Economists in the Biden administration are calling for more aggressive federal action to reduce costs for homebuyers and renters, targeting one of the biggest economic challenges facing President Biden as he runs for re-election.

The policy proposals in a White House report released Thursday include what could be an aggressive federal intervention in local politics, often dictating where homes are built and who can occupy them. The administration is backing a plan to pressure cities and other places to relax zoning restrictions, which in many cases are hampering affordable housing development.

The recommendation is part of a deep dive by the new administration into a housing crisis that has been brewing for decades and is hampering the president’s chances for a second term. The proposals, included in the president’s annual Economic Report, could serve as a blueprint for a major boost to the housing market if Mr. Biden wins a second term.

The report includes a series of measures intended to reduce the cost of renting or purchasing a home, while encouraging local governments to change zoning laws to allow for the development of more affordable housing.

“It’s really hard to make a difference in this space, in this affordable housing development, without addressing land use regulations,” Jared Bernstein, the chairman of the White House Council of Economic Advisers, said in an interview.

Mr. Bernstein added that government officials believed many local leaders were encouraging a greater federal role in zoning reform — which could help override objections from local groups opposed to development. “I feel like we’re kicking ass more now than ever before,” he said.

The report is packed with statistics that illustrate why housing has become an acute source of stress for American families and an electoral burden for Mr. Biden.

The government has recognized that it has limited power over local zoning rules, which tend to dictate the design and density of housing in certain neighborhoods. Most of the president’s recommendations to expand supply involve using the federal budget as a carrot to encourage local governments to allow more construction — including adding low-income housing and smaller starter homes.

Such policies are unlikely to become law this year, with elections looming and Republicans in control of the House of Representatives.

But the focus on housing and the adoption of a comprehensive set of policies to increase supply and affordability could serve as a blueprint for a potentially bipartisan effort in this area if Mr. Biden is re-elected. It could also boost a housing reform movement that is well underway in state legislatures across the country.

The report documents how home prices have significantly exceeded wage growth for American households over the past decade. That has put ownership out of reach for middle-income homebuyers and pushed lower-income renters to the brink of poverty.

A quarter of tenants – around twelve million households – now spend more than half of their income on rent. Prices are so high that if a minimum wage worker worked 45 hours a week for a month, an average rent would eat up every dollar he or she earned.

According to the report, behind all this lies a long-term housing shortage. The lack of housing has become a rare point of agreement between Democratic and Republican lawmakers.

The shortage is the result of decades of inability to build enough homes, a trend that worsened after the 2008 financial crisis. The situation has been exacerbated by rising construction costs and many local zoning and land use regulations, which make building housing more difficult and expensive. These rules also limit which types of units can go where, for example making apartments in single-family neighborhoods illegal.

The lack of affordable housing mainly affects lower-income families and first-time couples. Millions of cheaper apartments have all but disappeared over the past decade, either due to rising rents or falling into disrepair. At the same time, smaller and cheaper ‘starter homes’ form an increasingly smaller share of the market.

In recent years, a bipartisan group of lawmakers in both red and blue states have passed dozens of state bills to limit cities’ control over development. The report applauded them and noted the government’s efforts to encourage such reforms Housing supply action planwhich was released two years ago.

Mr. Biden has focused heavily on housing in recent weeks, in part to show voters he is fighting to reduce one of their biggest monthly costs. Privately, his aides have expressed hope that interest rate cuts by the Federal Reserve this year will push down mortgage rates and possibly home prices, if a new supply of homes comes onto the market in response.

Publicly, Mr. Biden has taken the initiative, calling on lawmakers to pass major federal investments in housing supply and tax breaks for people who buy homes.

“If inflation continues to fall – and that is expected to happen – mortgage rates will also fall, but I am not going to wait,” Biden said in Las Vegas on Tuesday. “I’m not going to wait.”

Federal Reserve officials plan to cut interest rates this year, real estate agents are likely to cut their commissions after a major settlement and President Biden has begun looking for ways his administration can ease high housing costs.

In short, a lot is changing in the housing market. Although sales have slowed significantly due to higher interest rates, both home prices and rents remain sharply higher than before the pandemic. The question now is whether recent developments will reduce costs.

Economists who study the housing market expect cost increases to be relatively moderate in the coming year. But they don’t expect prices to actually fall in most markets, especially home purchases. Demographic trends are still driving solid demand, and cheaper mortgages could lure buyers into a market where there are still too few homes for sale, even as lower interest rates could help attract more supply on the edges.

“It has become almost impossible for me to imagine that home prices will actually fall,” said Glenn Kelman, Redfin’s CEO. “The limitations on inventory are so profound.”

Here’s what’s changing and what it could mean for buyers, sellers and renters.

Interest rates are expected to fall.

Mortgages have been pricey lately, partly because the Fed has raised interest rates to the highest level in more than two decades. The central bank does not set mortgage rates, but its policy measures trickle down to make borrowing more expensive across the economy. Rates up Mortgages with a term of 30 years fluctuate just below 7 percent, compared to less than 3 percent in 2021.

Those interest rates could fall if the Fed lowers borrowing costs, especially if investors come to expect rates to be cut even more than they currently expect.

