Brian Lehrer: It's The Brian Lehrer Show on WNYC. Good morning again, everyone. Governor Kathy Hochul joins us now with details of what she says is a conceptual agreement on the new state budget that could have massive implications for affordable housing in New York State and a lot of other things. We have about 10 minutes with the governor today. Governor Hochul, always good of you to come on with us. Welcome back to WNYC.

Governor Kathy Hochul: Thanks, Brian. Looking forward to our conversation.

Brian Lehrer: A couple of things about housing to start. All I've seen so far is this language like preliminary agreement and conceptual agreement. Can you give us any specifics, first of all, of the so-called good cause eviction, rent increase limits, or the tax breaks that developers could get as part of the deal for building how much affordable housing?

Governor Kathy Hochul: Well, Brian, as you mentioned, this is still a conceptual agreement. All those specific details will be out within a matter of days, I believe. What that does is when I had that press conference, it signals that there is a handshake deal between myself, the Speaker of the Assembly and the Majority Leader of the Senate, that we're prepared to have them go back to their conferences, and then bring to us-- we'll settle on the final details.

All that will be out there, but I will say, we realize, and everyone talks about this shortage of housing crisis, and the fact that New York City has a 1.4% vacancy rate, I knew the only way out, and economists know the only way out is to build more housing. Ultimately, the larger the housing supply you have, the better it is for tenants because it starts driving down the prices, which right now are high because there's a shortage of supply. There's a lot of initiatives in there.

We have incentives for the developers to build because when that lapsed a couple of years ago, literally, they stopped building, 85% decline. That means affordable housing units weren't even on the books. They just walked away from them. I'm trying to jump-start that again. Also, using office space. Why is it so difficult to look at a building in Midtown, for example, that's only half full or a third full since the pandemic and say, why can't people live in Midtown and be able to have a 24/7 lifestyle here not far from their work?

Also, tenants have always been important to me. This is the most significant changes for our tenants that they have seen. We worked really hard to find anti-gouging measures to limit what landlords could charge them. Of course, there's always questions. There's always controversy. Everybody wants what they think is the perfect deal, but this is so much more than they had, and I would take that as a win.

Brian Lehrer: Well, tenant advocates like Housing Justice for All and the Met Council for Housing are saying good cause eviction provisions were gutted so much from the original versions that they don't really protect tenants very much from eviction or heinous rent increases if they're not already in rent-stabilized homes. Get as specific as you can to argue that tenants should be happier about this.

Governor Kathy Hochul: Oh, of course, they should be. Again, I know how passionate these advocates are about their cause. I understand that. I've been in elective office for 30 years, and what I know is that compromise is not a dirty word. It does not mean that you're selling out to get your foot in the door, to do something, that the legislature with these advocates' support has not done until now because I'm not sure they have the votes, Brian, because otherwise, this would have been on my desk before. This was the only path that gets over the finish line.

Brian Lehrer: What's the something that they're going to get?

Governor Kathy Hochul: We're going to be protecting tenants from massive rent increases, and so that is significant. That is what the biggest complaint has been, that they're being driven out of their homes. You cannot just raise rents on someone and drive them out of their home. There are limits. 5% is all you can raise it on plus CPI. That's not what the status quo is right now, and that is a win, but getting back to the fact that the whole focus is to build more so tenants don't have to deal with such outrageously high prices right now. That's what the ultimate goal of this is.

Brian Lehrer: Although progressives were unhappy with the old tax break for developing new apartment building system because they saw it as giving taxpayer subsidies to for-profit developers for too little actual affordable housing. Can you get specific at all about why this would be better in that respect? Are there higher percentages, 50%, 75% of units that would have to be substantially below market rates, anything like that?

