New York Gov. Kathy Hochul's Housing Plan Avoids Common Mistake of Other YIMBY Reforms

The governor would let developers route around local zoning codes and get housing projects approved directly by state officials.

New York has some of the most restrictive local zoning regimes in the country, resulting in rock-bottom rates of housing construction and sky-high prices.

Now, Democratic Gov. Kathy Hochul is proposing to fix this sad status quo by allowing developers to bypass city and town zoning codes altogether and get their housing projects approved directly by a fast-tracked state process.

"Through zoning, local communities hold enormous power to block growth," said Hochul in her annual State of the State address yesterday. "People want to live here, but local decisions to limit growth mean they cannot. Local governments can and should make different choices."

In her speech, Hochul announced a Housing Compact strategy that she says will lead to 800,000 new homes being built in the state over the next decade.

To make that happen, her plan would give local governments a goal of growing their housing stock by 1 percent every three years, or in the case of New York City and surrounding communities, 3 percent every three years.

Any new housing would count toward that target, although local governments would get bonus points for approving new below-market-rate, income-restricted "affordable" housing. Cities that miss their growth targets would have to show the state that they're proactively reducing zoning restrictions on new housing.

If a locality fails to remove zoning restrictions, developers would be allowed to bypass local officials entirely and get their projects approved via the courts or a new housing approval board. A fact sheet on Hochul's plan says projects appealed to that board "will be approved unless a locality can demonstrate a valid health or safety reason for denying the application."

Crucially, those projects wouldn't have to conform to local zoning restrictions. Developers could theoretically use this process to build projects of unlimited density anywhere in a city, although they would have to include some affordable housing units to qualify for state approval.

Hochul's proposal would, in effect, create similar arrangements to what exists in California and New Jersey.

In both places, the state requires local governments to plan for a certain amount of affordable housing. If a locality fails to meet these state requirements, developers can make use of what's known as a "builder's remedy" to get projects approved, even if the project would violate the zoning code.

In theory, this builder's remedy would allow a developer to propose a skyscraper in a single-family neighborhood or commercial area, and the local government couldn't use its zoning code to stop it.

Garden State developers have made occasional use of this builder's remedy. That's not the case in California, where no developer has managed to use the builder's remedy to get a project approved in the three decades it's been on the books.

One major reason for that is that the state's builder's remedy still ultimately leaves local governments in charge of permitting projects. That creates a lot of opportunity for antigrowth cities and towns to find reasons apart from their zoning codes to shoot down projects.

Localities could manufacture health and safety reasons to reject a project, for instance. Another tactic local governments use is demanding a project go through perpetual rounds of environmental review so that it's never formally approved or denied.

The impotence of the builder's remedy points to a general flaw with YIMBY zoning reforms: the state government tells antigrowth local governments they have to allow more housing but still leaves them in charge of approving that housing.

This kicks off a perpetual mountain cat-and-mouse game where motivated local governments find increasingly inventive ways to ignore state zoning reforms, and state lawmakers keep having to pass bills closing whatever loopholes localities find.

Hochul's proposal tries to avoid this dynamic by cutting local governments out of the process entirely. That would, in theory, afford the state's NIMBYs, and local governments they control, no direct ability to stop new housing. Localities could still raise health and safety objections, but those would have to be vetted by the proposed new board.

Libertarians might well recoil at the idea of the state effectively setting housing production quotas, but Hochul's plan would only force local governments to eliminate their own regulations. As proposed, it wouldn't require them to spend tax dollars building housing. Nor does it give private parties any mandates. Rather, property owners would have more flexibility to build.

The governor's idea of targeting overall housing growth is also simpler and more rational than California's equivalent system, whereby the state calculates local housing needs by income level and then gives local governments goals of how much low-, moderate-, and market-rate housing they should be building.

That's a convoluted process all premised on the false notion that cities will only become affordable when they're building new income-restricted housing for low- and moderate-income renters.

In contrast, Hochul's approach is far more market-oriented. It's premised on the idea that cities need to build more housing generally in order to become more affordable, and doesn't get too fussy about which kind of housing that is.

Whether this is all politically practical is a big open question.

Hochul used her 2022 State of the State address to call for the far more modest policies of legalizing accessory dwelling units, repealing state-set density limits in New York City, and encouraging more density near transit. None of those ideas went anywhere last year.

This year, she's proposing all those policies again as well as creating the aforementioned system of housing growth targets enforced by a builder's remedy.

Hochul's more radical proposals probably don't have much of a chance, but the fact that she's willing to call for such bold reforms is an encouraging sign.