Mortgage rates and some other borrowing costs tend to adjust when investors change their expectations about what the Fed will do, rather than when the central bank actually takes action. That’s one reason why mortgage rates have fallen from a peak of around 7.8 percent at the end of 2023: inflation has eased and it has become clear that the Fed could soon cut its policy rate.

Central bankers predicted on Wednesday that they could make three interest rate cuts this year and three more next year.

Some analysts think mortgage rates could fall further in 2024. Bankrate’s Greg McBride, for example, thinks they could end the year around 6 percent.

Cheaper borrowing costs will have two major effects on the housing market. First, they make it a little cheaper to finance a purchase: The monthly payment for a $400,000 mortgage with a 7.8 percent interest rate is about $2,880, but is more like $2,400 with a 6 percent interest rate. Such a decline could boost demand from potential buyers.

Second, lower rates could encourage more homeowners to sell. Many Americans are sitting on cheap mortgages they refinanced during the pandemic and are hesitant to give them up to move. The smaller the gap between existing mortgages and the mortgage interest rate on the market becomes, the more the interest rate lock-in could disappear, potentially making more starter homes available.

Broker practices are about to change.

It’s not just the cost of loans that can affect the housing market. The National Association of Realtors, a powerful group that has long set the guidelines for home sales, has agreed to settle a series of lawsuits in a move that could shake up home buying.

Pending court approval, the settlement would mean that real estate agents working with home sellers would no longer have to provide clearly advertised compensation to buyer agents. The change will likely bring down the industry-wide standard commission of 5 or 6 percent.

It is not clear what exactly this means for housing costs. There is speculation that this could be the case Reduce prices, in part because lower commissions could make it slightly more attractive for sellers to list their homes.

But there are limits to how much prices can fall. Igor Popov, chief economist at Apartment List, said that while the decision could save Americans money on transaction costs, home sellers would likely continue to try to charge as much as possible in competitive markets.

“It’s a big problem for the industry, but I don’t think it’s a big problem for prices and quantities,” he said.

Officers aren’t sure what the consequences will look like. Jovanni Ortiz, a real estate agent on Long Island, said he had heard colleagues wondering whether agents would leave the business — but no one knew exactly how much it would cost agents and reshape home shopping.

“It’s too early to say,” Mr. Ortiz said.

The White House has policy in mind.

President Biden has fixated on high housing costs in recent weeks, wary that Americans’ struggle to rent or buy a home is weighing on the country’s economic optimism.

In his State of the Union address, he announced new ideas to help homebuyers. His latest budget request includes more than $250 billion in spending proposals to address high housing costs, including building or renovating two million homes and increasing housing subsidies for low-income workers.

But it seems unlikely that most of these ideas will have immediate impact: There appears to be little chance of a major housing bill passing this year, with the November elections approaching and Republicans in control of the House of Representatives .

Still, Mr. Biden has directed his administration to act unilaterally to reduce certain costs associated with home buying. He has taken steps to eliminate insurance costs for federally backed mortgages, potentially saving $1,000 or more per purchase. This week he called on real estate agents to pass on the savings from lower required commissions to consumers.

Housing supply is increasing in the rental sector, but this may be short-lived.

If there is one bright spot in the field of housing affordability at the moment, it is the rental market.

In recent months, the severe supply crisis has eased, causing rents for new leases to rise grow only moderately or even declines in some markets.

There were a number of large rental buildings built in some southern and mountain western cities, putting pressure on monthly prices. But there will be relatively little new supply next year and into 2026, Mr. Popov said, so the cooling off could be limited.

The supply of owner-occupied homes is a less sunny story. It’s not just that fewer sellers have put homes on the market – housing construction has taken a hit from higher interest rates. That has, and has, exacerbated a shortage that has been growing for years prices have remained high even though high mortgage rates have depressed sales of both new and existing homes.

If builders see signs of a thaw in the market, they may be more willing to build new homes. But that will happen, because many shoppers will likely be lured by slightly lower rates.

“Demand is so strong that it is unlikely that the housing market will fall apart,” said Yelena Shulyatyeva, senior economist at BNP Paribas, noting that many millennials are still looking to buy, among other trends.

The result? Mr Popov believes that the housing market can return to some normality in the coming months. Prices are unlikely to fall, but increases could be slower and steadier compared to the big rebounds since 2020.

“We have felt the aftershocks of the many powerful blows to the snake market that the pandemic delivered,” he said. “We are going to return to more normal numbers and a more normal feeling in the housing market.”

Patrick S. Nelson is under siege.

An early player in the off-campus student housing industry, Mr. Nelson built his property management company by raising money from major lenders and hundreds of wealthy individuals. But his business has deteriorated in recent years, and Mr. Nelson — who has so far reneged on his promises to pay back some of those partners — now faces more than a dozen lawsuits and a dogfight with a private equity firm.

Mr. Nelson faces at least $115 million, which he has failed to pay, despite escalating fines and interest and being twice ordered into civil contempt by judges for alleged misuse of company funds. His resistance has frustrated investors and lenders, and irritated some judges who heard those disputes.

“I see a lot of money moving around, and I don’t like it,” New York County Superior Court Judge Melissa Crane said in February during a hearing involving Fortress Investment Group, a private equity firm trying to seize a of Mr. Nelson’s property. In January, Judge Crane held Mr. Nelson in contempt of court after finding he violated court restraints by using nearly $3 million from his business to pay personal expenses, including bank mortgages. luxury vacation rental ranch in Utah and a house in California, golf trips and credit card bills.

