NYC basement legalization plan caught in Albany’s housing gridlock

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By Dan Sears

The future of a plan to bring more illegal New York City basement apartments out of the shadows and up to code could depend on whether Gov. Kathy Hochul and state lawmakers can reach a wide-ranging deal on housing policy — a major obstacle that’s proven elusive so far.

Hochul’s $233 billion state budget proposal includes a measure allowing the city to set basement and cellar safety standards and waive fines against landlords if they commit to bringing illegal subterranean apartments up to code, complete with multiple exits and other safety protections.

The measure is backed by Mayor Eric Adams, who has made it a key part of his housing agenda, particularly in the outer boroughs.

It’s not a novel idea.

After 11 people drowned in New York City basement apartments when remnants of Hurricane Ida swept through the region in September 2021, state and city officials proposed new rules allowing the city to regulate thousands of subterranean dwellings and prevent another tragedy from happening.

Officials say cumbersome laws, including a total prohibition on legal basement apartments in two-family homes, keep thousands of existing units in the shadows. But previous efforts have stalled, and the latest push seems contingent on broader changes to housing policy.

Top lawmakers in Albany are making clear they don’t intend on taking a piecemeal approach to housing policy. The basement proposal continues to be caught in an ongoing housing stalemate between Hochul and Democratic lawmakers that has persisted for more than a year.

“The [housing] conversation, as I said, has to be comprehensive,” state Senate Majority Leader Andrea Stewart-Cousins told reporters Tuesday. “There are a lot of elements that we all are talking about, and I’m looking forward to really extending the conversation so that we can do a myriad of things, including tenant protections.”

Basement apartments are ubiquitous across the five boroughs, especially in lower-density neighborhoods in places like eastern Queens.

The Pratt Center for Community Development and the nonprofit organization Chhaya Community Development Corporation identified more than 376,000 small properties with basements and cellars in the city. They estimate that roughly half a million New Yorkers may be living in those below-grade accommodations, mostly in community districts predominantly populated by people of color and immigrants.

Supporters of basement legalization say keeping the units in the shadows makes them less safe, endangers tenants and exposes owners to big financial penalties if anything goes awry.

“There are actual human beings that do live in these units and it is the government’s responsibility to figure out how do they live there safely and how do we also support the homeowners,” said Rima Begum, an organizer and associate director at Chhaya, which advocates for South Asian and Indo-Caribbean New Yorkers’ housing and economic rights.

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Begum bought a single-family home in Hollis, Queens — a neighborhood prone to flooding — with her sister and brother-in-law six years ago and renovated the basement to include a second exit, heat, a separate boiler room and a kitchen.

But the unit remains illegal under the city’s current rules, which force owners to meet strict light, air and ceiling height requirements approved by the Department of Buildings.

Begum said this hasn’t stopped nearly every homeowner on her street and surrounding blocks from renting out their basements, usually at lower rents than in most areas of the city. She said her family charges $1,100 a month for their two-bedroom unit, which helps cover the cost of their mortgage and property taxes.

But conditions, safety features and flooding risks vary from block to block and even from house to house.

On a walk through the neighborhood in late January, Begum pointed out likely basement apartments with bars over the windows or with narrow windows that would prevent people from escaping in an emergency. She said the high stakes of basement safety hit home during Hurricane Ida after a mother and her adult son drowned in their basement unit about a block away.

Beyond safety risks, tenants living in illegal basement apartments also lack many of the rights afforded to other renters.

Last year, the buildings department issued vacate orders for about 1,000 basement units, according to agency records.

The city Department of Housing Preservation and Development has vacated 257 units for “illegal occupancy,” many of them in basements, since the start of 2023, data shows.

In those instances, tenants can become immediately homeless.

Preventing a ‘death by a thousand nicks’

Hochul’s plan, and other measures considered by state lawmakers, wouldn’t immediately make basement apartments legal. Instead, legislation backed by the governor would allow New York City to set its own regulations and help homeowners bring their units up to code more affordably.

