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Land Use, Housing & Zoning

March 2022, Land Use, Housing & Zoning Committee

Governor Hochul's Housing Budget Proposals

At the regularly scheduled monthly Community Board Five meeting on Thursday, March 10, 2022, the following resolution passed as follows:

(1) Ease Restrictions on Converting Hotels and Offices to residential uses, OPPOSED with a vote of 27 in favor; 10 opposed, 1 abstaining

(II) Lift the residential FAR cap and give the City of New York authority to encourage densification, OPPOSED with a vote of 26 in favor; 11 opposed, 1 abstaining 

(III) end the 421-A Tax Abatement and establish a new program that 

more effectively uses public dollars to drive affordability, OPPOSED with a vote of 34 in favor; 2 opposed, 1 abstaining; 1 present not entitled to vote.

WHEREAS, Governor Hochul has introduced articles in the Executive Budget to (i) ease restrictions on converting hotels and offices to residential uses, (ii) lift the residential FAR cap and give the city of New York authority to encourage densification, and (iii) end the 421-a tax abatement and establish a new program that more effectively uses public dollars to drive affordability; and

WHEREAS, Community Board Five has serious concerns about these proposals and their effectiveness to achieve the stated goals; and

WHEREAS, Community Board Five expresses the attached position on these proposals; and

WHEREAS, Community Board Five urges the Governor to better include the public, local legislators, and community boards in discussions on these matters which have such a direct impact on our local community; therefore, be it

RESOLVED, That Community Board Five urges the Governor to remove these proposals from the State budget; and be it

FURTHER RESOLVED, That Community Board Five urges our State and City legislators to oppose the proposals; and be it

FURTHER RESOLVED, That Community Board Five urges the Governor to include the public, local legislators, and community boards in discussions on these matters to find more effective ways of achieving their stated goals.

STATEMENT AND POSITION BY COMMUNITY BOARD FIVE ON GOVERNOR HOCHUL’S PROPOSALS TO (I) EASE RESTRICTIONS ON CONVERTING HOTELS AND OFFICES TO RESIDENTIAL USES, (II) LIFT THE RESIDENTIAL F.A.R. CAP AND GIVE THE CITY OF NEW YORK AUTHORITY TO ENCOURAGE DENSIFICATION, AND (III) END THE 421-A TAX ABATEMENT AND ESTABLISH A NEW PROGRAM THAT MORE EFFECTIVELY USES PUBLIC DOLLARS TO DRIVE AFFORDABILITY

In her 2022 State of the State address, Governor Hochul made proposals to (i) ease restrictions on converting hotels and offices to residential uses, (ii) lift the residential FAR cap and give the city of New York authority to encourage densification, and (iii) end the 421-a tax abatement and establish a new program that more effectively uses public dollars to drive affordability.  Community Board Five has the following analysis and response to these proposals:

  1.           Ease Restrictions on Converting Hotels and Offices to Residential Uses

GOVERNOR HOCHUL’S PROPOSAL IS AS FOLLOWS:

The ongoing shortage of housing in New York, combined with the post-pandemic rise of remote work that has emptied out offices and hotels, has given rise to the need for more flexible zoning rules that make it easier for buildings to convert commercial spaces into residential ones as needs change over time. Governor Hochul will propose legislation to facilitate conversions in the following manner:

COMMUNITY BOARD FIVE’S RESPONSE:

CB5’s position on this subject was previously established in our resolution of February 2021 when an earlier version of this proposal was announced. 

The proposal expressly overrides “any state law ... local zoning law, ordinance, resolution, or regulation” that would have the effect of limiting the conversions allowed by the proposed amendment, including but not limited to the NYC Zoning Resolution, the Energy Code and the NYC Building Code.  Instead of going through a proper legislative process, this sweeping legislation was included in the FY 2022 New York State Executive Budget, without input from the communities it would affect or the state and local legislators whose laws it would override.

Furthermore, the proposal would enable conversion of numerous properties, most of them located in CB5, while not giving those communities the benefit of much-needed affordable and supportive housing because of the “loophole” allowing developers to do a building’s full conversion in one location and a contribution to a fund managed by the State to spend anywhere and anyhow the DHCR chooses.  While neighborhoods in CB5 may benefit from a use change allowing residential conversions, such changes must be done in a thoughtful and comprehensive way, following the SEQRA and CEQR technical manuals, with full evaluation of environmental impacts, with community input and guidance from local stakeholders and legislators, and with proper mitigations, such as the creation of school seats, open space, hospital beds and other services a new residential population would require.

  1.           Lift the Residential FAR Cap and Give the City of New York Authority to Encourage Densification

GOVERNOR HOCHUL’S PROPOSAL IS AS FOLLOWS:

Existing New York State law limits the maximum density of residential floor area ratio (FAR) in New York City to 12.0, even though it does not limit the overall allowable floor area that may comprise other uses. Governor Hochul will propose a repeal of this antiquated limitation on the City’s authority and give the City the autonomy it should have to allow for denser residential development where appropriate.

COMMUNITY BOARD FIVE’S RESPONSE:

CB5 echoes the sentiment of the Municipal Art Society of New York in their letter to Governor Hochul, et. al. That statement reads:

“[W]e cannot support lifting the FAR 12.0 cap on residential buildings. Despite the seeming logic of giving New York City local control over its own zoning decisions, there are many overriding considerations that limit our ability to support this recommendation.