Governor Kathy Hochul: All I would say is that under that program that was started in the 1970s, 421-a, to really be a catalyst at a time when New York City was really in decline, and nobody wanted to build there. This was an incentive that says, developers, if you make 25% of your building affordable, we'll give you incentives, because otherwise, what the landlords or property owners are doing right now, they're taking those building lots they have and the space they have, they're doing expensive condos and co-ops. That is what has happened in the last two years since this expired when they are building, and there's not much building going on, they're not focused. They will not do any affordable housing if it's not in their interest.

All we did was just two things here, Brian. We expanded the existing language for six years because a lot of projects weren't able to be finished while that tax break was in place. We also said we're going for a new model of this. We call it 485-x. What that does is-- the labor unions are very pleased that the hard-working men and women of New York City will have a shot to be building the new houses of the future. They did not have a place before. This is negotiated since last summer. We brought all the players together. If you ask the leaders of the labor unions, of the building trades, they're delighted that they'll be able to have their workers building these projects because there is public dollars involved.

Brian Lehrer: You're saying 25% below market rate is the most you could get?

Governor Kathy Hochul: Yes, because if it doesn't pencil out, if it doesn't make financial sense for the developer, I can't force them to build. I can't say, no, no, you must build here, because it is their property, and what they're doing is building condos and co-ops with it instead. You have to find that sweet spot. That's why this was so hard fought for between everyone. We had to work with the other legislators and work with the industry to say, we want to make sure that you're not-- that you have restraints on what you can do. Also, very much aware that this is ultimately to help the tenants, but if we don't-- we need the tax incentives to jump-start new construction. We also have affordability. If we leave it on its own, all we're going to get is new construction with zero affordable. 25% is better than zero.

Brian Lehrer: One more housing item that we've been reporting on is making legal and bringing up-to-code basement apartments with housing for new immigrants badly needed and often used with basement apartments, and after the flooding of out-of-code basement apartments after Hurricane Ida. Advocates are concerned again that the original proposal is being very watered down. Can you tell us if there's a basement apartments provision in the budget, and specifically how extensive it is?

Governor Kathy Hochul: Sure. I was a brand new governor for about a week when Hurricane Ida hit. I walked those streets in Queens. I saw what happened in places, in homes where people were flooded and literally drowned in their own home because they were trapped in those illegal basement apartments. That was one of the reasons I said we must bring them into code. We want places for people to live. It's often very affordable. It helps a homeowner to be able to make some more money to pay their mortgage. As you mentioned, it's a home for our migrant community where we're struggling to get them out of these shelters where they are now and get them into real homes.

What we have to do is also be sensitive to what communities want. What you'll see when this is unveiled, all the details, we have to make sure that there's local involvement, the assembly members and the council members who represent a district because some neighborhoods really want this, some do not. We don't want Albany to always be dictating exactly what's going to happen at the street level. You'll see a compromise that allows for it to happen on a pilot basis.

Just as a note, this is one of the reasons places in California, Los Angeles and others, are starting to crawl out of their affordability and their housing crisis because they're finding creative ways where there's been barriers before like ADUs, accessory dwelling units, and basement apartments, which I think makes sense in most areas, but again, sensitive to what the local communities want. We need to get people into safe housing, no doubt about it.

Brian Lehrer: I know our time is very limited. I want to try to touch two other items very briefly. One is mayoral control of New York City public schools. I read that you reinserted it into the budget process rather than let it wait for later in the year. Advocates wants some strings attached including that the mayor will comply with a smaller class size law that's already been passed. Are you going to include a smaller class size requirement on the mayor?

Governor Kathy Hochul: I will say this. I proposed this in my budget to get it done during the budget process, so we can have the certainty for our children and our teachers and our principals to know what's going to happen. I focus on the kids and people often will criticize this way to do it, but I'm saying, I want to get this done so we can get focused on what's most important. We brought together City Hall, the legislature, education advocates, and labor, and I will assure you that what ends up being enacted if we get--

I feel confident, but, again, it's not 100% done right now. I feel confident that it'll meet those needs and make sure that the law we passed two years ago that deals with class sizes, I signed that into law, that was something that happened under my first year as governor, that that is being adhered to. That's very important. The mayor knows that, and we're structuring a very complex deal here, but I think ultimately, again, is everybody happy? Never. That's not the world we live in. You know that. Compromise is important and I think we'll get to a good place.

