This afternoon, the Citizens Budget Commission's (CBC) Director of Housing and Economic Development Studies Sean Campion will testify before the New York City Council's Committee on Land Use on the potential for converting commercial buildings to residential use and considerations for developing a new tax incentive to encourage conversions.

CBC's report, The Potential for Office-to-Residential Conversions: Lessons from 421-g, found that: 

• Regulatory reforms, such as lifting the Floor Area Ratio (FAR) cap and making zoning and building code changes, were essential to make conversion possible for some buildings that otherwise would have been prohibited or financially infeasible to convert;  
• Allowing conversions as-of-right, rather than through discretionary processes, maximized the potential number of conversions and allowed the market to determine where conversions were the best option;   
• A tax incentive may not be necessary for conversions to market rate units, as such conversions have continued without 421-g; but 
• Tax incentives would be needed to support mixed-income rental conversions.  

The analysis of 421-g yields four questions whose answers should guide the specific design of a new incentive program: 

1. Is the vacancy crisis concentrated or widely dispersed?
2. What are the goals of the conversion program, such as creating mixed use neighborhoods or increasing the supply of affordable rentals?
3. What incentives are needed to advance these goals, in which circumstances, and at what levels?
4. Is it cost-effective relative to other strategies?

Read the full testimony for more detail on the factors that policymakers should consider.

The Council hearing will begin at 12:00 p.m. and can be viewed here: https://council.nyc.gov/livestream/#250-broadway---committee-room-14th-floor