“There were bills we had to pay,” Mr. Nelson testified at a follow-up hearing on March 12. Mr. Nelson declined to be interviewed but said in written comments to the New York Times that he is “doing everything he can to fulfill his obligations.” He said the civil contempt findings were without merit.

Mr Nelson, 51, started Nelson Partners Student Housing in 2018 after parting ways with his brother, with whom he ran a student housing company for almost two decades. The siblings were among the first to spot an opportunity that has become a $10 billion-a-year market. In 2017, Inc. magazine placed their former company on the annual list of the fastest growing private companies. Great players love Blackstone has entered the market in recent yearslured by the promise of rent payments that are virtually guaranteed because of the student loan money.

Mr Nelson buys student accommodation with the money he raises and uses the rent to pay mortgages and dividends to investors, as well as for the general maintenance of the buildings, charging fees and collecting a commission when he eventually sells them sells. Through Nelson Partners, he manages 18 properties – each managed as a separate company with separate finances under contractual agreements with investors.

In his written statement, Mr. Nelson said his business would have thrived without the pandemic, which led to reduced occupancy at some buildings, and articles in The Times about investors suing his company and complaints from student residents about the condition of the properties. . Mr. Nelson said he had never lost money for investors before The Times articles, which he said also “crushed the ability to get loans.”

Mr Nelson has insisted that once he secures new financing and sells properties at a profit, there will be more than enough money to pay investors and service his debts. On Tuesday, he testified that he was trying to sell three student housing apartment complexes.

Since 2021, more than twenty lawsuits have been filed against him; about half remain active. Tens of millions in claims are still pending. He owes $57 million to Fortress, $50 million to investors and smaller amounts to other lenders and vendors. He has forced companies owning five properties into bankruptcy after defaulting on their loans. And the Internal Revenue Service placed a $3 million tax lien on one of his homes in Southern California.

The first major lawsuits against Mr. Nelson and some of his companies came in early 2021 when hundreds of investors in a luxury student housing apartment tower called Skyloft, near the University of Texas at Austin, said they had been defrauded out of tens of millions. of dollars.

One of Mr. Nelson’s companies had bought Skyloft in 2019 for $124 million, with $75 million coming from small investors — mostly wealthy retirees, lawyers, doctors and engineers — and the rest from a hedge fund and a major bank. When the pandemic moved classes online, Mr. Nelson said cash flow issues led him to halt monthly dividend payments to investors in Skyloft and other properties.

In 2022, he reached a $50 million settlement with Skyloft investors. The same year he sold two buildings: one for a profit before the Skyloft settlement, the other for slightly above the purchase price. He returned tens of millions of dollars to investors in those properties, although some received significantly less than they invested.

But last fall, Judge Karin Crump of Travis County, Texas, held Mr. Nelson in contempt of court after finding that he had violated the terms of his settlement by using money that was intended to go to a restitution fund for legal bills, and collect a commission. on the sale of another building instead of returning that money to investors.

Judy Sims said she and her husband, both retired, had invested $250,000 in a Nelson Partners student housing project near the University of Northern Colorado in Greeley, Colorado, but expected to lose much of their investment after the lender foreclosed. had placed on the building. in 2023.

“He sounded very nice on the phone when he wanted our money,” said Mrs. Sims, who lives with her husband in Chelan, Washington. “But what makes me so angry is that he doesn’t accept any responsibility.”

In court, Mr Nelson’s lawyers described the disputed money transfers, including those intended for his personal use, as legitimate “inter-company loans”, in line with the way he has always run his business. They have argued that Mr. Nelson is simply doing what is necessary to keep his company from going bankrupt. Mr. Nelson testified at the March 12 hearing that he was concerned that the 130 people Nelson Partners employs would lose their jobs. He also said he wanted to “leave a legacy for my daughters.”

“I really don’t understand what his end game is,” said George Wong, 64, a marketing executive in Los Altos, California, who has invested in three of Mr. Nelson’s deals.

One of Mr. Nelson’s biggest disputes is with Fortress, the New York investment firm. For more than two years, Fortress, which secured a $52 million loan to a Nelson Partners company that owns the Auraria Student Lofts in downtown Denver, has been trying to foreclose on the building. But the action was suspended after Mr Nelson declared that property bankrupt in 2022.

A bankruptcy filing halts a foreclosure and gives the borrower more time to potentially negotiate a deal, but it doesn’t necessarily prevent losses for investors.

Last summer, Fortress obtained a judgment allowing it to collect on the loan, now worth $57 million, with interest, that Mr. Nelson had personally agreed to repay. That set the stage for the current round of contempt proceedings before Judge Crane.

Mr Nelson has called Fortress a “greedy” investor who acquired the loan on Auraria during the pandemic and is now “essentially trying to put me out of business.”

The two parties are due to appear before Judge Crane again on Monday as she grapples with Mr Nelson’s failure to comply with her previous court orders.

Martin Goodman, 60, a real estate broker who lives in San Diego, California, said he had been trying to rally investors in the Greeley student housing complex to come up with a plan to avoid a bankruptcy by Fannie Mae, the federally backed mortgage , to prevent. financial giant. Fannie recently received court approval to seize in April.