Brian Lehrer: That sounds like a yes on smaller class sizes. The last thing is something that the mayor's been asking you for, and even asking President Biden for, what he calls a decompression strategy on all the asylum seekers coming to New York City. As you know, by decompression, he means he wants you to say, no, you can't all be in New York City. It's too much of a burden on one city. We're going to have some of you in the Capital District, we're going to have some of you in the Rochester area. We're going to have some of you in Westchester. Are you giving him anything on decompression?

Governor Kathy Hochul: We have migrants in all those cities you mentioned, Brian. They have already been going there. In fact, the state has a program where we will pay for accommodations for migrants who go upstate for a year once they have their work authorization, and I have to be-- Tell you this, I'm surprised at how few have taken advantage of it. We can't force them to leave the city. They came here and now there's already communities being established. Just like all migrant communities. Whether they're coming from China or India, people come here, someone plants the flag, they start building a sense of community and they start getting jobs.

They start finding housing, and they share housing with the next group coming in. That's what's starting to happen with the individuals who have been literally coming for the last two years now. They have options to go elsewhere. Many are turning it down, but those who have, they're being welcomed. Again, not 100% of the state, but it's working out well. We also put $2.4 billion into support what the mayor is doing, $500 million more than even last year. I don't know that he even expected that. Everybody always wants to ask for more. I asked for more out of Washington always. I know how that's done.

Ultimately, Brian, this will be solved if the Republicans that we have in the state of New York, 10 Republican, members of Congress, will walk into Speaker Johnson's office and say, we'll, support your reelection or your position as speaker only if you take up what the Senate did. A bipartisan negotiated by Democrats and Republicans bill to address the border crisis, more border control agents, enforce more support decompression at the border and help us at our northern border, and money for cities like New York. They'd walked away only for one reason. Donald Trump told them to because they did not want Democrats or President Biden to look like they could solve this problem. That's a frustrating part for us.

I'm working hand in hand with the mayor because this should not fall on his shoulders alone. That's why we've been supporting-- Last year we did $1.9 billion. We're paying for all the shelters you see, that is fully funded by the state on Randalls Island and Creedmore and Floyd Bennett Field. I have over 2100 National Guard totally paid for by the state. We're picking up their healthcare costs. I don't think people realize the scale of what we're already doing, but again, the point is we are at capacity. We want to make sure those who are here get the work permits they need so they can enter the legal economy and not be abused by employers in the underground, which worries me a lot, and make sure that they have the shot that other people came here like my very poor Irish immigrants did two generations ago.

Brian Lehrer: I'm going to let you go after just a bit of breaking news here that maybe you can explain. Apparently, I'm seeing that there was some kind of cyber attack on the bill drafting system up there. What happened as far as you know? Is it going to delay the budget?

Governor Kathy Hochul: No, it's okay right now. We have to go back to the more antiquated system we had in place from 1994. This happened very, very early in the morning, and so we've been on top of this. I have one of the top cybersecurity teams in the entire country. I knew that was a priority, so no one will do it better than we do in trying to get to the bottom of this attack. Our understanding right now is it'll take a little bit longer to deal with the legislative side of it because a lot of data's included in the computers that we need to do what they call bill drafting, and then the printing and then the passage.

The agreements I would say are in good shape, obviously, if we're doing drafting and printing, that's a message about how far we've come along, but we're finding the path forward using 1974 computers that we still have access to.

Brian Lehrer: '74 or '94?

Governor Kathy Hochul: '94. Still an eternity ago.

Brian Lehrer: That means a couple of more days on the actual bills and the actual vote.

