HPD discusses zoning changes and subsidies to boost affordable housing in New York City

The Finance/Public Housing/Housing & Buildings' FY26 Executive Budget Hearing took place on May 14, 2025, in New York City, focusing on the city's housing strategies and budget allocations. The meeting featured discussions on various topics, including the effectiveness of density bonuses for developers and the role of zoning changes versus city subsidies in increasing housing supply.

The hearing began with representatives expressing enthusiasm for the "Get Stuff Done" initiative, highlighting its potential to advance housing innovations in New York City. A significant point of discussion was a report from the Independent Budget Office (IBO), which indicated that developers often do not view density bonuses as sufficient financial incentives for project initiation. The Department of Housing Preservation and Development (HPD) acknowledged this assessment, noting that since 2014, there has been an ongoing conversation about the necessity of pairing tax abatements with building envelope adjustments to stimulate affordable housing development.

HPD officials emphasized that the effectiveness of zoning changes or subsidies in increasing housing supply largely depends on the specific market conditions of different city areas. They pointed out that predictable zoning regulations can reduce uncertainty for developers, ultimately lowering costs and facilitating project advancement. The discussion included references to successful neighborhood plans, such as "City of YES" and "Aim Up," which have provided developers with clearer frameworks for project planning.

Further, HPD representatives discussed their role as a "gap filler" in the housing market, striving to balance private sector interests with the need for fairness and accessibility in affordable housing projects. They acknowledged the importance of tax abatement tools in reducing costs and enabling deeper affordability in housing developments.

The meeting concluded with a question regarding whether HPD conducts cost-benefit analyses to evaluate the impact of capital budget expenditures versus tax expenditures. While HPD officials indicated that some figures had been reviewed, they were unable to provide a definitive answer at the time.

Overall, the hearing underscored the complexities of housing development in New York City, highlighting the interplay between zoning, financial incentives, and market conditions as critical factors in addressing the city's housing challenges. The discussions set the stage for future considerations in the ongoing efforts to enhance affordable housing availability.