Rural New York Explores Creative Housing Solutions

Rural communities and small cities are implementing affordable housing solutions at the local level, while the state budget prioritizes urban areas.

10 minute read

May 21, 2024, 5:00 AM PDT

By Mark McNulty

View of street in small town of Camillus, New York on a cloudy day.

Camillus, New York. | debramillet / Adobe Stock

  

Debates over housing delayed the annual New York State budget for weeks in April before lawmakers ultimately struck a deal which Governor Kathy Hochul described as the state’s “most comprehensive housing policy in three generations.” Yet the two key pillars of the deal — tenant protections and a tax break for building affordable housing — only apply in New York City, although other municipalities may opt into the same protections. 

The budget earmarks $650 million in grants under a new statewide Pro-Housing Communities program, but the program has struggled to attract applicants. The budget also includes $500 million to fund housing development on state-owned land, although the Governor has to date only announced one site that it will target.

“We mostly hear about a housing crisis in places like New York City or in our more urban areas,” says State Senator Michelle Hinchey, who represents parts of the Hudson Valley. “But in our rural communities and small cities, we, too, are facing a housing shortage.” 

Advocates have also criticized the budget. “This budget perpetuates a divided state,” Annemarie Gray, Executive Director of Open New York, said in a statement. 

Rural areas are losing population at twice the rate of urban areas, and the lack of housing is a major culprit, according to the NYS Rural Housing Coalition. Housing costs have soared in areas that have seen an uptick in population. In the Hudson Valley's rural Columbia County, median home prices virtually doubled from 2018 to 2023. Prices jumped more in the city of Kingston than anywhere else in the country in 2020.

In the Catskill Mountains village of Tannersville, restaurants could only open two or three days a week in 2021 due to the lack of workforce housing, according to Kevin O’Connor, CEO of RUPCO, a local non-profit that is building 55 housing units in the village. “I have one woman in a beautiful one-bedroom at Landmark Place [in Kingston], she was living in her car for three years prior to that apartment,” he says.

In these rural areas, key obstacles to producing and preserving affordable housing include a lack of water and sewer infrastructure outside population centers, a lack of capacity in the local government and civic community, and a lack of state housing programs specifically targeting rural areas, according to Mike Borges, Executive Director at the Rural Housing Coalition. Plus, state budgets naturally prioritize urban areas because that’s where they can build more housing for less public money. 

To address these challenges, small cities and rural counties are not waiting for the state. They’re already implementing strategies locally to advance affordability like regulating short-term rentals, updating local zoning, land banking, and capacity building. While some of these solutions leverage state funding or depend on state legislation, they’re mostly taking place apart from Albany’s annual budget season debates and backroom deals.

Regulating short-term rentals

The short-term rental (STR) market has exploded in upstate New York, growing by nearly 100 percent in the Hudson Valley during the pandemic. Many communities have responded by creating registries to track these rentals, including at least 10 communities in Ulster County where STRs accounted for 12 percent of the total rental housing stock in June 2022. 

Ulster County’s Planning Department started the Housing Smart Communities Initiative (HSCI) to provide technical and financial support to help municipalities refine their housing policies. The initiative recommends towns create a registry and cap STRs at 2 percent of their housing stock. “You want the benefits that short-term rentals bring to the community, but you don’t want them accounting for most of your available houses,”  says Jen Metzger, Ulster County Executive. 

People stand on sidewalk in Woodstock, NY
Woodstock, New York in Greene County is a popular weekend destination. In June 2022, short-term rentals accounted for 45 percent of all rental housing stock in Greene County. (Photo: littlenySTOCK / Shutterstock.com) 

The City of Kingston capped short-term rentals at 1 percent of total housing stock. “We’ve been able to put more than 100 housing units back on the market for long-term housing as a result of the cap,” says Kingston Mayor Steve Noble.

In 2023, State Senator Hinchey introduced a bill to create a statewide registry for short-term rentals. She claims it would provide helpful data and enforcement capacity which is rarely available at the local level. “Often multiple small towns may share a building inspector. Having a set of standards could be helpful to the individual on the ground doing the work.” Hinchey says some communities must pay a third party to create and maintain their registry. “A lot of communities are on the fence…They want it, but they don’t want to spend their limited tax dollars on a third party.” Under Hinchey’s bill, the Department of State would maintain the statewide registry and distribute quarterly reports to towns.

The bill would also establish a standard sales tax on STR transactions. Some NYS counties already receive occupancy taxes from certain STR platforms. Metzger has proposed dedicating 25 percent of occupancy tax revenue to Ulster County’s Housing Action Fund. She says if the County could collect sales tax, they would consider dedicating some of it to housing too. 

Nationwide many localities are attempting to regulate STRs, although no statewide registry exists yet. Hinchey emphasizes that New York’s strategy was created in close coordination with local officials and residents. This could mitigate some of the back and forth between state and local officials taking place in other states, for example.

Updating zoning 

While short-term rental regulations deal with existing homes, some communities are opening the door to new homes by updating their zoning codes. Kingston’s Common Council unanimously voted to adopt a new form-based zoning code in 2023, and other municipalities are making more discrete updates like permitting accessory dwelling units (ADU).

Kingston’s Mayor Noble’s background in environmental science informed his approach to the rezoning. “Urban areas are supposed to be built in. Rural and agricultural environments are supposed to be protected…This is where we have the water and the sewer infrastructure, we have the density, the sidewalks, this is where we should be building.”

Kingston’s new code ends minimum parking requirements, legalizes multifamily and infill development, streamlines the approval process for new development, and more. “We got rid of single-family zoning and didn’t have pitchforks outside city hall,” said Noble said during a recent webinar. The city has permitted 90 units of housing (a .9 percent increase) since the rezoning.