There has been no demonstration that increased density alone yields affordability. Indeed, there is widespread agreement that the City’s Mandatory Inclusionary Housing (MIH) program has not produced the affordable units promised, while the City’s Voluntary Inclusionary Housing program similarly yields trivial numbers of and relies too heavily on the private sector to produce affordable units. Both should be significantly rethought by the City. MIH has also shown that the City lacks comprehensive data of existing affordable units. In addition, New York City has a considerable amount of developable FAR already; even affordable projects leave unused FAR on the table. The argument that the lifting of the FAR cap is necessary to create FAR is unfounded.

We question whether New York City officials need “authority to encourage densification” without a corresponding mandate for sound planning, adequate environmental review, and the assurance of an emphasis on the production of affordable housing over new market rate units. Many City neighborhoods are dense already. The conversation around lifting the cap on residential FAR further concentrates growth pressure on the areas of the city that have some of the most housing without taking into account other strategies to introduce new housing into lower-density areas in the city. Recent economic studies on the benefits of preservation in the City show that historic districts are often denser than the surrounding areas. The Upper East and West Sides of Manhattan, containing nearly twenty designated districts, are the two densest communities in the country. The existing density in these areas supports vibrant commercial districts, street-level activity, and reinvestment to maintain the character of the buildings and the culture of the communities they serve.

Recent rezonings in New York City, whether in richer or poorer communities, have been highly contested. There have been many reasons for this, but the overwhelming concern is that communities feel ignored. The current environmental review process, the lack of long-term community-based planning, and critical gaps in the land use process have led to the discord these proposals engendered. We believe there must be a well-considered plan prior to zoning changes, including criteria minimizing the affected land area and a public planning process. Any change to the no-cap must respect historic districts and ensure that they will not be negatively affected. Historic districts only occupy some 5% of the buildable land in the City. Further, 95% of subway entrances are outside of historic districts. The definition of “transit rich” needs to be expanded.

The City’s last Administration made two prior attempts to lift the cap with limited public information or debate. These previous efforts were minimally supported in the legislature and received active opposition from many New York City representatives in the State Legislature. We welcome the opportunity for a robust public debate of your current proposal where we can present our arguments against lifting the residential FAR cap as well as our support for alternative strategies to increase affordable housing production, support community-based planning, and stabilize our neighborhoods.”

 

 III.            End the 421-a Tax Abatement and Establish a New Program That More Effectively Uses Public Dollars to Drive Affordability

 

GOVERNOR HOCHUL’S PROPOSAL IS AS FOLLOWS:

There is a critical need for affordable and market-rate rental housing in New York City. Real estate tax abatements have historically driven the development of new rental units across the city with 200,000 apartments currently covered by the 421-a program. Since 2010, nearly half of all new residential units built in New York City took advantage of this program, which has spurred housing construction and the creation of thousands of affordable units.

With 421-a set to expire in 2022, there is an opportunity to enact a different kind of abatement program that can continue to incentivize rental housing construction across New York City while creating permanent and deeper affordability and spending taxpayer money more efficiently.

Governor Hochul will propose a new tax abatement that aims to achieve these goals:

 

COMMUNITY BOARD FIVE’S RESPONSE:

The 421-a property tax exemption program has not produced the needed level of affordable housing in CB5.  Governor Hochu’s proposal basically extends the tax benefit to developers with some changes but not in a way that would effectively create more affordable housing. 

421-a was signed into law in 1971 when New York City was in a state of declining population, decelerating construction, and diminishing real estate values.  Those conditions no longer apply today, and several attempts to correct the program and add new requirements to it have failed to either shrink the cost of the program or produce a meaningful amount of truly affordable housing.  421-a has been substantially revised three times—in 1984, 2008, and 2017—and still has not produced the needed levels of affordable housing.

Governor Hochul’s revision of 421-a, called Affordable Neighborhoods for New Yorkers, creates a new tax rule, 485-w, that would continue the 35-year break to rental projects that offer below-market rates on at least 25% of their units.  485-w would provide that, if a project contains 30 or more units, 25% would need to be affordable (10% at 40% of average median income (“AMI”), 10% at 60% AMI and 5% at 80% AMI). 

This basically extends the same tax benefit for developers, with some changes regarding affordability.  While we appreciate the deepening of the affordability requirement, this still isn’t enough to redeem the proposal.  The same inefficient structure of 421-a is perpetuated by 485-w.

Of particular concern is that, because the proposal defines “affordable” at 90% of the AMI for buildings with 30 apartments or less, developers will favor smaller projects overall. That may reduce the total number of homes created, further exacerbating the lack of affordable housing.  For larger buildings, the lowest income level would be 40% of AMI, but only for 10% of the units.  With projects under 30 units, 20% of the units must be set aside for affordable at 90% of AMI but this requirement would end when the tax exemption ends, allowing free market units to remain free market after the tax exemption period expires.  Furthermore, with AMI in our district being so high, relative affordability remains unaffordable for most.

The proposed structure of tax abatements for affordable housing does not go far enough, nor provide certainty that the needed level of affordable housing will be produced.  With just these few tweaks, 485-w will fail just as 421-a has. 

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