Existing state laws are raising the costs of converting an unregulated basement unit up to legal building code standards to as much as $1 million, city officials said at a City Council hearing Tuesday. 

The officials discussed an ongoing pilot program in East New York to determine barriers in city and state codes to legalizing the city’s vast number of basement units. 

Kim Darga, the deputy commissioner for development at the city’s Department of Housing Preservation and Development, said that the pilot has shown that state legislative changes are necessary to make conversions financially feasible. 

“​​If we don't address these regulations, we won't be able to do this work,” Darga said. 

Part of the issue, Darga said, is that state law prevents the city from loaning homeowners more than $60,000 per unit in renovations — meaning a $120,000 cap for changing a one-family home to two families. 

Yet Darga reported that other state laws require homeowners adding extra units to follow “multiple dwelling” building codes that incur significant costs. Those codes, she said, make sense for tall apartment developments, but are onerous for smaller buildings. They mandate features like building-wide fire sprinklers and safety railings on roofs, and have pushed cost estimates for the four homeowners who have yet to begin construction into the $500,000 to $1 million range, she said. 

“We need to figure out a way to make it easier for normal people to actually undertake this,” Darga said. State law, she said, should exempt owner-occupied, one- and two-family homes from such codes to bring down basement conversion costs.

The units, which concentrate in majority Black and immigrant neighborhoods, rose to wide public awareness in the aftermath of Hurricane Ida, in September 2021, when 11 New Yorkers drowned in basement homes. 

The city has estimated that at least 100,000 people live in unregulated basement units, which can range from dormitory-style housing for multiple families to full apartments. Yet advocates for legalizing the units have suggested their total population is much higher, and that a series of rule changes at the city and state level could bring more than 400,000 such units into the city’s tight rental market. 

Efforts by the city to address the issue of unregulated basement units have faltered in some cases. A plan to create a “census” of such units, promised by former Mayor Bill de Blasio in the wake of Hurricane Ida, has not materialized.

The pilot program, begun in 2020, was largely defunded amid the city’s early pandemic financial stress. Of 800 homeowners who expressed interest in participating, 100 received detailed cost assessments, Darga said — and of those, only 12 said they could shoulder the financial cost.

Three years later, just five homeowners are currently participating, and only one has begun construction work. 

Council members voiced their support for a resolution calling on state legislators to pass existing bills aimed at making it easier, and cheaper, to convert basement units to legal apartments.

“We cannot wait for another hurricane season to pass,” said Councilwoman Pierina Sanchez. 

Yet advocates for legalizing basement units said that the city can still address the issue on its own. Some existing city rules, such as minimum parking space requirements, make it “legally impossible” to add units to some single-family homes, said Ryan Chavez, the program director for the basement pilot program at Cypress Hills Community Development Corporation. 

Mayor Eric Adams’ housing and development plans call for eliminating some of those rules, but that will require a public review process that may last through the rest of the year, city officials said.