Hochul wants condos in exchange for HAVP

Gov. Kathy Hochul has finally (sort of) come around on the Housing Access Voucher Program as part of the state budget, but not for free. According to three sources with knowledge of the talks, the governor is pushing to tie the Housing Access Voucher Program to legislation favored by real estate developers that would make it easier for building owners to convert units in certain mixed-income buildings into condos. And she’s only willing to do the exchange for a two-year pilot.

Legislators have pushed for the Housing Access Voucher Program for years, continually allocating $250 million in both chambers’ one-house budget proposals to jumpstart the rental voucher program for low-income people facing imminent or experiencing homelessness. The legislation has also attracted a wide array of supporters, uniting both tenant advocates and the real estate industry in a rare instance of agreement. It also has the backing of many powerful lawmakers in New York City and Congress. But Hochul has never included the legislation in her budget, and has opposed passing it due to the high price tag her office predicted it would ultimately have. 

Last week, City & State first reported that the voucher issue had been revived from the dead and was likely to be included in the final budget. It was the first time that the governor had indicated any serious consideration for the measure. On Tuesday, Hochul gave a number she was willing to fund: $50 million, far less than what lawmakers wanted but better than nothing. 

Specifically, the governor has proposed a pilot voucher program that would expire in two years, rather than committing to a permanent one, according to three sources with knowledge of negotiations. The pilot program would be funded at $50 million per year. Lawmakers and the governor disagree on when the program or pilot would start, with legislators pushing for a September launch and the governor asking to wait until April of next year.

And Hochul wouldn’t even agree to the limited pilot program without asking for something in return. According to sources, the governor wants the Legislature to agree to include in the final budget legislation that would reduce the threshold for developers to convert rental apartments into condos in certain mixed-use buildings. She had not included the measure in her executive budget proposal, but the state Senate had put it in its one-house rebuttal. The purpose of the bill is to preserve affordable housing – the law would apply to certain residential buildings that have units where affordability may be about to expire or permanently affordable apartments that may fall into disrepair. Traditionally, condo conversions offer building owners a fiscal windfall, though alternatively can give renters a shot at homeownership if they drive conversion efforts. 

The measure now pushed by Hochul would be fairly limited in scope, only applying to buildings built after 1996 with 100 units or more. It would also require that all rent-restricted units be subject to rent stabilization moving forward, and that permanently affordable units be expanded. And the legislative version mandates that the affordable units be either sold to a community land trust or nonprofit, or become low-income ownership units. 

As laid out in the legislative version of the proposal – sponsored by state Sen. Cordell Cleare and Assembly Member Harvey Epstein and dubbed the Affordable Housing Retention Act – building owners would be allowed to convert the market rate units in qualifying buildings into condos with the agreement that they would preserve the affordable rental units. To sweeten the pot, only 15% of “bona fide purchasers” of a condo – which includes both current tenants and nontenants – would need to agree to the conversion, as opposed to the 51% of building residents, as currently required by law. 

The threshold for conversions changed from 15% of building tenants to 51% in 2019 when lawmakers approved the Housing Stability and Tenant Protection Act, renewing rent stabilization laws and enacting other tenant-friendly measures. The change drastically reduced the number of condo conversions, and the real estate industry vehemently opposed the provision at the time, while housing advocates who generally dislike conversions were pleased with the new law.

Details from the original bill are still subject to change as state leaders hash out a final agreement on the Housing Access Voucher Program and condo conversions, as well as the budget as a whole. The measure has the backing of the Real Estate Board of New York and housing groups like Habitat for Humanity that could take stewardship of the affordable units in order to rent them. Other progressive housing advocates have generally opposed the measure.