Hochul plan: Hopeless, but at least calls lawmakers’ bluff

If you consider local control so important, prove it.

That is Gov. Kathy Hochul’s unspoken message to state legislators this session.

Last year they balked at her housing plan because it would have removed control over housing development from NIMBY towns.

So in Tuesday’s State of the State she challenged state legislators to cede control to New York City on two important things: property taxes on rental projects and a cap on housing density.

If — or more accurately when — legislators refuse, it will reveal them to be hypocrites of the first order. (Quite a revelation, I know.)

State legislators are all for local control, except when it involves giving up something they control from Albany. Especially New York City real estate.

Example One is their refusal to let the city reduce taxes on rental projects. The state used to freeze property taxes on qualifying projects for 25 years, then phase out the abatement over 10 years.

State legislators let that program, 421-a, expire in 2022, saying it didn’t deliver enough affordability. But they refused to replace it, leaving property taxes on rentals much higher than on condos and single-family homes. As a result, rental development typically does not pencil out and project filings have plunged.

Example Two is the floor-area ratio cap, which applies to residential properties in the city. The FAR cap makes conversions of some office properties illegal. Given that the city badly needs to add housing and cull dated offices, the cap is unconscionable.

State legislators won’t fix either problem, but won’t let New York City fix them either. Unfortunately, Hochul doesn’t have enough political capital to get them to act. Mayor Eric Adams, he of the 28 percent approval rating, has even less.

Hochul does have a soapbox, though. She could criss-cross the state, bashing lawmakers by name for failing to take New York’s housing shortage seriously. But politicians don’t do that, especially to members of their own party. Hochul is not going to throw fellow Democrats under the bus, especially with control of the House of Representatives hanging in the balance.

Eliot Spitzer ignored that protocol, burning so many bridges as governor that when he was engulfed by scandal, no one came to his aid and he had to announce his resignation within three days. Andrew Cuomo held out for months but ultimately had the same problem. Hochul prefers not to make enemies.

Instead, she is giving legislators the chance to make it seem like they are taking action on housing — which will help their re-election campaigns this year — by handing the ball to the City Council.

If, many months later, Council members replace 421-a and lift the FAR cap, any criticism of those actions would be focused on them more than on state lawmakers.

Hochul can’t make legislators act, but she can convince them that acting is in their best interest. She won’t call them out individually, but is instead rallying New Yorkers to support more housing. Most voters do want more housing — as long as it’s not next door.

Now, the bad news. As plausible as Hochul’s strategy is, it probably won’t produce any housing. Even if Albany empowers New York City to seize control of its housing destiny, Council members are not likely to pass laws that actually work.

Progressives are blithely unaware of the realities of real estate. They will surely attach heavy affordability requirements that cancel out whatever incentive they are offering developers. Many still believe that there is so much profit in projects that the industry can shoulder any burden placed on it.

Case in point: last year’s office conversion bill. It was so unrealistic that developers told Adams not to bother advocating for it in Albany. (He did so anyway; it didn’t pass.)

Even the most socially minded, wildly optimistic developer can’t build an ultra-progressive project without financing. What are the chances of such a developer finding a socially minded, wildly optimistic bank?

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