January 26, 2026 Update: Governor Hochul’s budget proposal includes legislation outlining key details of the proposed State Environmental Quality Review Act (SEQRA) reforms. Known as “Article VII legislation,” this proposal is included in the Transportation, Economic Development, and Environmental Conservation legislation released this week.
Within New York City
In New York City, the requirements of SEQRA will not apply to housing projects that meet all of the following conditions: (1) they are not in coastal flooding areas; (2) they are not located in areas zoned exclusively for industrial use; (3) they are for mixed use projects, the nonresidential component does not exceed 50,000 square feet; and (4) the total unit count does not exceed 500 units in medium or high density residential or mixed use districts or 250 units in all other zoning districts.
Outside New York City
Outside New York City, a housing project is exempt from SEQRA only if it meets all of the following conditions: (1) it will be connected to existing community or public water and sewer systems at the commencement of habitation; (2) it is located on a previously disturbed site; (3) it is for mixed-use projects, the non-residential component does not exceed the lesser of 50,000 square feet or 20% of the gross floor area; and (4) it contains no more than 100 dwelling units.
Previously disturbed sites
The definition of “previously disturbed site” excludes properties located in a FEMA designated 100 year floodplain and imposes two timing-and-use conditions: the site must have been developed at least two years before the permit application, and it must not have been used for agricultural purposes for three of the five years preceding the application. Moreover, beyond obvious examples, such as vacant parcels or sites with demolished structures, a “previously disturbed site” includes land that is substantially altered by maintained lawns or other non vegetated maintained areas.
Streamlining approvals
Although the reforms are intended to cover all “actions involving the construction of housing” and, therefore, would likely exempt additional approvals necessary to build qualified housing—such as site plan approvals or area variances—there may still be instances in which seemingly eligible projects remain subject to SEQRA as regulations and case law evolve. If enacted, however, these reforms would remove a significant barrier for many projects and provide a more efficient, cost effective path to delivering much needed affordable housing across New York State.
The proposed legislation would take effect immediately and apply to all proceedings pending on or after the effective date.
Governor Hochul’s 2026 State of the State included a bold initiative to streamline approvals for affordable housing. Under the proposal, housing projects that meet certain criteria will be exempt from review under the State Environmental Quality Review Act (SEQRA), removing a lengthy and costly process that can significantly delay—or even derail—affordable housing projects.
Eligibility criteria for affordable housing projects under the proposed SEQRA exemption
Additional details on eligible project types are still forthcoming, but, at a minimum, eligible projects will have to comply with local zoning requirements and be located outside of flood risk areas. In New York City, projects will be subject to building size caps set by the State, based on neighborhood density to be determined by the City, to qualify for the exemption. Outside New York City, qualified housing projects must be on previously disturbed land, connected to existing water and sewer infrastructure, and meet additional unit caps. Housing projects will also still need to comply with state regulatory and permitting requirements, including those governing water use, air quality, environmental justice, and protection of natural resources, in addition to all local land use and zoning requirements.
Key considerations for affordable housing projects
Despite the encouraging news, affordable housing developers should closely monitor how the proposal is finalized and implemented to determine whether their projects will benefit from the reform. For example, if revisions are limited to “multifamily dwellings” or similar residential uses, mixed-use affordable housing projects may still be subject to SEQRA. Known as “segmentation,” municipalities may not divide a single action into separate stages or components when undertaking a review. Accordingly, even if a residential component of a mixed-use project would otherwise require no further review under SEQRA, nonresidential elements—such as community centers or ground-floor retail—could make the overall project an Unlisted or Type I action. It also remains unclear whether “compliant with local zoning” will be limited to projects permitted as of right, or whether projects that require additional approvals, such as special use permits, will qualify.
Related regulatory questions
It will also be important to see how the proposed changes are reconciled with recent developments that affect SEQRA. The Environmental Justice Siting Law, for instance, now requires an agency to consider whether an action may cause or increase a disproportionate pollution burden on a disadvantaged community during its SEQRA review. Depending on how the revisions are drafted, they could either allow affordable housing projects in disadvantaged communities to forgo this review or, conversely, make projects in those communities ineligible for the exemption even if they would otherwise qualify. Likewise, the revised freshwater wetlands regulations broaden jurisdiction to cover wetlands located in or adjacent to urban areas, regardless of size. As a result, previously unmapped “urban wetlands” could impact whether a site qualifies for the SEQRA exemption.
Streamlining Environmental Impact Statements through GEISs
Governor Hochul also announced in the 2026 State of the State that she is directing the Department of Environmental Conservation to prepare new Generic Environmental Impact Statements (GEISs) for selected categories of housing projects and renewable energy. While this proposal is intended to expedite review for common project types and inform early-stage site selection and design, it is unclear how such GEISs will be integrated across, and effectively utilized by, the wide array of involved agencies that “undertake, fund, or approve” affordable housing, which can include local land use boards, entitlement communities administering CDBG and HOME funds, industrial development agencies approving project benefits, local development corporations issuing tax-exempt bonds, and local legislative bodies approving tax exemptions under the Private Housing Finance Law.
Timeline and implementation path for SEQRA reforms
The timeline of SEQRA reform will be dictated by whether amendments are proposed to the SEQRA statute itself, which would require legislative action, or as an expansion of the list of Type II actions under the SEQRA regulations. Further details on the timeline and implementation may be addressed in the Governor’s budget proposal, which is expected next week. The proposed changes, whether in statute or regulation, should also be evaluated in conjunction with New York City’s City Environmental Quality Review (CEQR) process to ensure consistency.
While the ultimate impact will depend on how the revisions are drafted and implemented, the proposal signals a statewide effort to reduce procedural hurdles to affordable housing development. If carefully designed and implemented to address SEQRA’s nuances and quirks, this initiative could streamline approvals for affordable housing projects that were previously delayed or obstructed by procedural challenges and opposition.
Nixon Peabody’s Affordable Housing Team is ready to provide guidance on how New York’s SEQRA updates may impact your project timeline or approvals. For more information on the content of this alert, please contact your Nixon Peabody attorney or the authors of this alert.