BCW Group Details to Lawmakers What’s Behind High Cost of Housing

The Business Council of Westchester’s (BCW) Smart Development Working Group, which consists of 17 developers, held its annual meeting with the Westchester state delegation on March 15. The group discussed how Albany can facilitate the construction of more housing at a time when building costs are skyrocketing.

Recognizing the urgent need to create more housing to ensure affordability and maintain Westchester’s competitiveness, the Smart Development Working Group presented findings from an in-depth study comparing the development costs of multi-family housing projects in the Pre-Pandemic era with today’s reality.

“Every year it seems as if new regulations add costs and sometimes remove revenues from our projects,” said Mark Weingarten, a partner at DelBello Donnellan Weingarten Wise & Wiederkehr and co-chair of the Smart Development Working Group. “Various levels of government keep increasing the cost of these projects to developers. I am afraid we are reaching a breaking point.”

The Smart Development Working Group’s analysis found that in Yonkers, a 370-unit, 450,000 square foot building completed in 2019 versus a 240-unit, 300,000 square foot building in 2023 in a similar location had a per-unit hard cost increase of 47 percent; a 106 percent increase in insurance costs and a 55 percent financing cost increase. The result is that the cost of a 2024 residential complex costs the same as a 2019 structure that is 50 percent larger.

In White Plains, the analysis found that a 300-unit, 364,000 square foot multi-family project in 2020 compared to a 200-unit, 235,000 square foot project in 2023 saw a 54 percent per-unit increase in hard costs; a 93 percent increase in per-unit insurance costs; and a 57 percent increase in per-unit financing costs.

Weingarten noted that throughout Westchester County, thousands of apartments are approved for construction, but the sites remain inactive due to rising interest rates on borrowing and the rising cost of building materials.

Weingarten attributed some of Westchester’s housing crisis to:

• The State Environmental Quality Review Act, which allows development opponents to make project approvals lengthy, expensive and uncertain.
• A lack of infrastructure to support multifamily projects, particularly north of I-287.
• An opposition to developments that attract school-aged children.
• Increases in fees for affordable housing and recreation funds.
• Outdated parking requirements that sometimes add millions of dollars in unnecessary costs.
• Elimination of the State and Local Tax Deduction.
• Elimination of condominium taxation in some municipalities.
• Restrictions on some energy sources and green energy requirements adding significant costs.
• Efforts to limit the effectiveness of industrial development agencies.
• Demands by organized labor to increase wages beyond market rates.

David Garten, a senior advisor at RXR, led the analysis and he noted that New York City’s failure to produce new housing as job growth boomed led to skyrocketing rents. In Westchester, Garten said that New Rochelle’s rollout of residential towers under its downtown master plan has moderated rent spikes.

“Rent growth has gone up all over the country, but in the places where there is flexible zoning and they’ve increased that supply, that rent growth has not gone as high as the other places,” said Garten.

BCW Executive Vice President and COO John Ravitz told the legislators that the Smart Development Working Group’s findings and recommendations are intended to create a better New York.

“It’s important that you know that this group is here to help in terms of being a sounding board and in terms of giving concrete advice and examples of what they’re going through because they’re on the front lines,” said Ravitz.