Governor Kathy Hochul: I can't tell you that right now because we're more concerned about finding the source, finding how we can remedy this, how we can just get back to normal. It's something we've been dealing with since the wee hours of the morning.

Brian Lehrer: Was this a politically motivated attack?

Governor Kathy Hochul: I don't know. I won't be able to answer that. We'll let people know what we know when we know it, but right now we just have to solve the problem.

Brian Lehrer: Governor Kathy Hochul, we always appreciate when you come on the show. Thank you very, very much.

Governor Kathy Hochul: Thank you, Brian. Appreciate it very much. Bye-bye.

Brian Lehrer: Brian Lehrer on WNYC and joining us now is our Albany correspondent Jon Campbell, to discuss what we just heard from Governor Hochul because he's much more in the weeds, much more familiar with the details and implications of what we just heard than I am. Hi, Jon. Thanks for listening to that interview and coming on right after.

Jon Campbell: Hi, Brian. Thanks for having me.

Brian Lehrer: What about that cyber attack first of all? Did you learn anything?

Jon Campbell: That has been the buzz all morning at the Capitol and I'm so glad you asked about it because that was news from the governor there. She said they're going back to some sort of system from 1994. We're going to have to figure out some more details on that, but obviously, that is having some sort of effect here, particularly because they were just getting to the point where they might start printing bills to actually vote on. That's a big part of the budget process to actually get it done. Now we have this cyber attack that we're trying to learn more about. It sounds like they're going to have to go to some sort of backup system there as the governor just confirmed.

Brian Lehrer: She didn't know or wouldn't say if it was a politically motivated cyber attack. Are you hearing anything from any sources that somebody or some group was trying to delay the budget printing process to delay the vote on the final budget for some political purpose or something else?

Jon Campbell: No. We have very few details about what actually is going on here, aside from the fact that there was an attack and what the governor just told us. That is what we're trying to figure out here. I haven't heard any inkling that it was politically motivated or something like that, but we live in a world right now where cyber attacks are very, very common, and malware attacks and locking people out of their systems for ransom. I don't know of any of that is what's going on right now, but we've seen that in other government agencies throughout the state, throughout the country, throughout the world.

Brian Lehrer: All right, we'll blame Russia until we hear otherwise. No, I'm kidding. Listeners, we can take some phone calls for our Albany correspondent, Jon Campbell, your reactions to anything you heard from Governor Hochul, or any questions that you have to help clarify anything that you just heard from Governor Hochul? 212-433-WNYC. You can call or text 212-433-9692. Jon, on housing, the big ticket item of big-ticket items translate what we just heard on who's getting what that they wanted in terms of rent and eviction protections if the governor gave us any specifics. You heard me trying to get her to get more specific than she wanted to get.

Jon Campbell: She did get more specific than she did the other day when she announced this, what she called the parameters of a conceptual agreement, which immediately goes in my Albany glossary of terms because that was a pretty good one, I thought. One thing that was interesting that she said, she did confirm that one measure of the good cause eviction bill is that reasonable rent would be considered 5% more than the rate of inflation. That is what we had been hearing that-- It's not exactly a cap on rent increases, but basically, it gives tenants an opportunity to challenge a rent increase greater than that in housing court.

What we had been hearing is 5% greater than the rate of inflation, or 10%, basically whichever is lower. What the governor said lined up with what we had been hearing, but it was nice to hear, confirm it. The big question still is what exactly are those exemptions going to look for? What kind of tenants are going to be exempted from this good cause eviction program? That's really the big thing here that we're going to be combing through the budget legislation however they end up printing it to try to figure out.

Brian Lehrer: We have a good cause eviction question coming from a caller. Jason in Queens, you're on WNYC with our Albany reporter, Jon Campbell. Hi, Jason.

Jason: Hi there. Can you hear me?

Brian Lehrer: Yes. What did you get from the governor by listening to that?

