Millions in State Housing Grants Available to Towns and Villages

When Governor Kathy Hochul’s effort to force municipalities statewide to loosen zoning regulations and spur the construction of hundreds of thousands of new housing units fell apart last year the state executive’s office turned to financial incentives as a way to hopefully spur at least some of the housing growth she says the state needs.

Tens of millions of dollars in state grants are available to local municipalities that qualify as “pro-housing communities” under the state’s criteria. East Hampton Town, Sag Harbor Village and Riverhead Town have already qualified and been certified pro-housing, making them eligible to apply for the grants, and Southampton Town this week said it would wade into the pool also — since it already meets the necessary criteria of at least 1 percent growth in housing stock year-over-year.

But like the New York Housing Compact, her much maligned 2023 initiative, the incentive programs do not put any emphasis on, or even mention, the affordability of the new housing “units” being created, and the 1 percent growth in Southampton Town over the past year almost certainly did little to address the town crisis-level shortage of housing for year-round, middle class and low income residents.

But there’s no sense in looking a gift horse in the mouth, the town’s top housing official, Housing and Community Development Director Kara Bak, told the Southampton Town Board last week, since any ways that the town could tap into the state’s housing-focused grant money could mean money from the Community Housing Fund — which is dedicated to affordable housing only — freed up.

“The requirement is that the town must show that it has been successful in promoting overall housing growth … not just affordable housing, but overall, and that it is committed to working toward removing impediments to housing growth,” Bak told the board members. “We must show permits that increased housing stock by 1 percent over the last year or 3 percent over the last three years. It appears that we would qualify under the 1 percent requirement.”

The town lawmakers acknowledged that the statistics that qualify the town for the grants — hundreds of new homes being constructed — are based primarily on numbers of new building permits, many of which in the town are for multimillion-dollar mansions and are likely only deepening the desperate situation the town and its residents and workers face. Bak said she was unsure if permits for redevelopment — replacing an old existing house with a new one — would qualify, which, if it did, would mean that potentially replacing formerly affordable housing could be replaced by part-time, second homes and still count in the eyes of the state.

The money available from the state would come from two narrowly-focused programs: the New York Investment Fund, which makes grants of up to $20 million available specifically for projects related to new developments of at least 100 housing units; and the New York Forward program, which is focused on revitalizing smaller downtowns through redevelopment, building renovations and projects that restore or elevate historical “small town charm.”

The grants would have to be applied for by the town itself, though the money could be directed to private, profit-driven development projects by independent developers.

Councilwoman Cyndi McNamara noted that the mixed-use expansion of Hampton Bays’ downtown proposed by developer Alfred Caiola would fit neatly into the criteria of the NYIF.

“It’s for developers, it’s for over 100 units of housing … it’s multi-family housing development — he checks most of the boxes on here,” she said. “He could absolutely get between $2 million and $20 million through this fund.”

McNamara said she was skeptical of the program, largely because of Hochul’s proposal last year, which would have required that municipalities take steps to increase their housing stock by at least 3 percent every three years, largely thorough high-density multi-family developments, or the state could step in and supersede local zoning rules that blocked such developments.

Board members were hesitant, but agreed that since it is grant funding, it would still be under the town’s control to apply for the grants of what projects deserved

“If we qualify and take grant money, does that indent us to the state in any way,” she asked Bak. “Because the governor has tried to override local zoning before.”

“They are going to want to see growth,” Councilman Michael Iasilli said.

“And changes to our zoning — that’s part and parcel to this,” Councilman Tommy John Schiavoni said.

Supervisor Maria Moore noted that the town would have to be recertified as qualifying — showing that the housing growth was continuing — each year, and that it could always choose not to even apply again if the program proved to be problematic in any way.

And Bak noted that any avenue to funding should be welcomed.

“If you are eligible for some of these grants, it leaves more from the CHF for other programs,” Bak, whose office administers the Community Housing Fund, said.

“Any funds we get from the state, helps preserve funds for other things like, for instance, down payment assistance,” Iasilli said. “And we can be selective of what we apply for. It’s not like just saying, ‘Okay, state, just land your funds wherever.”

Schiavoni said that the housing crisis and flight of young locals demands the town at least avail itself of every possible opportunity to drive housing development that would be helpful, even if the statistics that make it eligible are not.

“It would bring money into the town, under our purview, to provide homes for people,” he said.