Mr Goodman said he expected Mr Nelson to go bankrupt again.

“Ultimately we could very well lose the property,” Mr Goodman said. “All because Pat won’t get up.”

Alain Delaqueriere research contributed.

Good morning. It is Wednesday. Today we’ll learn about plans to address the housing crisis, not just in New York City, but statewide.

I asked Grace Ashford, who monitors Albany, to look into the housing proposals.

How many times have you heard the phrase “back to the future” in connection with “Mitchell-Lama 2.0?” Because that’s not what it’s about?

There is a lot of nostalgia associated with the Mitchell-Lama program. People see it as a solid way for the government to produce good housing, allowing middle-class New Yorkers to rent and buy affordable homes. That gives it a special place in the political psyche.

That said, this new proposal will be different in some important ways.

How come?

The Senate proposal aims to encourage development of state land, meaning the state could reduce or eliminate property taxes. Senate leaders hope this will give developers an incentive to build affordably.

The original Mitchell-Lama program did not include construction on state land. It not only provided tax benefits, but also lower mortgage terms for developers.

The plan for Mitchell-Lama 2.0 is to include rentals and co-ops, just like the original Mitchell-Lama program.

But this isn’t a done deal, right?

No. The Assembly would also have to embrace Mitchell-Lama 2.0 to get it done, as would the governor.

How many apartments would actually be added?

We don’t know, and the legislators don’t know either. It depends on what kind of deal the Senate could make with the General Assembly and the governor.

It also depends on how developers respond to the prompts provided. If developers decide the incentives aren’t good enough, they may not build as many units as Senate leaders hope.

It’s worth noting that Mitchell-Lama 2.0 is just one of many different ideas the Senate has included in their “One House” budget proposal. They also offer to create a replacement for the 421a tax credit for developers who build a certain percentage of “affordable” units and to make changes to rent stabilization laws that would allow landlords to increase rent based on the improvements they make .

But Senate leaders say they are unwilling to make any deal without one key provision, renter protections that are known to be a good goal. The legislation in its current form would make it more difficult for landlords to evict tenants.

Landlords, who would also have to justify the rent increases, are generally opposed. They feel it is an overreach that could affect their ability to care for their property.

Senate leaders obviously hope that by incorporating ideas valued by tenant groups and unions — like Mitchell-Lama — along with ideas that would appeal to major developers, they can work out a compromise and resolve the housing impasse. breaking through. Why was it so difficult to bring all those groups together?

Progressives are very enthusiastic about the charity proposal. Whether it can gain widespread support remains to be seen. We have seen that there will be opposition in the General Assembly, and the governor has opposed it in the past. Senate leaders say they want to advance the “core principles” of a good cause, which likely means they will accept some kind of deal.

The Assembly has its own ideas, including $500 million to support existing Mitchell-Lama housing and $125 million for people struggling with incarceration and homelessness. They also say they are in favor of tenant protection, but unlike their colleagues in the Senate, they have not formulated a good target proposal.

Can everyone involved – the Senate, Assembly and the governor – craft a budget package in just three weeks?

That’s the big question. An important agenda item is that Easter this year falls on March 31, the day before the deadline, which could indicate that the budget may be a bit late.

Weather

Expect a partly sunny day with temperatures reaching the low 60s. At night, temperatures will drop to the high 40s with partly cloudy skies.

ALTERNATE PARKING

In effect until March 24 (Purim).

The latest New York news

A story by my colleague Andy Newman is poignant because he tried to answer questions that have been on the minds of many New Yorkers: Why do kids sell candy on the subway? Isn’t that child labor? Isn’t it illegal? Shouldn’t someone do something to help?

Families are desperate. Selling food is one of their main sources of income when the adults cannot work legally.

Allowing children to do this during school hours violates several laws and regulations. But a series of city and state agencies said it wasn’t their job to stop it.

• The Ministry of Education has “on-call teachers” who ensure that families send their children to school, but they do not go out on patrol. A spokeswoman referred Andy to the police station.

• The state Labor Department said it was “difficult to determine” whether the practice of children selling candy on the subway violated labor law, which generally “regulates employment relations (i.e., between employers and employees).”

• The city’s child welfare agency, the Administration for Children’s Services, said anyone who sees a child in an apparently unsafe situation can call the state’s child abuse hotline.

• But the state Office of Children and Family Services, which runs the hotline, said a child selling merchandise — or cheating — would not itself be considered neglect or abuse. There should be specific concerns about potential harm, such as “children selling candy at a dangerous intersection,” a spokesperson said.

• The Metropolitan Transportation Authority, which runs the subways, cited a rule against unauthorized commercial activity, which carries a $50 fine, and referred further investigations back to police and City Hall.

METROPOLITAN diary

On the way to Kanaalstraat

Dear Diary:

It was a spring day and I was walking to the train station on my way to run errands during my lunch break when I saw an older woman with a cane waving and smiling at me.

She asked me where the Q train was.

“Right behind you,” I said. “Where are you going?”

“Canal Street,” she replied.

She told me she got lost and couldn’t remember how she ended up in my Brooklyn neighborhood.

I watched her carefully descend the stairs to the station. She did it backwards. She said it was easier on her hips.

