Streamlining and Taxes
New York lawmakers exempt some housing from the state's environmental review law while piling taxes on second homes.
Happy Tuesday and welcome to another edition of Rent Free.
This week's newsletter takes a look at some recent state-level policy changes in New York, where lawmakers passed streamlining reforms to the state's environmental review law for the first time in decades while also layering on new taxes on second homes.
Meanwhile, in Portland, Oregon, city-sponsored affordable housing approaches financial collapse, and rent control continues to suppress new development in Saint Paul, Minnesota.
In New York, Some Streamlining…
At the tail end of last month, the New York Legislature belatedly passed a state budget bill that includes a handful of housing policy changes.
That includes some streamlining reforms to the State Environmental Quality Review Act (SEQRA). Like the California Environmental Quality Act and the National Environmental Policy Act, SEQRA requires governments to review the environmental impacts of discretionary actions they take.
Rent Free Newsletter by Christian Britschgi. Get more of Christian's urban regulation, development, and zoning coverage.
Housing projects that require a rezoning, public subsidy, or special permit may be required to perform SEQRA reviews. Study periods can last anywhere from six months for smaller projects that are subject to a lesser level of review to close to three years for more significant rezonings.
Like other environmental review laws, SEQRA also allows third parties to sue when they believe a project was approved without a thorough enough environmental review.
In 2024, state courts decided 43 SEQRA lawsuits. Only 10 of those involved housing projects, and of those, only one housing project was ultimately stopped by the courts.
Even so, lawsuits are expensive, particularly SEQRA lawsuits that can last years.
"The mere threat of legal challenges increases the time, cost and uncertainty for projects that already undergo extensive environmental review," writes Sean Campion, the director of housing and economic development studies at the Citizens Budget Commission, for Vital City.
Democratic Gov. Kathy Hochul had proposed excluding some housing projects from SEQRA review as part of her Let Them Build plan.
The reforms passed as part of the budget in late May exempt rezonings, site plan approvals, and other land use actions done to allow denser housing projects of up to 500 units on infill lots.
You can read more detailed summaries here and here of which particular projects and parcels qualify for SEQRA exemptions.
The reforms also impose new deadlines for projects that still need to undergo SEQRA review. Environmental Impact Statements, the most demanding level of SEQRA review, must generally be completed within two years.
Increasingly, the view among wonks and policymakers is that open-ended environmental review laws have been a mistake. They can add years to the delivery of housing and infrastructure while providing few substantive environmental protections.
All but seven states and the federal government manage to get by without these laws. Where these laws do exist, the trend has been to exclude more and more projects from their purview.
New York now joins the ranks of the reformers by exempting some types of discretionary land use actions from its environmental review law when they result in more housing. A deeper reform would be to allow more housing to be built without needing a discretionary process in the first place.
…And Some Taxes
New York's budget also includes the so-called pied-à-terre tax on second homes worth more than $1 million in New York City that Democratic Mayor Zohran Mamdani had been agitating for as part of his "tax the rich" agenda.
The tax, which will be implemented in stages, is anticipated to bring in $500 million, although revenue estimates are complicated by New York's arcane property tax system that, per The New York Times, undervalues high-end real estate.
The politics of taxing rich nonresidents' second homes is pretty straightforward for the city's socialist mayor and the state's liberal governor.
As a revenue raiser, the policy has some problems, argued tax experts Ken Girardin and Jared Walczak in an April City Journal article.
While property tax revenues are usually quite stable, New York's second-home tax "over-indexes on a small number of high-value properties, making it more susceptible to valuation fluctuations," they write, adding that "higher taxes on select high-end properties will make investment in the construction of new high-value housing less attractive."
If you take the logic of filtering seriously, a fall in the number of new high-end homes being built will raise housing costs for everyone. Fewer luxury units means more money chasing fewer homes, putting upward pressure on prices.
Given the narrow base of the tax, the effect on housing prices generally will likely be marginal. Still, any cost increases in the already expensive city are hardly ideal.
Beyond any practical arguments about policy, narrow taxes designed to bilk unpopular people with too much money are unseemly.
If one believes, as Mamdani does, that there's no problem too large or concern too small for city hall to fix, it seems only fair that everyone pay for this great socialist experiment.
A targeted tax on out-of-town millionaires' property reveals the mean, grasping hand behind the mayor's "warmth of collectivism."
The Bills Not Considered
All things considered, both the SEQRA exemptions and the pied-à-terre tax are relatively small potatoes when compared to previous housing policy fights at the state level in New York.
The high-water mark was 2023, when the Legislature considered both a major expansion of rent control (deceptively pitched as a "good cause" eviction law) and one of the more far-reaching state zoning reform plans ever considered anywhere in the country. Neither ended up passing.
(In 2024, a more limited good cause eviction law did pass.)
Since then, the major housing policy action in New York has been at the city level. In 2024, local leaders approved the "City of Yes" plan, which upzoned large swaths of the city. This year, the city's Rent Guidelines Board is expected to impose Mamdani's sought-after rent freeze.
This makes New York distinct from states in the West and South, both red and blue, where legislatures are consistently considering and even passing significant state-level zoning reforms.
The rent stabilization law bankrupting housing in New York City is also a state law that will require state action to fix.
In the past few years, at least, it appears Empire State lawmakers don't have the appetite for taking on major reform proposals.
Quick Links
- John Ketcham has a great piece in Pirate Wires about Mamdani's plan to have the city take over apartment buildings in need of serious repairs. In short, the city's already tried this in recent memory, and it was an expensive failure.
- The Institute for Justice has a new lawsuit that challenges North Port, Florida's selective rezoning of retiree Art Yatsko's property that prevents him from building a single-family home on the lot.
- Over at Market Urbanism, Michael Lewyn reviews Patrick Condon's book Broken City. Condon argues that upzoning will never make cities affordable because increased density merely spikes land prices. Lewyn isn't convinced.
- Portland, Oregon, Mayor Keith Wilson warns that the city's affordable housing portfolio is approaching financial collapse. Per KOIN's summary of the memo, the city's affordable housing stock has all the problems, including "unpredictable and unsustainable material and personnel costs, unprecedented behavioral health and substance use disorder rates, faltering resident security, unit vacancies and chronic tenant nonpayment."
- Rents are once again spiking in San Francisco.
The data for rent appreciation in San Francisco is just nuts. pic.twitter.com/SWvdOR0OLM
— Mike Simonsen 🐉 (@mikesimonsen) June 7, 2026
- Researchers at the Federal Reserve Bank of Minneapolis have an interesting new brief on housing in Saint Paul, Minnesota. "Missing middle" zoning reforms have enabled the construction of a few dozen duplexes and triplexes each year. Meanwhile, the city's rent control experiment continues to chill investment in larger multifamily developments.