Residents of Kingston, NY participate in a design charette.
The City of Kingston invested in outreach and community participation while drafting a new form-based zoning code. (Photo: Kingston Mayor's Office)

Noble credits the city’s outreach process for the overwhelmingly positive response to the new zoning.  “We tried to make zoning cool,” he says. His team “invited residents off their porch” for walks to look at architecture and urban form. They produced bumper stickers, eye-catching graphics, and short videos to explain what zoning is, as well as a Gridics site where residents could easily compare the old and new zoning codes on their own block.

Throughout the rest of Ulster County, Metzger encourages towns to look at small components of their zoning if they can’t renew the entire code. Her office has been “heavily promoting” accessory dwelling units and distributing grants alongside RUPCO to fund ADU construction. At least seven Ulster County communities now permit ADUs as of right, according to Metzger.

Land banking

As communities consider zoning changes to spur housing production, housing preservation is often a greater challenge. “We’re faced with these communities that used to have huge employers and now they don’t,” says Nicole Justice Green, the Executive Director of PRIDE of Ticonderoga, a non-profit and Rural Preservation Company in the North Country. “They’re left with housing that really needs to be maintained and beautiful historic structures that are starting to decay.” 

In 2011, New York followed Ohio and Michigan and passed legislation giving any government unit that enforces delinquent property taxes (like a county) the power to create a land bank. These are public authorities designed to acquire blighted and abandoned properties and return them to productive use according to community goals. 

A county or city can manage the land bank directly or administer it in partnership with a non-profit. Land banks use grant funding, private donations, administrative stipends, and other tools to obtain properties cost-effectively through the tax foreclosure process, hold them tax-free, and sell them to new owners based on the best outcome, not just the highest price. 

Aerial photo of portions of the East End II project in Newburgh, NY showing rehabilitated homes and buildings
Kingston-based non-profit RUPCO collaborated with the Newburgh Land Bank on East End II, a project that rehabilitated 24 buildings, including a Methodist church, to create 61 homes. (Photo: RUPCO)

A land bank can give rural communities more latitude to develop the type of housing they need. “We didn’t have a toolkit to construct housing. That’s why we created the land bank with the Essex County government,” says Justice Green. “The strategy, because of the Adirondack Park and because we can’t build housing outside of our hamlets easily, is to do infill within our hamlets and to densify them.”

New York’s land bank network is one of the oldest and most successful in the country. Since 2012, the New York State Land Bank Association (NYSLBA) has stewarded investments of nearly half a billion dollars into underserved urban neighborhoods, rural main streets, village centers, and manufactured home parks to acquire more than 5,000 properties. 

Jason Isaman is the Association’s Vice-President for Rural Land Banks and Executive Director of the Allegany County Land Bank in southwestern New York. He credits this success to tight organization. “We started a land bank association right off the bat and spent our dues to pay for legal assistance and consulting to help us raise awareness in Albany.”

While they speak with a unified voice at the state level, rural land banks create savings in different ways at the local level, says Isaman. In the Southern Tier, public works departments in Steuben and Chemung Counties will haul away waste during home demolitions. In the Finger Lakes, the Wayne and Livingston County Land Banks have discussed passing rehabilitated buildings, like motels, to social services departments for uses such as transitional housing.

In states that do not have land banks, Isaman recommends localities research their own tax sale system, then approach state lawmakers with a unified voice. “Look at the properties that were sold at past tax sales — what happened to them? Try to study the outcomes and then consider, with investment, could you have saved those houses and made them into affordable housing?”

Capacity building 

All these challenges are made harder by the lack of civic and government capacity around housing in rural communities. Many rural towns lack the dedicated planners, building inspectors, or non-profit partners who can seek grants, administer programs, or develop plans.

After working in planning departments in more urban areas, Chris Brown became the Housing Development Coordinator at Columbia County’s Economic Development Corporation in 2022. “Walking into no organizational infrastructure, before we could even start to think about chasing grants or finding properties to develop, we needed to figure out, ‘Who’s going to do these things?’” 

Over the last 18 months, Brown has addressed capacity head-on by helping to facilitate the creation of the County Affordable Housing Task Force, Columbia County Land Bank, and the Trillium Community Land Trust. “It’s not capacity underneath any one umbrella. You’re sort of building it horizontally instead of vertically,” says Brown.

School building in Columbia County, NY
Developers have expressed interest in redeveloping the Roe-Jan School in Columbia County, NY, but the financial challenges are complex. (Photo: Loopnet.com)

He encourages communities to focus on what they can control when it comes to “land, labor and lumber,” the three main costs that weigh on housing production and preservation. While local governments can hardly influence the cost of labor and materials, forming a Land Trust and a Land Bank can influence the cost of land. Managing these entities, however, requires capacity. “A lot of the work is only going to get done by volunteers in the community,” says Brown.

Many towns in Columbia County have recently formed their own housing committees. “The first year has been laying that groundwork,” says Brown. “Hopefully the second year of task force activity is when we start getting some grant money and start putting some properties up.”

According to Kingston Mayor Steve Noble, the city government could have never pulled off the rezoning, which cost approximately $500,000, without a Housing Initiatives Director, a role Noble created when he came to office. “We really spent lots of time investing in staff in key areas where we want to accomplish things,” he says. 

While these various solutions are bubbling up from the local level, all housing practitioners did express gratitude toward the state agencies that manage some of the programs required to do this work, including Homes and Community Renewal and Empire State Development. The practitioners also expressed a universal desire for more support, mostly in the form of capacity and funding. Even the most effective local efforts will need to be scaled up to make a dent in the state’s housing shortage.

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