I was worried about her, so I offered to drive with her to Canal Street. She agreed.

During our ride, she told me her life story: how she grew up in Beijing in the 1940s, how her son died of leukemia, and how she moved to New York alone to study music.

When we arrived at Canal Street, I insisted on giving her my number.

I haven’t seen her in my neighborhood since, but we occasionally have breakfast at a Chinese bakery near Canal Street. It’s her favorite spot.

– Cathy Zhang

Illustrated by Agnes Lee. Send your entries here And read more Metropolitan Diary here.

Glad we could get together here. See you tomorrow. – JB

PS Here is today’s Mini crossword And Game competition. You can find all our puzzles here.

What do free bus rides, new taxes for the rich and a stiff drink at the cinema have in common? All three have the support of lawmakers in the New York State Legislature.

These ideas and thousands of others were buried in the Senate Edit budget proposals released this week that offer a glimpse of lawmakers’ positions as Albany’s annual budget battle royale gets underway. Gov. Kathy Hochul must reach an agreement with leaders in the Senate and Congress on how the state can spend more than $230 billion before the April 1 budget deadline.

The fact that all three leaders are Democrats does not mean there is less to negotiate: taxing the wealthy, tenant protections and school funding are all up for debate again as Ms. Hochul, a centrist from Buffalo, will be forced to find common ground with an increasingly left-leaning legislature.

And while those debates have sometimes become intractable — last year’s budget came a full month late, after Ms. Hochul pushed to tighten the state’s bail laws — Democrats in both houses are eager to see a protracted ordeal with the avoid any consequential general elections in the offing.

In January, Ms. Hochul unveiled her $233 billion spending plan, which called for significant investments in mental health care, public safety and artificial intelligence research, as well as $2.4 billion to address New York City’s migrant crisis. But she also proposed cuts to education funding and health care, which have drawn criticism.

In their proposals, Democrats in the Senate and Assembly have opposed Ms. Hochul’s desired changes in education funding. while with their own proposals on how to solve the state’s housing crisis, make transportation more effective and accessible, and more.

Here’s what you need to know as budget talks begin.

A battle for financing education

Both the Senate and Assembly rejected key changes to school aid that Ms. Hochul proposed in an effort to reduce education spending, instead maintaining the formula the state uses to determine how much aid is distributed to individual districts. They have allocated $1 million for a study on this topic.

Ms. Hochul’s proposals have been a point of contention on both sides of the aisle. Although the governor’s budget would increase total education aid by about 2.4 percent compared to last year, about half of the state’s school districts would receive less state aid, and no district would receive as much as they expected under the current formula.

Ms Hochul’s budget would base funding partly on the average cost of living over the past ten years, as opposed to the year before. It would also end a decades-old practice that ensures districts never receive less state funding in a school year than the year before, even if enrollment declines.

The governor said these changes would help distribute aid in a way that more accurately reflects the needs of counties. But district leaders and lawmakers have said the changes will negatively impact many schools across the state, including in many low-income rural areas.

The General Assembly and Senate also rejected the governor’s proposal to grant Eric Adams four more years of control of New York City schools. New York City’s mayor has had control of the city’s schools since 2002, subject to renewal by the Legislature — an arrangement that has frustrated some lawmakers and parents who would like to see a new model.

Raising taxes on the wealthiest New Yorkers

Both the Senate and Assembly proposed raising personal income taxes by half a percent through 2027 for people earning more than $5 million. Such an increase could generate nearly a billion in new revenue each year, they estimate.

When Ms. Hochul was asked about the proposal on Tuesday, she was clear: “Increasing income taxes is a non-starter for me,” she said.

The governor is strongly opposed to raising taxes, as she sees the measure as counterproductive to her goal of combating New York’s economic crisis. largest population loss in the country.

However, there has been much debate about whether tax increases on the wealthy actually drive New Yorkers out of the state: This is evident from an analysis by the Fiscal Policy Institute that it was in fact the working and middle classes who led the exodus, trends they linked to affordability issues more broadly.

Both houses also proposed an increase in corporate taxes and new tax credits for working families. The General Assembly would expand two existing credits, the earned income tax credit and the child tax credit. The Senate proposed a new credit, known as the Working Families Tax Credit, that would provide $550 to married couples making less than $130,000.

Will this be the year of housing construction?

Last year, Ms. Hochul proposed an ambitious plan to boost housing construction across the state. But that proposal and all others fell apart last year because all parties could not agree.

Senate Democrats introduced a package that aims to keep people in their homes while building new, affordable housing. The proposal includes initiatives to accelerate residential conversions, legalize basement apartments and free up money to help renters in the state avoid eviction.

Parts of the package — including proposals to replace an expired tax credit for developers, and raising the cap on what landlords who own rent-stabilized buildings can charge after improving a unit — are sure to be celebrated by landlords and developers .

But the package comes with one key condition: Senate Democrats say they won’t make any deal that doesn’t provide protections similar to those in the Good Cause Eviction legislation — a controversial bill that would limit landlords’ ability to to evict tenants or increase their rent above that. 3 percent in times of low inflation.

The General Assembly’s proposal also includes incentives for office conversions and for the construction of new housing on state land. And while it refers to protecting tenants from “erratic rent increases and unreasonable evictions,” it makes no mention of the tenant protection legislation that the Senate prioritized in a blow to progressives.

