Gov. Kathy Hochul and Democratic lawmakers are nearing a deal on a broad legislative package meant to boost housing production and provide renters with some new safeguards against eviction, which would clear one of the major remaining hurdles to reaching a final state budget agreement.

But the framework presented to lawmakers on Friday is encountering sharp criticism from advocates for stronger statewide tenant protections and landlord groups demanding changes to New York City’s current rent stabilization rules.

The housing agreement described by state lawmakers and people close to negotiations is expected to revive a tax break for New York City housing developers that expired two years ago while enacting a form of “Good Cause” eviction measures, which will allow tenants to challenge rent increases that exceed a certain percentage.

It also calls for easing a long-standing rule known as the floor-area ratio cap, which restricts the square footage of New York City residential buildings based on the size of their lot as a way to limit density. Landlords who own rent-regulated buildings, meanwhile, would be given more leeway to raise rents to cover the cost of improvements to individual apartments.

Assembly Speaker Carl Heastie (D-Bronx) told Gothamist on Friday that members supported parts of the package, but there were “some things they raised good questions on.”

But it’s not yet a done deal; leaders are still working out details related to the tax break and carve-outs for the good cause protections.

“There are some parts we like and some parts we don’t like,” said Assemblymember Linda Rosenthal, who chairs the housing committee. “And so, there will be further discussions.”

The pending housing deal comes after more than a year of intermittent negotiations between Hochul and legislative leaders, who all agreed that the state is facing a housing crisis that requires action but have struggled to reach a consensus on how to address it.

It also comes as 13 days have elapsed since the state’s fiscal year began on April 1, when the governor and lawmakers were supposed to have a final spending plan for the state budget in place.

Senate and Assembly Democrats, who hold supermajorities in their respective chambers, held separate, closed-door meetings on Friday evening to discuss the emerging agreement, which came together earlier in the day after a meeting among Hochul, Heastie and Senate Majority Leader Andrea Stewart-Cousins (D-Yonkers).

Hochul has warned that a rising number of low- and middle-income New Yorkers are leaving the city and state because of housing costs. New development has trailed the need for housing by a huge margin for decades.

In New York City, less than 1% of apartments priced below $2,400 were vacant and available for rent last year, according to the city’s most recent housing survey. The housing situation is even more dire for low-income renters, and homelessness remains at record highs.

Mayor Eric Adams and city officials have been urging state leaders to pass measures intended to boost new housing construction, especially the tax break for residential developers.

The program, previously known as 421-a, would be rebranded as 485-x under the emerging deal.

In order to qualify, a developer constructing a New York City residential building would have to commit to keeping 20% of units affordable for tenants who are at or below 80% of the area’s median income — just under $80,000 for an individual and around $102,000 for a family of three. In turn, the developer would receive a multi-decade property tax break.

State lawmakers say they also plan to lift a cap on residential building size in New York City that limits square footage to just 12 times the size of property lot. Raising or scrapping the “floor area ratio” cap could ease the conversion of office buildings that are larger than residential rules allow, especially in Manhattan’s commercial hubs.

“If this framework holds, New Yorkers can breathe a sigh of relief,” said Deputy Mayor Maria Torres Springer in a statement. “The package that seems to be coming together is what the Adams administration has been advocating for and working tirelessly with Albany colleagues to achieve for months.”

But the plan floated on Friday is facing heavy criticism from tenant groups seeking stronger protections against eviction and dramatic rent increases.

Cea Weaver, an organizer for the statewide Housing Justice For All tenant coalition, called the package a “shocking gut punch.”

Weaver specifically criticized several carve-outs to the “Good Cause” eviction provisions, which would allow tenants to challenge rent increases higher than 10% or 5 percentage points beyond the rate of inflation. The rule would also require owners to offer a lease renewal to tenants who pay rent and follow the terms of their agreement.

The agreement described on Friday includes a 30-year exemption for newly constructed buildings and a possible exemption for smaller property owners. The plan would also exclude units priced above 200% of the fair market rent, or about $4,900 for a one-bedroom unit, in a move designed to exclude higher-priced luxury apartments from the protections.

“It’s the worst good cause law in the country by miles,” she said.

The package lacks several other goals sought by tenant and homeowner advocates, like a measure allowing New York City to set rules legalizing basement apartments.

The final plan could also double the amount landlords of rent-stabilized apartments can raise rents after completing renovations known as “individual apartment improvements.”

But landlord groups are shredding the agreement.

Owners of rent-stabilized apartments have called for a provision allowing them to hike rents to fair market standards set by the federal government when a unit becomes vacant. That seems unlikely to make it into the final budget, said Jay Martin, executive director of the Community Housing Improvement Program, a group that represents owners of rent-stabilized apartments.

Martin said the proposed changes do not address the concerns of landlords who say they can’t make enough money in rent to cover or justify the cost of renovations in many units.

“From our perspective, everything that we’re seeing does not address the problem,” he said. “We’re still waiting for more details … but none of it addresses the unaddressed financial insolvency issues that rent-stabilized buildings are seeing.”

Now, Hochul and lawmakers will have to put the emerging housing deal into budget bills, which the Legislature could put to a vote as soon as Monday, when lawmakers are scheduled to return to the state Capitol.