Big City, Little Reforms

The final version of New York's "City of Yes" reforms makes modest liberalizing changes to the city's zoning code.

Happy Tuesday and welcome to another edition of Rent Free. This week's newsletter covers:

• The official launch of Congress' new YIMBY Caucus.
• President-elect Donald Trump's pick to lead the Department of Housing and Urban Development (HUD).
• A new report on Los Angeles' slow-as-molasses disbursement of homelessness dollars.

But first! We take a look at the final version of New York City's major zoning overhaul.

---

A Watered Down 'City of Yes' Nears Passage

It's been a long journey for New York's City of Yes for Housing Opportunity—Mayor Eric Adams' plan to allow "a little more housing in every neighborhood."

Adams first announced this suite of reforms to pare back minimum parking requirements and allow more housing near transit stops, in commercial zones, and in low-density areas all the way back in June 2022.

"We are going to turn New York into a city of yes. Yes in my backyard. Yes on my block. Yes in my borough," he said at the time. New York's YIMBY ("yes in my backyard") activists heralded the plan as a vibe shift—the city was at last getting in on the movement to allow more housing in more places.

The intervening two and a half years saw city planning staff draft a detailed version of these rules, the city's community boards and borough presidents demand changes, and the City Planning Commission and City Council insert amendments that all had the effect of watering the proposal down.

On Thursday, the City Council's zoning committee made what is expected to be a final set of changes to the 1,400-page zoning overhaul. The plan now goes back to the City Planning Commission for one final look before the whole City Council votes on it.

The ultimate version of the City of Yes is less ambitious than what Adams proposed and enables less housing than what many housing policy wonks say the city needs. Still, progress is progress.

More Parking, Bigger Units, Less Housing

The biggest changes made by the City Council on Thursday all have to do with parking.

The original version of Adams' City of Yes plan called for the total elimination of parking minimums—rules that require developers to include a set number of off-street parking spaces for every new home they build.

Critics of parking minimums argue that the policy drives up developers' costs, leads to an overproduction of parking compared to what the market would provide, and makes smaller-lot multifamily development infeasible. Dozens of cities and a handful of states have pared back or abolished these rules and witnessed more housing construction as a result.

But following the lead of urban Minneapolis was a bridge too far for New York City council members. Their Thursday parking amendments to the City of Yes divide the city into three zones.

In zone one, covering most of Manhattan and parts of Brooklyn and Queens, parking minimums are eliminated. In zone two, parking minimums are eliminated for smaller projects near transit stops and reduced for other types of housing. In zone three, existing parking minimums are left mostly untouched.

Eric Kober, a former New York city planner and a scholar with the Manhattan Institute, says that developers will respond to the new rules by proposing smaller projects that avoid the remaining parking minimums.

More housing will get built as a result, but "you're promoting inefficiency because each building has to have its own heating system, its own elevator, and so on," he says. Incentivizing developers to pursue smaller projects will also make some mixed-use retail-residential projects more difficult, he says.

The hodgepodge of other amendments made by the City Council on Thursday all have the effect of allowing less housing than the original City of Yes plan.

The City Council reduced the number of areas where newly legal accessory dwelling units (ADUs) will be allowed and will require that anyone building an ADU must live on the property.

Changes that would have allowed developers to build smaller studio units have been pared back. The lowest-density areas are exempted from new rules that would allow small apartments on commercially zoned streets.

(See here for a summary of the City Council's changes.)

A Little More Housing in Some Neighborhoods

The city estimated that Adams' original City of Yes plan would enable an additional 109,000 housing units to be built. The City Council's amendments whittle this down to 80,000 units—and that's a very rough estimate.

The City of Yes will not transform New York from a high-regulation, high-cost jurisdiction into a fast-building boom town. But the reforms are a positive, worthwhile improvement, says Alex Armlovich, a New York-based housing policy researcher at the Niskanen Center.

"As a first step, it's big enough to still be a very real first step," he says.