Tackling climate change

Both chambers proposed allocating millions for climate projects, including infrastructure for electric vehicles, heat pumps and solar panels.

But the Senate went further, eliminating a slew of tax breaks for the fossil fuel industry and backing a piece of legislation favored by environmentalists that would also require companies that have dumped significant amounts of fossil fuels into the atmosphere contribute to a fund to help the state adapt to climate change.

The Senate has also proposed legislation to eliminate subsidies for gas companies and limit energy bills. Ms. Hochul had included part of the proposal in her budget, but jettisoned some measures that the bill’s proponents said would keep costs down for taxpayers.

A high-speed train, free bus lines and cinema cocktails

While most of the budget language focuses on changes to New York’s existing programs, there are some newer ideas as well.

The Assembly and Senate proposed expanding New York City’s free bus pilot program to include three lines in each borough. The Senate also allocated $10 million for a “higher-speed rail” project, though few details were given on what that might be.

The Senate also rejected Ms Hochul’s proposal to make to-go drinks permanent. But instead, lawmakers proposed a change that would allow moviegoers to enjoy cocktails in theaters regardless of whether those theaters serve food.

Ce’Yann Irving, mother of a 1-year-old daughter, pays $990 a month for a two-bedroom apartment on the site of a former dairy processing plant in New Orleans’ Central City neighborhood. She has amenities, such as a 24-hour gym and a private community clinic, within easy reach.

“I’m a first-time mother, so if my daughter coughs for too long I try to take her to a doctor,” said Ms. Irving, 30, a disaster case manager for Catholic Charities. “Here I can literally walk to the clinic, and if there is a wait, I just wait in my own apartment.”

The 192-unit affordable housing complex, which opened in January, is a joint project of Alembic Community Development and the Gulf Coast Housing Partnership, an affordable housing developer formed in the aftermath of Hurricane Katrina in hopes of improving Gulf Coast region to rebuild. The complex aims to be a model for communities across the country by linking stable housing to better health.

Aetna, a managed care organization operating in the region, invested $26.7 million in the $80 million project, called H3C, where the “H” stands for health and the “3C” stands for commerce, culture and community. Tenants and others in the community have access to a medical clinic operated by DePaul Community Health Centers on the ground floor. Researchers from the Louisiana Public Health Institute will study patient health outcomes, and consultants from Health Management Associates will use the anonymized data to determine more effective ways for health care systems to work with developers.

H3C is just one of many examples showing that healthcare systems are beginning to see more and more benefits in building affordable and safe housing, from the improved health of local communities to the extent to which managed care groups benefit financially from those healthier populations. These and other factors, including a shortage of housing for their own workers, have led health care systems to become partners and investors in affordable housing.

Such partnerships are “necessary,” said Peggy Bailey, vice president for housing policy at the Center on Budget and Policy Priorities, a think tank. “It takes so many investors and so many types of financing to deliver affordable housing development.”

Hospitals “reinvesting in the places they serve is important,” she said, especially if they are in underserved communities.

Kaiser Permanente, a managed care giant in Oakland, California, has committed $400 million to finance affordable housing through its Thriving Communities fund, which aims to build or preserve 30,000 units by 2030. And the Healthcare Anchor Network, a national coalition formed in 2017. with more than 70 healthcare systems focused on investing in local economies, the country has poured more of its capital into housing, neighborhoods and commercial projects such as supermarkets. According to the group’s most recent data, the network invested $450 million in affordable housing projects from 2017 through the end of September 2022.

This type of long-term capital, usually in the form of low-cost loans, has become even more valuable during a period of higher interest rates, financial uncertainty and rising costs for builders. The cost of these developments is a huge undertaking. Funded from government and private sources, H3C was valued at $60 million before supply and inflation increased the budget by a third.

However, healthcare systems don’t act like banks, says David Zuckerman, president and founder of Healthcare Anchor Network. “They are filling the gap left by the financial sector not investing properly in affordable housing and the public sector not providing the necessary subsidies to make this all work,” he said.

Affordable housing has become a way for hospitals and healthcare systems to meet their nonprofit needs community benefits requirements and invest capital from their cash reserves, which healthcare nonprofits depend on to cover operating costs and unexpected expenses. (A strong reserve is an indicator of financial stability and helps improve the creditworthiness of nonprofit healthcare organizations.)

There are some early examples of health care systems investing in housing, particularly Catholic hospitals working with groups like Mercy Housing, an affordable housing organization.

But over the past decade, hospitals, health care systems and insurance groups, working with affordable housing developers, have expanded these efforts. They have built temporary housing for the most vulnerable people and established programs to temporarily house the homeless, especially those with serious mental health issues.

A recently expanded pilot program through Medicaid, called the 1115 waiver, allows certain health care providers to use Medicaid money to provide temporary housing. Washington State has used this model, with federal funding for rental assistance and $141 million in state funding, to build new homes as a means to target the population with the most needs.

And a shortage of available housing for hospital staff has also led to more developments. Kathy Parsons, a consultant and former vice president of CentraCare, a health care system in St. Cloud, Minnesota, said it was difficult to move health care workers to the area and that the network had explored ways to work with developers. . Housing shortages can be acute in rural areas. They can lead to longer commutes, significant costs due to overwork, staff burnout and the closure of hospital services in communities that need them most.