Jason: I feel like I got a lot of hot air, to be quite frank with you. I had some questions about the 2019 rollbacks that were now going to be put into effect because of this new budget. Something like 1 million of rent-stabilized households in New York are going to be raised by almost $200 a month per unit. People like myself and people like my great-grandmother who actually I brought out to [unintelligible 00:21:04] Governor Hochul, soon won't be able to afford our homes here in Queens that we've been living in for years.

Brian Lehrer: This has to do with renovations and the amount that they could raise the rent after they do certain renovations on an apartment, Jason.

Jason: Say that again.

Brian Lehrer: This has to do with how much landlords could raise the rent under the deal that may be emerging after they do renovations on a particular apartment. Is that what you're referring to?

Jason: Yes. Rent stabilized apartments in particular.

Brian Lehrer: Oh, rent-stabilized apartments. Jon, anything on that?

Jon Campbell: Yes. That's what they call the IAIs, the individual apartment improvements, and that is part of this housing deal in some form or fashion. Like so many of these things, we have details based on what lawmakers are telling us that they've been briefed on or what lobbyists have been told by lawmakers. There is some wiggle room here before the final legislation is printed. What we've heard on that is that they are nearing a deal or part of this housing deal will be to allow landlords to pass off a greater amount of improvements to apartments to their tenants in rent-stabilized units.

As of now, basically, it's capped at something like $90 a month that they can pass those off on the rent-regulated tenants. It would move up to maybe a couple hundred dollars a month. The overall cap would increase. We don't have the exact details on that yet. That's one of the things that has been under debate in Albany for months now and really, really under debate for the last couple of weeks.

Brian Lehrer: One of the things that might have been more specific that I did get out of the Governor than I think she has said before is giving a number on the percentage of below-market-rate or affordable units that would be required for developers to get tax breaks for building new apartment buildings. She said 25%, so 75% could be at market rate, 25% would have to be at below market rate. I know tenant advocates want a lot more than that. They say it still gentrifies the neighborhood rather than makes it more affordable overall if you're adding 75% new market-rate apartments. I asked 25% is the best you could do, and she said, yes, that was the best she could do. Was that new to you?

Jon Campbell: Yes, that was new. That lines up with what we had heard from lawmakers and that would be a slight bump from the old system. Still relatively in line. The other thing that we have heard that they're looking at doing is reducing, basically making those "affordable" units actually more affordable, making them affordable to a lower income rate than was required under the previous system. I feel like I'm saying it over and over again, but nothing is final, final until we see it in a bill. We have not seen anything in a bill yet. That's what we're waiting on cyber attack aside.

Brian Lehrer: Do you think it could come-- yes, cyber attack aside, that that 25% could include percentages that are specified in the law for people making under X income and under Y income? You know what I mean? There are carve-outs for not just middle class, a little less than market rate, but really lower-income people who desperately need more units.

Jon Campbell: Yes. It's based on the area median income. The number that has been tossed around recently is 80% of the area median income. We don't know specifically if that's going to be final or not. Yes, it's all based on the area median income, and then what level of rent they are deemed to be able to afford.

Brian Lehrer: What's the area? I know we're getting into the weeds here, but if you define the area for the median income as the whole New York City metro area, let's say, that's going to be a lot higher, allowing higher rents than if you define the area as a particular low-income neighborhood of the city that needs a lot of really deeply affordable units.

Jon Campbell: It is more targeted than just the New York City metro area. Manhattan would have a different AMI than Outer Queens, Outer Brooklyn, something like that. I don't know off the top of my head if it is by zip code or if there's some other regional metric there. It is definitely more targeted than greater New York City area.

Brian Lehrer: All right. We also talked with the Governor about mayoral control of public schools and a possible requirement for smaller class sizes in exchange for extending mayoral control. Kaiser in Brooklyn has a question about that, I think. Kaiser, you're on WNYC. Hello.

