All the details of Albany’s final housing deal

After weeks of negotiations, state leaders have finally released the details of a landmark housing package that will offer new tenant protections and establish a new tax incentive for developers to build affordable housing in New York City. But both provisions are set to expire in 10 years, which means state officials could find themselves in a similarly contentious boat in a decade. 

On the tenant protection side, the budget explicitly includes language establishing “good cause” eviction protections, which tenant advocates have been pushing to get passed for years. But the final compromise includes deep concessions compared to the version that lawmakers first introduced in 2019, and over the course of negotiations, tenant advocates have denounced changes getting proposed behind closed doors. The tenants rights group Housing Justice for All wrote on X that the version included in the final budget is “a logistical nightmare written in page after page of crisp legalese” compared to the four-page bill originally introduced by state Sen. Julia Salazar and Assembly Member Pamela Hunter. 

Under the new provision, rent increases on covered apartments will have an effective cap of 10%, or 5% plus the consumer price index, whichever is lower. If a landlord raised the rent any higher and then tried to evict a tenant for non-payment of rent, the tenant could argue in court that the rent increase was unreasonably high and avoid eviction. The original legislation placed that effective cap at 3%, or 1.5 times the consumer price index. 

Compared to the Salazar and Hunter bill, the final version of “good cause” eviction also includes an expanded list of valid reasons that a landlord can evict a tenant or decline to renew a lease. Notably, the added language would allow a landlord to evict a tenant – or choose not to renew a lease – if they plan to remove the unit from the market or to demolish the unit. Landlords would also be allowed to evict tenants who violate their lease or cause a nuisance, provisions in the original bill language as well.

Not all tenants will be covered by “good cause” eviction. 

The new law, which requires landlords to notify tenants about whether or not their unit is covered under “good cause” eviction, only applies to New York City automatically. Everywhere else must opt in to the protections – and the law allows each municipality to tweak the protections to better fit the area.

The compromise includes a number of carve outs for a variety of apartments. “Small landlords” with portfolios of 10 units or fewer would be exempt from the new law, as would owner-occupied buildings with 10 units or fewer. (For the purposes of the law, everyone with direct or indirect ownership interests in an LLC or company that owns properties is considered to have all of those properties in their portfolio.) “High-rent” units, which have rents higher than 245% the federally-determined fair market rent, would also be exempt from the new law. All new construction since 2009 would also be exempt for the first 30 years after being built. In addition, the legislation includes a number of other exemptions, including rentals in co-op and condo buildings, manufactured homes and seasonal rentals.

The tenant protections are tied directly to 485-x, a new developer tax break to incentivize affordable housing development in New York City. Both the eviction protections and the 485-x program are set to expire in a decade, which will likely set off a fight over housing yet again over renewing both “good cause” eviction and the developer incentive. 

The 485-x program replaces the 421-a program, which expired in 2022. Discussions about a replacement to 421-a have been ongoing for years, but lawmakers have not agreed to a renewal or replacement until now. Many said they would not support a new incentive program unless it was paired with tenant protections. 

Lawmakers were also reluctant to sign off on the new 485-x program unless it included strong labor standards for projects that receive the tax break. At the start of budget negotiations, Hochul opted to leave it up to the major unions and developers to come to an agreement on what pay standards would look like, though for weeks the talks seemed to stall. 

In the end, construction workers won fairly strong labor standards in the new program. Workers on any project of 100 units or more will be guaranteed a minimum wage of at least $40 an hour, which will increase by 2.5% each year starting in 2025. For projects of 150 units or more in certain areas of the city, developers must pay a minimum wage of $72.40 an hour, or 65% of the prevailing wage for a particular trade, whichever is lower. For projects of 150 units or more in other areas of the city, the minimum wage will be $63 an hour, or 60% of the prevailing wage for a trade. Additionally, building service workers would receive prevailing wage for the duration of the tax benefit period following construction. 

The 485-x program has some deeper affordability requirements than the previous 421-a program. While the 421-a program considered units “affordable” if they were affordable at 130% of area median income, the 485-x program only considers units “affordable” if they are affordable to households making less than the area median income. For large rental building projects – 100 units or more – at least 25% of the units will need to be affordable at three different bands, averaging out to 80% of the area median income. Very large projects – 150 apartments or more – would need to have deeper affordability, at an average of 60% the area median income. The benefit period varies from 10 years for small rental projects to 40 years for very large rental projects.

In addition to the tenant protections and the 485-x program, the final housing deal includes a slight tweak to the state’s rent regulation laws, increasing the amount of money that landlords can recoup through rent increases for significant renovations to rent-stabilized apartments. The 2019 Housing Stability and Tenant Protection Act established a $15,000 cap on these recoupable expenses, but this year’s budget raises the cap to either $30,000 or $50,000, depending on whether the apartment became vacant within the past few years and the length of time that a tenant lived in the apartment before vacating it. 

The final deal received widespread criticism from many in the housing sphere, including both tenant advocates and members of the real estate industry, but Salazar, one of the original sponsors of the “good cause” bill, still ended up voting in favor of the legislation containing the housing package. “This law marks the single most substantial expansion of tenants’ rights in New York that we have seen in 50 years,” Salazar said on Saturday. But she indicated that she is not yet declaring a final victory on tenant protections. “Every single family in our state” deserves strong protections against eviction, she said. “This bill alone, sadly, does not achieve that. But I will continue to fight until the laws in our state finally do.”

Prior to the final housing deal becoming public, roughly 50 state legislators said they wouldn’t support a housing deal that substantially rolled back rent-regulated tenant protections and included significant concessions on “good cause” eviction. In the end, most – like Salazar – wound up voting for the bill containing the housing package, which included other big priorities like language that will allow New York City to lower its speed limits. Some, like Assembly Housing Chair Linda Rosenthal, qualified their support of the housing package as well. “There is no doubt that our state is facing a housing crisis, and tenants are still being priced out of their homes and face needless evictions,” Rosenthal said in a statement following the budget’s passage, saying the spending plan made progress towards meeting the state’s lofty housing goals. “With good cause now a statewide option, we must continue to push forward for greater protections.”

But a handful of progressives and socialists – including Assembly Members Zohran Mamdani and Marcela Mitaynes – voted against the omnibus bill. Mamdani specifically cited the changes to individual apartment improvements, calling out the system’s “rampant fraud” and warning that changes allowing landlords to raise rents higher than otherwise allowed will pose “a danger” to rent-stabilized tenants. Mitaynes said in a statement that the goals of “good cause” eviction “cannot be met in this legislation” due to its large number of exemptions.