It's notable that the City Council passed Adams' City of Yes after the mayor was indicted on federal corruption charges. The mayoral candidates running to replace Adams have all endorsed the City of Yes as well.

That suggests the political winds in New York are shifting in a more pro-development direction.

---

Congress Gets a YIMBY Caucus

At a Thursday Capitol Hill press conference, assembled Congress members and advocates officially announced the formation of a bipartisan YIMBY conference that will work to advance housing supply legislation in the incoming Congress.

"Where Republicans and Democrats agree on this issue is we understand that building housing is critically important, that there's a housing crisis in many of our states, and this is also a jobs issue, and oftentimes that housing is overregulated," said Rep. Robert Garcia (D–Calif.) at the press conference.

President-elect Donald Trump's campaign trail proposal for increasing housing supply was to open up federal lands in Western states for residential development.

Asked by this reporter whether that was something the YIMBY Caucus could work with Trump on, Garcia said yes.

"There's a lot of opportunity to build housing on federal land. We've overregulated where we should and can build," he said, adding that state bodies like the California Coastal Commission are also a big part of the problem.

Regarding what kind of legislation would fare best in a Republican Congress, Garcia suggested potential additional tax credit for developers, particularly tax credits for commercial-to-residential projects. The tax bill Congress will take up next year could be a vehicle for moving some of those policies, said Garcia.

He also expressed support for the idea of including incentives for land use deregulation in existing federal grants.

---

A New HUD Secretary at Last

Trump announced that he'll nominate former Texas state Rep. Scott Turner to helm HUD.

Turner held a housing position in the first Trump White House, where he worked to promote investment in tax-advantaged "Opportunity Zones." In 2023, he was hired as the chief visionary officer for multifamily development firm JPI.

That would seem to make him a pretty conventional and qualified HUD secretary. Housing industry professionals and associations have been quick to praise Turner's selection.

The Opportunity Zones program that Turner promoted to investors was not without controversy. Created in the 2017 Tax Cuts and Jobs Act, the program allowed investors to defer or write off federal taxes on investments in low-income census tracts designated by a state's governor as Opportunity Zones.

A 2019 ProPublica investigation found that some high-income areas were being designated as Opportunity Zones. An analysis by the Niskanen Center found a similar pattern. A 2021 Government Accountability Office report said the IRS lacked the necessary data to properly oversee the program and evaluate its performance.

---

L.A. Is Sitting on Millions of Unspent Homelessness Dollars

A new analysis from Los Angeles City Controller Kenneth Mejia found that around half of the city's $1.3 billion annual homeless budget went unspent this fiscal year.

"Homelessness is still at a historic high," Mejia said in a press release. "The City had a record high homelessness budget at its fingertips but failed to spend over half a billion dollars of it."

Mejia's report blamed the city's cumbersome and outdated processes at city hall, plus "siloed efforts" and a lack of staff for the failure to spend all its allotted homeless dollars.

"While the Controller is saying there's too much money being spent one day, and not enough being spent the next, Mayor [Karen] Bass has been executing a prudent and comprehensive strategy that brought down homelessness overall for the first time in years," said a city hall spokesperson to the Los Angeles Times in response.

Spending quickly and efficiently is apparently too much to ask of city hall.

---

Quick Hits

• Providence, Rhode Island, has enacted a new comprehensive land use plan that calls for more types of housing and more affordable housing, but also more regulation of the aesthetics of what new housing can look like.
• A property owner in Hermosa Beach, California, is asking officials in the coastal community to waive code requirements that his single-story commercial building include an elevator to allow access from the handicapped parking space in the elevated parking lot in the rear of the building. The city already waived requirements that the building come with rooftop solar panels. The owner says that the building is already handicap accessible and that the elevator would make it harder to rent out the currently vacant building.
• A lesson on supply and demand: New York City cracked down on Airbnb and new hotel construction. Now hotel prices are at record highs.
• NIMBY ("not in my backyard") stronghold Berkeley, California, elects a pro-housing mayor.
• Developers pivot to building hotels and smaller condo buildings to avoid Portland, Maine's affordable housing mandates.