Thiele Measures Would Create Incentives For Homeowners To Add Affordable Accessory Units

State Assemblyman Fred W. Thiele Jr. on Monday announced the introduction of two bills that he said would help in the effort to provide more affordable housing opportunities in the face of the ongoing housing crisis in his district.

One measure would create three major incentives — forgivable loans, tax credits and property tax rebates — designed to encourage homeowners to create affordable accessory apartments on their properties.

“It’s one thing to make accessory units legal, it’s another thing to get homeowners to walk through the door,” Thiele said. “Nationwide, the communities that have been the most successful in creating affordable housing have had incentives in place to encourage them.”

The second would require local governments to create five-year plans to address housing needs on both a local and regional basis.

“Good planning is critical to the future of our communities,” Thiele said. “Housing is a critical need for any community land use plan. Every local government must have a plan to address local and regional needs for housing. These bills will give local governments the plan they need to address affordable housing and the tools they need to implement the plan.”

The Accessory Dwelling Unit Incentive Act would establish a program to loan homeowners up to $75,000 to construct an accessory apartment on their properties. If a unit is rented to tenants on terms that meet affordable income and rent guidelines for 20 years, the loan would be forgiven.

The program would be administered by the State Division of Housing and Community Renewal.

A second provision of the bill would create a tax credit for property owners with legal accessory units who rent them under affordable guidelines. They would receive a tax credit equal to half the difference between the market rate rent and the affordable rate.

For example, if someone rented an apartment classified as affordable for $500 a month less than the same apartment rented at a market rate, they would receive an annual tax credit of $3,000, which is half the difference of $6,000 in lost potential income. The credit would be capped at $10,000 per year.

The bill would also allow local governments to provide a property tax exemption to homeowners who construct legal accessory dwellings that are rented at affordable rates. The exemption could be as much 100 percent of any increase in the assessed value of the property attributed to the construction of the accessory unit.

For example, if a homeowner’s house was assessed at $1 million and they added an accessory unit that cost $100,000, their town could choose to keep the homeowner’s assessed value at $1 million.

The second bill would require local governments to enact comprehensive, five-year plans to address local and regional housing needs. The plans would be required to examine a number of criteria to encourage affordable housing, including: providing financial assistance to homebuyers; creating affordable housing for sale or rent; producing affordable housing through public-private partnerships; rehabilitating existing buildings for use as affordable housing; taking an equity stake in houses to help first-time buyers; encouraging accessory apartments; supporting mixed-use developments that include affordable housing; and offering housing counseling services.

Governor Kathy Hochul’s executive budget had contained a provision that would have required local governments to approve the construction of accessory apartments for all residential properties, eliminating their ability to zone against such developments. Thiele joined other legislators who acknowledged the need for more affordable housing but expressed concern that the blanket approach proposed by the governor would overwhelm the infrastructure and threaten the character of communities across the state.

The governor withdrew her proposal and agreed the state should focus on incentivizing the creation of affordable housing, while protecting local communities' rights to regulate their placement.