Nothing to Celebrate About Albany’s Housing Plan
David R. Jones, The Urban Agenda
New York State has long been an affordable housing champion and innovator. We built one of the first public housing developments in the United States—the First Houses—on the Lower East Side in the 1930s and pioneered a unique, statewide limited-equity homeownership program, known as Mitchell-Lama, in the 1950s.
Unfortunately, the housing package included in the recently passed FY25 state budget does not live up to the State’s storied housing innovation legacy. It all but excludes the people who these previous housing programs centered: low- and moderate-income New Yorkers struggling with their housing costs. As homelessness reaches historic heights and the vast majority of tenants struggle with high rent burdens, the main beneficiaries of this housing deal are the already wealthy developers that will receive massive tax benefits to build luxury apartments most New Yorkers will never be able to afford.
The centerpiece of the housing deal is a revamped tax exemption program for housing construction that used to be called 421a but is now called 485x. The Community Service Society of New York (CSS) has long criticized the 421a program because, at nearly $2 billion in uncollected tax revenue, it is at once the city’s most costly housing program and yet it has provided alarmingly little truly affordable housing.
After 421a expired in 2022, CSS along with housing advocates from across the state have called for Albany lawmakers to steer public funding toward social housing construction, which would guarantee permanent affordability and feature better income targeting. Instead, 485x will provide developers with the same tax breaks with less focus on targeting those most in need. Area median income is the measure provided by the US Department of Housing and Urban Development to help determine who is eligible for affordable housing. 485x gives up to 40 years of tax exemptions if developers set aside 20 to 25 percent of newly built units for households earning below 80 percent of Area Median Income (AMI)— $111,840 for a NYC family of three— or 60 percent of AMI—$83,880 for a NYC family of three—in large developments located in certain high-cost neighborhoods.
On face value, 485x will be a bigger strain on public coffers than its predecessor. It will exclude buildings from tax collection for longer periods of time than 421a, meaning the rest of us will have to cover the difference. Further, as the NYU Furman Center noted in a recent Daily News article, 485x fails to account for the astonishing growth in AMI over the past few years due to inflation and other factors. In 2024, the 80 percent AMI threshold for a four-person household was $124,400. In an upcoming report, entitled “AMI in NYC: Visualizing Inequality and Unaffordability with Area Median Income,” CSS will show that New York City’s real median income is closer to 71 percent of AMI, or $90,241 for a NYC family of three.
Not surprisingly, our report found significant economic disparities persist between racial groups, with Black and Latino households earning 48 percent and 49 percent of AMI respectively, compared with Asian households (74 percent of AMI) and White households (91 percent of AMI). In other words, everyday New Yorkers will pay for the construction of new luxury buildings for the next 40 years, while being economically excluded from both the market and affordable units that will be built.
While failing to facilitate new production of homes targeted to New Yorkers’ real incomes, the housing package also does not protect affordable housing that already exists. Albany has offered $215 million in public housing capital, $685 million less than what was needed to fund the first year of a capital plan that could actually improve living conditions in New York City Housing Authority’s apartments, and other public housing developments across the state. While we celebrated Albany’s support of the Preservation Trust model, it cannot be a replacement for capital funding from the state.
Moreover, this housing package will do little to keep low and moderate-income New Yorkers in their homes. It does not include a penny for the Housing Access Voucher Program (HAVP), a proposed rental housing assistance program championed by the State Senate and Assembly, housing and homeless advocates, and even landlords.
Finally, while the package vaguely gestures toward tenant protections, the “Good Cause” provision it includes will be the weakest in the country. Its many carveouts exclude 87 percent of tenants who should be covered. What’s worse is that the Governor and legislators conceded to the real estate lobby, rolling back hard-won protections for rent stabilized tenants won in 2019. This rollback will increase displacement pressure on the 250,000 rent stabilized households who have lived in their apartments for a long time, the majority of whom are senior citizens.
In short, there is very little to celebrate in this year’s housing deal. Besides draining public resources without creating any deeply affordable units for those most impacted by our current housing crisis, it fails to protect our existing affordable housing, or to keep New Yorkers from being evicted or displaced.