There are also more and more projects that want to build homes for people who need special care. In New Jersey, the Hospital Partnership Subsidy Program is beginning to see demand expand from big cities to suburbs, with proposals for specialized housing projects to support people with multiple sclerosis and Down syndrome. The program, which launched in 2018, provides millions of dollars in government grants to lay the foundation for hospital investments in housing projects.

Barclay Place, the first project completed under the state program, opened in Paterson in July. The 56-apartment complex has a wellness center on the first floor and a number of units are reserved for residents with chronic health conditions. The project was developed through a partnership between the New Jersey Community Development Corporation and St. Joseph’s Health, which will provide supportive services to residents.

In Minnesota, the Greater Minnesota Housing Fund, which has built 20,000 affordable housing units since 1995, offers some sort of additional focus on health care in about 20 percent of its projects, said Eric Muschler, the fund’s director of housing and health equity. The organization’s new initiative is to educate healthcare professionals about the importance of housing solutions for healthcare equity and provide loans to developers to help close gaps in a project’s overall financing plan.

“We continually need more capital to build more housing,” Mr. Muschler said. “We have a housing system that is broken, and we need to look beyond subsidies.”

Hospitals can also tap into another important resource: their own land and property. Boston Medical Center and Trinity Health both have plans to build affordable housing complexes on their own properties.

John Vu, Kaiser’s vice president of community health strategy, said this was the first phase in solving the housing problem. In the next phase, he said, data collected from the developments will be used to determine how future partnerships can better address the health and housing needs of communities.

Numerous studies of pediatric researchers and groups like Health watch for children have shown how housing support can help the homeless families that have members with a chronic illness or disability, or who require more than normal health care.

And Kaiser is partnering with Enterprise on the Housing for Health initiative, which connects developers with public health groups to evaluate how housing determines health based on 30 factors.

Stephany De Scisciolo, vice president at Enterprise Community Partners, a national nonprofit developer that has worked with Kaiser on some of its housing investments, said the program has been collecting data for four years.

Marcia L. Fudge, the Secretary of Housing and Urban Development, announced Monday that she would resign this month after three years of presiding over seismic shifts in the housing market due to the Covid-19 pandemic and changes in the economy.

Ms. Fudge, 71, a former Ohio congresswoman, attributed her decision to a desire to spend more time with her 92-year-old mother and suggested that major policy action between now and the election was unlikely anyway. But her departure undermined a White House plan to keep the president’s Cabinet and senior team intact through the November election.

“Under Marcia’s transformational leadership, we have worked hard to lower housing costs and increase supply,” President Biden said in a statement. “Thanks to Minister Fudge,” he added, “we have helped first-time buyers enter the housing market and are working to reduce rental costs. And there are more homes currently under construction than at any time in the last fifty years.”

Ms. Fudge is only the second of the original 15 Cabinet members designated by law to leave under Mr. Biden, matching the lowest turnover rate in modern times. That’s a stark contrast to the administration of former President Donald J. Trump, when the Cabinet was a virtual turnstile on the subway, with secretaries coming and going despite resignations and resignations. Marty Walsh, Biden’s Secretary of Labor, resigned a year ago.

Jeffrey D. Zients, the White House chief of staff, had last fall asked all remaining Cabinet secretaries to either stay for the rest of Biden’s term or leave immediately so that no major positions would be vacant during an election year. A White House official, who asked not to be identified discussing personnel matters, said Ms. Fudge made that commitment at the time but felt compelled to change her mind given her mother’s age.

Adrianne Todman, the deputy housing secretary, will take over the department as acting secretary once Ms. Fudge’s resignation becomes official on March 22, the White House said in the statement. At that point, with barely seven months to go until November, it seems unlikely that a new candidate could be chosen, vetted and confirmed by the Senate before the election. Mr Walsh’s designated successor is yet to be confirmed 13 months after he announced his resignation.

Ms. Fudge, a former mayor of Warrensville Heights, Ohio, who served in the House of Representatives from 2008 to 2021, said she planned to return to Ohio to be with her mother and other relatives and that she had no plans to ever run for office again.

“It’s time to go home,” Mrs. Fudge told USA Today. “I strongly believe that I have done just about everything I could do at HUD for this administration as we enter this crazy, foolish election season.”

Mr. Biden has credited Ms. Fudge with reviving the department after what he characterized as the neglect of the Trump years. “When I took office, we inherited a broken housing system, with fair housing and civil rights protections that had been severely dismantled under the previous administration,” he said.

“On Day 1,” he added, “Marcia went to work rebuilding the Department of Housing and Urban Development, and for the past three years she has been a strong voice for expanding efforts to build generational wealth through homeownership, reducing costs and promoting equity. for American tenants.”

In fact, housing costs have been rising faster than inflation, posing a major challenge, especially for younger Americans just getting started, and hampering efforts by major cities to address the growing problem of homelessness. The cost of shelter rose by an average of 6 percent last year, compared to an overall inflation rate of 3 percent.

“I know that the cost of housing is critically important to families across the country,” Biden said Monday in a speech to the National League of Cities in Washington. Now that inflation has fallen, he said mortgage rates should soon fall as well.

