Encouragement: Provide Necessary Incentives for New York Builders to Construct
In the heart of New York, change is afoot. The city and state governments, led by Governor Kathy Hochul, are taking bold steps to address the city's housing crisis.
Governor Hochul has spearheaded the adoption of an office-to-residential conversion incentive program, which is off to a strong start. This initiative, designed to transform underutilised office spaces into residential units, is part of a wider strategy to increase housing supply.
The city has also taken a significant step forward with the City of Yes, upzoning Gowanus and other areas. This move, part of the New York City's incorporation of the "abundance" agenda, aims to encourage growth, create jobs, and make the city more affordable.
The "abundance" agenda, as referred to in the book "Abundance" by Ezra Klein and Derek Thomson, includes more housing, growth, clean energy, and projects that create jobs and opportunity.
The current mayoral election in New York is contentious, but most candidates support this agenda. They understand the need for substantial private investment to see progress in making New York more affordable.
The state budget in 2024 included the adoption of the new 485x plan. This plan seeks to strike a balance, encouraging the development of affordable and other rental housing across the five boroughs. To achieve this, Governor Hochul and the New York State Legislature have decided to enhance housing development incentive programs by expanding tax credits and streamlining regulations to encourage affordable housing construction.
However, the success of the 485x plan in maximising the construction of affordable units is yet to be determined. What is clear is that developers, necessary for the construction of housing in New York, need a budget that produces a profit, a reliable timeline, and manageable risks to invest in a project. They must also pay their fair share of taxes, pay fair wages, and comply with environmental, health and safety, labor, and other laws.
The government finds it expensive to build housing and thus relies on private developers. To help move projects forward, the New York State government has introduced a General Project Plan. This plan provides a clear path for developers, reducing the complexity and uncertainty often associated with large-scale housing projects.
Many New Yorkers agree on the need for making the city more affordable. The city's initiatives, such as the City of Yes and the 485x plan, are steps towards addressing this need. With the support of the state government, the city is hoping to see a surge in housing construction, making New York a more affordable place for all its residents.
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