ensure they keep getting richer off the backs of hardworking tenants.”
Amid these controversies, labor leaders celebrate the inclusion of strengthened wage standards. Gary LaBarbera, President of the Building Trades Council, praised the set wage provisions in the 485-x program as a victory for labor enforcement and worker empowerment. “This measure makes possible a true enforcement of wage standards upon developers, supports workforce development necessary to adequately address housing needs, and opens more pathways for construction workers to pursue the middle class,” LaBarbera stated.
The Governor also emphasized the broader impacts of the housing initiatives, including anti-price gouging and eviction protections, and new incentives for mixed-income and affordable housing projects. Despite these advancements, significant challenges remain, with Rafael Cestero, President of the Community Preservation Corporation, noting, “This is not going to solve all the problems, but I think it’s progress, and progress is really important.”
The deal, while not without its critics, represents a critical step toward addressing the acute housing shortage in New York. It showcases the delicate balance of interests that must be navigated to tackle such a pervasive issue. As stakeholders continue to debate its merits and shortcomings, the true effectiveness of this comprehensive housing package will unfold in the coming years.
