Hochul announces financial incentive for Gowanus affordable housing developers in lieu of 421-a

governor kathy hochul at affordable housing announcement
Governor Kathy Hochul announced a slate of housing-specific executive actions in Gowanus on Tuesday.
Photo courtesy of the Office of Governor Kathy Hochul

Governor Kathy Hochul visited Brooklyn on Tuesday to announce a series of executive actions she said would promote housing growth amid an untenable housing crisis in New York — including a specific financial incentive for developers in the recently-rezoned Gowanus area.

The governor’s announcement — which included new programs, discretionary funding, and regulatory guidelines for creating affordable housing — came after the end of a legislative session many advocates as the state struggles with a housing shortage that has forced some New Yorkers to move out of the state. 

“People do want to be here,” Hochul said. “But we’ve not kept up with the need for building housing for decades. We announced this bold plan, but the legislature was not ready for it. But I still believe that we need a comprehensive solution to meet the scale of this housing crisis.”

Re-creating 421-a in Gowanus

At a press conference at Powerhouse Arts in Gowanus on July 18, Hochul introduced a neighborhood-specific executive action that will allow project developers within Gowanus to benefit in the same manner they would have under 421-a — an expired real estate tax exemption that incentivized developers to build new housing with additional affordable units.

This legislative session also saw the expiration of 421-a, a tax break which functioned to encourage and incentivize developers to build housing and create more affordable housing opportunities. Some critics saw the tax exemption as an opportunity for potential private development exploitation especially without the accompanying passage of “Good Cause Eviction” legislation — but the end of the program meant that many developers who had planned to build affordable units as part of the massive Gowanus rezoning were left without options. 

gowanus canal photo
The end of 421-a put thousands of affordable units slated to be built as part of the Gowanus rezoning at risk, Hochul said. File photo by Kevin Duggan

The governor said that despite some opposition, attempting to ease the housing shortage by any means necessary was a crucial priority for her administration.

“When the state legislature let the 421-a tax incentive program expire, it effectively killed thousands of housing units right here in this neighborhood,” Hochul said.

Under the new “Facilitating Development of Housing, Including Affordable Housing, Through Gowanus Program,” Empire State Development would purchase eligible properties in Gowanus, then lease them back to their original owners for a period of time matching the length of the 421-a benefits program. Properties would be deeded back to the original owners at the end of the lease term.

During that time, developers would make payments equal to the reduced tax payments they would have made under the original 421-a program. 

To be eligible for the program, projects must meet a series of criteria including being located in the Gowanus rezoning area; currently vested in expired 421-a program; a proposed building capacity of at least 50 housing units and containing affordable housing in compliance with 421-a; and compliance with Empire State Development’s Minority and Women-Owned Business Enterprises contracting requirements.

The governor will present the Gowanus proposal to the Empire State Development Directors later this week, where it will likely be approved. When the program comes into effect, eligible developers will apply to participate. 

“We approved the Gowanus rezoning to increase Gowanus’s affordability and resiliency,” Mike Racioppo, district manager of Brooklyn Community Board 6, told Brooklyn Paper. “This requires improving infrastructure and building more housing. Governor Hochul’s announcement today makes that closer to a reality.” 

Still, following the announcement of the executive order, some groups, including the Legal Aid Society — a legal non-profit organization — criticized the governor’s decision to reinstate certain aspects of 421-a and called for the advancement of both “Good Cause” legislation and the Housing Access Voucher Program.

Hochul announced a number of pro-housing initiatives and new development guidelines. Photo courtesy of the Office of Governor Kathy Hochul

“With this executive order, Governor Hochul continues to ignore the urgent needs of tenants statewide who are struggling each month to make rent,” the group said in a statement. “The Governor had ample opportunity this past session to act on New York’s proliferating eviction and homelessness crisis, and the Legislature offered a package of proposals that included measures addressing both the construction of new housing and immediate tenant protections. The Governor rejected this package, and she is now trying to save face with this executive order, one that is legally dubious at best, which will fail to ensure housing affordability in the short-term and accomplishes nothing to stabilize communities and keep tenants housed.”

Funding and incentives for creating new housing

The executive orders also include over $650 million in state discretionary funds to be distributed for “Pro-Housing Community Programs.” The funding would be awarded to municipalities throughout the state that are actively working to promote building new homes.

“We are sending a very simple message that communities that do their part to build housing will get priorities for funding over those who will not,” said Hochul.

The state’s Division of Homes and Community Renewal will assess communities to determine whether or not they are eligible for the program based on their housing policies and participation in state housing-growth initiatives. Communities that are dubbed “pro-housing” will be favored to receive funding from certain state programs, like the Downtown Revitalization Initiative and the New York Main Street program. 

Additionally, the executive orders direct New York State agencies and public authorities to consider and prioritize the creation of additional housing in all future policy and program decisions — Hochul and announced a request for proposals to redevelop the Downstate Correctional Facility in Fishkill and part of the Jacob K. Javitz Center in Manhattan. Both locations could provide space for thousands of new apartments, the governor said. 

hochul affordable housing in gowanus
A number of local politicians and community leaders celebrated Hochul’s announcement. Photo courtesy of the Office of Governor Kathy Hochul

“New York’s housing crisis isn’t going away, and I’m committed to doing everything in my power to make New York more affordable and livable for all,” Hochul said. “These executive actions are an important first step to expand our housing supply and promote housing growth. But make no mistake: to fully address the scope of this crisis, we need action from the legislature — and I’m committed to continuing our work on housing in the coming months.” 

Over the next few months, the governor said she will announce further regulatory changes that would streamline and ease the process of building new housing developments across the state.

New York State Senator Andrew Gounardes joined Hochul at the press conference, and said the housing crisis a “dire” issue in need of urgent action to rectify it.

“While we still need a comprehensive legislative solution to fully house New Yorkers, today’s announcement is crucial for the Gowanus community and our city, which is depending on 3,000 affordable units coming online as soon as possible,” said Gounardes. “By having the state come in and assist with these developments, Governor Hochul and New York State are ensuring thousands of families can live in this neighborhood with real financial stability and no displacement to existing residents. Affordable housing is a game-changer for families, and I look forward to these units’ positive impact on our community.”