New York City’s dire need for new homes is well known, following the proposed City of Yes for Housing Opportunity, a zoning change that would help build more homes across all neighborhoods in the five boroughs. But passing the City of Yes would not just go a considerable way to addressing our housing shortage - RPA’s analysis shows that it would also provide significant new jobs, earnings, and economic activity.

The key to the package’s potential success is its breadth. The modest zoning changes in City of Yes add up because they apply everywhere in New York City - a ​“little more housing everywhere” means enough to significantly impact our housing crisis. The same is true of jobs and economic benefits.

To give a sense of the scale of this impact, the economic activity and jobs unlocked by City of Yes will be four times greater than those potentially generated by the Hudson Tunnel Project, one of the largest and most significant upcoming infrastructure projects in New York.

Over half of these benefits will come from the construction of small homes and apartment buildings outside the urban core. In a city where the vast majority of most new development is in buildings of over 50 units, this will be a big help for our smaller contractors and developers, especially M/WBEs and non-profits. This means the economic benefits - like the housing benefits - will accrue across the entire city, not just in a few neighborhoods or among a few communities.

And the benefits don’t stop there. While staying attuned to the local context of the city’s diverse neighborhoods, the proposal would also advance the city’s fair housing plan and better align its land use regulations with climate goals.

The analysis by Regional Plan Association shows that if fully adopted, the proposed citywide zoning text amendments could unlock the creation of as many as 442,000 jobs, $32 billion in earnings, and $83 billion in Gross Domestic Product (GDP) across the region. These figures represent the direct, indirect, and induced effects generated over a 15-year period resulting from new investments in the residential construction sector enabled by zoning changes. These estimates do not include the long-term benefits to the economy that will stem from the improved affordability and retention of our working- and middle-class households that the new housing spurred by the City of Yes reforms will bring.

Economic Effects by Building Type

RPA calculated the jobs and economic activity generated based on three building types: Accessory Dwelling Units (ADUs), Multifamily Units (outside the urban core), and Multifamily Units (inside the urban core). These roughly correspond to the main categories of zoning provisions that are being proposed:

• Low-density areas (allowing ADUs and removing parking requirements citywide)

• Middle-density (Town center along commercial corridors and Transit-oriented development in the outer boroughs)

• High-density (expansion of inclusionary zoning through Universal Affordability Preference program, office conversions, and new R11 & R12 districts).

Despite being the smaller and cheapest type of construction, the additional ADU’s enabled by the proposal alone would generate a significant percentage of the new jobs and economic activity, generating between 3,800 and 5,700 jobs a year, and between $11 and $16 billion in overall economic impact.

Cost Assumptions and Projected Housing Units

To estimate the economic effects of the proposal, RPA first determined the investment in the residential construction sector to achieve the forecasted increase of new housing stock. The Environmental Impact Statement for City of Yes estimates an additional 3,867 to 7,267 units to be built each year through 2039. To build these units, the necessary investment would have to range between $21 and $43 billion, equivalent to $1.4 to $2.8 billion per year annually.

This raises important questions about our current housing programs and their ability to help underwrite the type of new construction enabled by the zoning proposal. For instance, the necessary investment for ADUs alone ranges from $5.5 to $8.3 billion, or $372 to $552 million annually. The budget of the New York State Plus One ADU program – dedicated to creating and upgrading ADUs across the entire state – is just $85 million dollars. Moreover, given the current restriction on ADUs in New York City, the industry dedicated to their design and construction will need to be scaled up in order to realize these benefits. In addition to passing the City of Yes reforms, both New York State and New York City should look toward investing more in both housing programs and workforce development for ADUs and other types of development that will need to be scaled up.

RPA used cost estimates representing different building types and the expected increase in housing units that would be unlocked by the proposal. We used the cost assumptions by development type as documented by the Citizens Budget Commission of New York (CBC), which range from $280,000 to $870,000 per unit, depending on location. For ADUs, RPA used estimates from recent construction trends in San Francisco, which showed that the average unit there costs approximately $207,000 to build. RPA also used the incremental number of units disclosed in the proposal Final Environmental Impact Statement (FEIS), which ranges from 58,000 to 109,000 units by year 2039.

Conclusion

The investment figures represent changes not only to the city’s zoning but to the entire residential building industry, both private and public. If the new units enabled by the City of Yes are to materialize, then industry lending, design, construction, and operation practices must expand and adjust accordingly. The City of Yes proposal is helping resolve the zoning part of the housing problem, but fully solving our housing crisis will also require more involvement, coordination, and funding among private stakeholders and city and state agencies.