One possible answer to help solve the affordable housing crisis? Converting more vacant commercial and office space to low-cost homes.
That’s what New Jersey Rep. Mikie Sherrill is proposing in a new bill she introduced on Thursday. If the legislation passes, it would provide tax breaks for anyone who finances the redevelopment of empty office space into housing in her state and others around the country, and help local officials identify commercial-to-residential conversion opportunities in their municipalities.
It comes as New Jersey is embarking on an ambitious plan to build 84,000 new affordable homes across the state over the next decade and as Sherrill sets her sights on the governor’s office. She is one of six Democrats vying to replace Gov. Phil Murphy, whose final term ends January 2026.
New York state and New York City are exploring similar plans to offer tax incentives for converting empty offices to housing.
Sherrill told Gothamist the tax credits would be open to developers building various types of housing, but those who build affordable housing or use union labor for construction would be eligible for additional tax credits as well.
“Let’s face it, in New Jersey we have a housing shortage at almost every level,” she said. “I hear all the time that we need more housing, but we don’t want to build on wetlands. We don’t want to build on our open spaces.”
Sherrill added that she believes the approach would be especially effective in New Jersey and other states with industrial histories.
“We have spaces that have been built out that are now being underutilized as some of the industries have moved out or modernized. So having these properties sit idle, sometimes in some really desirable places, like on waterfront properties, it’s just kind of a loss of the housing market,” she said.
Sherrill, a Democrat who is also running to become New Jersey’s next governor in 2026, told Gothamist the legislation would be funded through Congress’ next tax bill.
“Much of the 2017 tax bill expires in 2025, so we’re renegotiating that now,” she said.
Sherrill’s bill could be an early litmus test of whether Republican and Democratic lawmakers can work together on an issue both parties claim to care deeply about. Similar tax incentive programs — most notably the more than 40-year-old federal Low Income Housing Tax Credit Program — have been hugely popular with both parties.
President-elect Donald Trump promised to lower the cost of housing during his candidacy. But it’s unclear if he and his allies in Congress would support Sherrill’s — a Democrat’s — tax incentive proposal. Trump’s transition team did not respond to a request for comment on Sherrill’s bill.
In a previous statement provided to Gothamist last month, Trump spokesperson Taylor Rogers said the incoming president would lower the cost of housing by banning mortgages for illegal immigrants and opening up portions of federal land with lower taxes and regulations for large-scale housing construction.
Sherrill acknowledged that when one party controls all three branches of government, it has typically been hard, if not impossible, for the minority party to get any of its priorities included in legislation.
“This time might be different,” she said, pointing to stark divisions within Trump’s own party. “So we’re going to be pushing back very hard. And in a bill like this, where you have such a slim majority, the Republicans might need Democratic votes to get [their tax plan] across the finish line.”
Affordable housing will undoubtedly be a key issue in the New Jersey governor’s race this year. Officials estimate that the state is short 200,000 affordable homes for its most rent-burdened residents. Several of the candidates running against Sherrill, who is the early Democratic front-runner in the polls, have put out policy ideas of their own.
Jersey City Mayor Steve Fulop, another Democrat running for governor, said he will “double” the production of affordable housing in the state if elected. He has proposed increasing tax subsidies and incorporating direct cash payouts to developers who build more transit-oriented affordable housing near NJ Transit hubs.
Newark Mayor Ras Baraka, who is also vying to be the next governor, has proposed levying a fee on for-profit, luxury developments to help fund affordable housing. Baraka also called for raising the filing fee for evictions — currently $50 in New Jersey — and expanding the “right-to-counsel” program established in Newark and a few other New Jersey cities that provide free legal representation to tenants facing eviction in other parts of the state.
The early Republican front-runner in the race, former state Assemblymember Jack Ciattarelli, has said he would take a more regional approach to building affordable housing if elected. He has criticized the state’s current approach for, as he sees it, placing too much emphasis on developing more affordable housing in the state’s suburbs.
Town officials across the state face a pending deadline at the end of January to accept or counter the number of affordable homes mandated to be developed in their community. Those figures were handed down from the state’s Department of Community Affairs in October as part of New Jersey’s latest round of the Mount Laurel doctrine, which says each municipality must contribute its fair share of affordable housing.
Last fall, state officials announced they wanted to build 84,000 new affordable homes and rehab another 65,000 existing low-priced apartments by 2035.