“But I’m not waiting,” he added. In his budget plan released Monday, he said he was proposing a tax cut of about $400 a month for the next three years to help qualified homebuyers “because every family deserves a place they can call home, a place where they can live their American lives.” can make dreams come true. WHERE.”

He said his plan would also help build two million new homes and provide municipalities with $8 billion to get unhoused people off the streets. “The bottom line is we have to build, build, build,” he said. “In this way we can reduce housing costs for good.”

To address the growing housing crisis, New York Senate leaders will propose sweeping legislation Monday that would encourage new construction, provide new tenant protections and also revive some older ideas for building affordable housing.

Including: the creation of a new public utility company that would finance housing construction on state land. Leaders see it as a successor to the popular Midcentury program known as Mitchell-Lama.

New York has faced rising rents and a homelessness crisis, exacerbated by an influx of migrants. There is broad consensus that the state must take action. But leaders have struggled to find a compromise that could unite a fractious group of stakeholders behind a housing program that meets the state’s needs.

Senate lawmakers hope that this year’s proposal, by including ideas valued by tenant groups, unions and major developers, can finally help break the impasse.

Last year, Gov. Kathy Hochul introduced an ambitious plan that would have forced suburbs and other communities to allow more development, among other growth-enhancing measures. Lawmakers representing several constituencies balked and little progress was made.

The Senate proposal, which will be released Monday in the One House Budget bill, could be interpreted as an opening bid for the upcoming budget negotiations: Every year the governor and both chambers of the Legislature propose their own vision for the state. Leaders in Albany have until the April 1 budget deadline to reach an agreement.

A successful plan must spur massive amounts of new construction while supporting landlords and tenants, said Senate Majority Leader Andrea Stewart-Cousins. She called for a “big idea” that would holistically address affordability for generations of New Yorkers.

“I want my kids and grandkids to be able to hang out,” she said. “I want to be able to hang out!”

The Senate plan will call for a new tax break for developers with more robust affordability protections than its predecessor, known as 421a, which expired in 2022.

Critics called the previous program a giveaway to developers, who could secure millions of dollars in tax write-offs in exchange for building some units with lower rents. But in the years since it expired, construction has fallen off, underscoring the need to bring developers to the table.

A crucial element to entice the left wing of the party is the inclusion of legislation known as “just cause deportation,” which has long been a progressive priority.

Senate leaders say any housing package should include some version of this legislation, which would limit landlords’ ability to evict tenants. It also requires most landlords to offer tenants automatic lease extensions and forces them to justify rent increases of more than 3 percent.

But the legislation, which landowner groups say would stifle development and make it difficult for them to care for their properties, is causing division, especially in the State Assembly. Including an item in the budget requires the support of both Houses of the Legislature, as well as the governor.

And while Ms. Hochul has said she supports tenant protections, she has opposed “good cause” legislation, a position that played a role in the collapse of last year’s housing deal.

The plan presented Monday also includes smaller but still important proposals, including a push for more construction of larger residential buildings in Manhattan and the legalization of basement units. Both are at the top of the wish list of city officials and housing activists.

But perhaps the boldest idea is also one of the oldest, with roots going back almost seventy years.

The $250 million proposal is based on the 1955 Mitchell-Lama legislation. The program, which takes its name from the two state legislators who were its primary sponsors — Senator MacNeil Mitchell, a Republican, and Assemblyman Alfred A. Lama, a Democrat — helped transform New York’s housing landscape after World War II by making construction possible to create more than 100,000 middle-income housing units at a time when the city was experiencing a housing crisis exacerbated by an influx of returning military personnel, as well as immigrants and refugees. It aimed to boost affordability for both renters and homeowners by using incentives for developers to create a protected supply of housing available to residents with incomes below a certain threshold.

The new version, which lawmakers are calling “Mitchell-Lama 2.0,” would differ in several key ways. It would, among other things, create a new state entity that could finance developments on state land.

The state would give developers cheap leases on state land, which would be exempt from taxes and certain elements of the public assessment process. The state would also lend money to developers to make construction fast and cheap for businesses.

The apartments and rental properties built through the program should be affordable for middle-income households. In New York City, for example, housing must be affordable for a family of four earning $232,980.

It is not yet clear how many units the program can yield.

The Senate proposal is in some ways a response to what Ms. Hochul and others have already proposed. Ms. Hochul, for example, is exploring building apartments on state land and called for the new tax incentive as part of her budget proposal this year.

As with many things in Albany, the details of the Senate proposal will determine how much impact it can have and whether it will be embraced by the governor and the General Assembly.

For example, a tax incentive may not make financial sense for developers depending on how affordable the apartments need to be, which could lead to them building fewer units. And even in its current form, the charity eviction measure excludes small buildings, potentially leaving tens of thousands of New Yorkers without protection.

But both proposals have the potential to transform New York’s housing market. And officials agree the need for action is clear.

Rents in New York City remain high and are expected to rise as summer approaches. The number of eviction cases is increasing.

The housing shortage in New York is estimated at hundreds of thousands of homes. A city survey this year found that only 1.4 percent of apartments were available for rent in 2023, the lowest number in 50 years.

On Monday, the General Assembly is also expected to release its budget proposal, which will cover everything from funding for migrants to school aid and health care spending.