Opinion: Give New York developers a reason to build

In the midst of a contentious mayoral election, one thing many New Yorkers seem to agree on is the need to make New York more affordable. We want more housing and more growth, generally, along with clean energy and other projects that create jobs and opportunity. This is the “abundance” agenda referred to by Ezra Klein and Derek Thomson in their recent book, also titled “Abundance.”  Most of our mayoral candidates would sign on to this important agenda.

Now, you may not like what I’m going to say next, but hang in there with me. If we want to see this progress, we are going to need substantial private investment. That means setting aside our suspicions and skepticism about developers and giving them the tools they need to, well, develop. Developers are considered the stock villains in our local melodrama. We accuse them of acting out of greed and enriching themselves at our expense. Measures to protect affordable units from rising rents can protect some renters in the short run, but they will do little to ameliorate our long term affordable housing crisis, caused in large part by a lack of supply of housing. Ultimately, lower living costs and a growing city and state require brick and mortar.

There’s the catch: the government builds roads, bridges, public buildings, infrastructure, and even housing. But it is wildly expensive for the government to build housing and so at the end of the day, we need to rely on private developers.

Let’s be clear: the more motivated developers are to build, the more they will build.  To invest in a project, a developer needs a budget that pencils out (i.e. produces a profit that attracts investors, encourages lenders to lend and investors to invest), a reliable timeline and manageable risks. Developers must pay their fair share of taxes, pay fair wages, and comply with environmental, health and safety, labor and other laws. But at the end of the day, we need them to build.

How do we do this? There are five key catalysts for growth.

First, the fundamentals – zoning. New York City has taken a vital step forward with the City of Yes. The city has also upzoned Gowanus and other areas, and the state has helped move a number of projects forward with a General Project Plan, a tool that in the right circumstances can advance projects quickly. Also, Gov. Kathy Hochul and the Legislature lifted the caps on floor to area ratios, allowing for more dense housing development. New York City incorporated those changes into the City of Yes. Let’s now use this momentum to continue upzoning where appropriate, including encouraging transit-oriented development around the state.

Second, incentives matter. New York is a wildly expensive place to build. High end luxury housing can and does take care of itself, but affordable housing does not. While decried as giveaways to developers, tax credits, tax exempt financing, building bonuses and other incentives lead to the construction of affordable units. And, if we want developers to pay higher wages as part of an incentive program, and if we also want deep affordability, then we have to adjust the incentives accordingly. Gov. Hochul led the state to adopt an office-to-residential conversion incentive program in exchange for the inclusion of affordable housing. This program is off to a strong start. The new 485x plan, also adopted as part of the state budget in 2024, seeks to strike the right balance to encourage the development of affordable and other rental housing across the five boroughs. Time will tell whether this program needs adjustments to maximize construction of affordable units.

Third, we need to cut red tape. While many agencies are timely and efficient, others just move too slowly. Time is money. Costs go up every passing month while pending approvals sit piled on a desk. Agencies need to act with the sense of urgency that New Yorkers need. New York City set up an Office Adaptive Reuse Taskforce to streamline the process for office-to-residential conversions. Let’s expand on this approach.

Fourth, community voices are important but the loudest voices play an outsized role in determining the fate of development. Land use laws, environmental laws, building codes, community boards and advisory committees and more are all designed to protect communities’ interests. But sometimes, there is a separate, informal review process dictated solely by community opposition. That separate process defeated the rezoning of Industry City and numerous other valuable projects. More recently, that parallel process defeated what would have been the state’s largest battery storage facility in Carmel.

Finally, legislators must be practical. City and state legislatures pass too many laws that ratchet up the costs of construction and reduce building owners’ post-construction revenue. We need to look at reversing this trend. In a move that New York should carefully examine, California just revised its environmental laws to encourage housing and other priority development projects. 

Just to be clear, this is not a love letter to developers or a call to subsidize unreasonable profiteering or recklessness. It is a call to recognize the realities we face and to remove barriers to development that leave us all in the rearview mirror of progress. Developers are a necessity, whether we like it or not. Instead of decrying greed, let’s create an environment to encourage responsible development.