Current laws force property owners to follow strict zoning regulations that can make it nearly impossible to legalize basement dwellings, even when new physical space isn’t being added.

Other rules force owners to add a parking space or excavate foundations to increase ceiling heights — expenses that make legalization infeasible for most interested homeowners, according to a 2023 report from the nonprofit Citizens Housing and Planning Council.

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A home in Hollis, Queens where a mother and her adult son drowned in their basement apartment during Hurricane Ida.

Photo by David Brand

On Wednesday, Hochul told reporters her basement apartment plan is designed to be simple and permit flexibility. Otherwise, she said, such a proposal could suffer a “death by a thousand nicks.”

“I want to work with the Legislature to identify the barriers [to basement apartments],” she said after an unrelated news conference in Albany’s suburbs.

Hochul noted she wants to significantly expand access to legal basement apartments while maintaining safety measures that protect tenants. “I think it could be a dramatic, dramatic change as I’m trying to increase the supply of housing in the state of New York,” she said.

The governor’s proposal would grant amnesty to landlords, allowing them to erase pending fines for illegally renting basement or cellar apartments — but only if they commit to converting their space into a legal dwelling.

The proposal would also give existing tenants the right of first refusal to rent their revamped, legalized basement apartments if they had to be evicted during the renovation process.

The governor’s plan would allow city agencies to propose new rules permitting conversions and safety inspections, likely subject to a public review process.

“The bill is extremely important because it will have a huge impact for what we estimate are tens of thousands of tenants during a housing crisis and with new migrants coming to the city,” said Sylvia Morse, the Pratt Center’s program manager for policy. “But this piece of legislation itself is pretty narrow.”

Hochul’s basement plan would need approval by state lawmakers. And for much of the last 13 months, the state’s elected officials haven’t been seeing eye to eye on housing.

The plan has drawn some concern from state Sen. Joseph Addabbo, a Democrat whose Queens district includes Kew Gardens and Ozone Park.

In the event the state gives the green light and the city successfully converts thousands of basement apartments, Addabbo said he isn’t convinced the city would have enough personnel available to properly inspect the improvements and whether they’re keeping tenants safe.

“That would be an inspection of every house that basically makes the application to become legal,” he said. “That’s a lot of work. That’s a lot of inspectors. If that can be done, and it’s done in a safe way, I would embrace the theory. Right now, I can’t.”

Hochul’s budget doesn’t include any specific new funding to implement the basement apartment program, though there are some existing state- and city-level programs that provide loans and grants to create basement apartments and other accessory dwelling units.

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Some lawmakers say additional funding is needed.

“Making sure that all of those pieces actually fit together and result in many, many houses being able to legalize their basement apartments is going to take a lot of coordination and a lot of work,” said Assemblymember Catalina Cruz, whose Queens district was hit hard by Hurricane Ida in 2021. “I am more than happy to help chime in, but I want to make sure that the city and the state are working and not just throwing the ball at each other.”

Cruz pointed to a pilot program New York City launched in 2019 as a way to entice Brooklyn homeowners to bring their basement apartments up to code. That program, which was intended to help 40 property owners in East New York, revealed the extent of the challenges.

Five years after it started, just two homeowners have stuck with the effort as exorbitant costs — an average of $250,000 per home — and strict regulations forced dozens of prospective participants to drop out.

Meanwhile, tenants continue renting tens of thousands of basement units around the city, with or without intervention to make them safer.

Mohammed Rahman, a real estate agent who works with tenants, landlords and homebuyers in Queens and elsewhere, said the units are a key source of affordable housing and owner income. Some buyers move into the basements and rent out their other floors to avoid the prohibition on below-grade apartments, Rahman said; others buy a home and count on the underground income to offset their mortgage and property tax bills.

“It doesn’t matter if it’s legal or not, people are going to do it,” he said.

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