Kaiser: Hi. I'm a teacher and a parent. I was really frustrated and disappointed with the Governor's response on that. I feel like the NYSED report was really clear that mayoral control disenfranchises students and parents, and teachers. I don't really understand why the Governor pushed so hard to include it in the budget. The fact that the compromise was that the mayor has to follow the class size law, which was already a law, seems really hollow to me. I'm wondering whether there's any chance that there'll be some impactful reforms considered, like restructuring the panel for educational policy. From what she said earlier, it seems like there's not much of a chance.

Brian Lehrer: We'll get Jon's response in a minute. What system would you like to see Kaiser? Because when mayoral control was first instituted under Mayor Michael Bloomberg over 20 years ago, a lot of the reason was that when there was more local control, when there were 32 local school districts, it was like 32 little fiefdoms and nobody was really accountable. Mayor Adams, to this day, calls it not mayoral control but a mayoral accountability provision. What would you like to see?

Kaiser: Sadly, I don't think anyone is really accountable right now. The mayor has a rubber stamp with the PEP to do whatever he wants. Like the NYSED report pointed out, there's no proof that anything is improving under mayoral control. I think it's a complicated public school system, and so the result is going to be a complicated system. It's not either, or. It doesn't have to be 32 distinct districts versus mayoral control. It's a large system. One ruler of the whole thing really doesn't make sense. I think we can look to cities like Chicago that have transitioned away really thoughtfully from mayoral control.

There's a lot of public comment in the NYSED report that give really clear ideas of how that can look with stakeholder input, where elected parent leaders who have a proven track record of leadership for equity have more of a say. Right now leaders come to the panel for educational policy and speak for hours really powerfully about the changes we want to see, and the panel completely ignores that every time.

Brian Lehrer: What's a very top change that you would want to see that if parents were more empowered, you think might be more possible?

Kaiser: It's hard to pick just one. I think the over-policing of students of color is up there for sure. Having meaningful restorative justice systems in our schools instead of-- right now we've got away from some of the punitive policies, but there's no restorative justice infrastructure in place to replace it. That's something we need really desperately.

Brian Lehrer: Kaiser, thank you very much for your call. Jon, your thoughts?

Jon Campbell: I'm glad the caller brought up the panel for educational progress. I know the Governor didn't mention it when she was talking there, but that is something that is under discussion here in these closed-door negotiations to the best that we can tell. Maybe a different makeup there. The mayor does have, I believe it's a majority of appointees on that. Maybe he gets less, or maybe he doesn't appoint the chair, or maybe there's some oversight of the chair, he appoints. That is one of the things that lawmakers are trying to discuss.

The governor mentioned-- this is the first time that she actually talked about this, but she mentioned that she brought together labor and the mayor's office and legislators. That seems to be what has happened here, that UFT, the United Federation of Teachers union, is at the table negotiating changes with the mayor's office. That seems to have brought this back onto the radar screen. On the class sizes thing, the caller was right in saying that two years ago, lawmakers did pass a cap on class sizes in New York City. That was part of the deal to extend mayoral control for two years. That's kindergarten through 3rd grade eventually will be capped to 20 students. High school classes, 25 students.

What lawmakers are now trying to negotiate under the budget is some sort of enforcement mechanism. Maybe you tie New York City's increase in state funding to ensuring that the school funding is used on implementing that class size mandate. Those are the kind of things that they're trying to tie to this extension of mayoral control.

Brian Lehrer: Jon Campbell, WNYC's Albany correspondent, thanks for hanging around after Governor Hochul's interview and helping debrief and interpret what we heard from the governor. Very interesting stuff. We'll see what happens with that cyberattack too, if they figure out who did it and how long it's going to delay the actual printing of and voting on all these budget provisions. Jon, thanks a lot.

Jon Campbell: Thank you, Brian.

Brian Lehrer: Brian Lehrer on WNYC, more to come.