NYC

3 Ways Landlords Can Save Money on Heating Bills (and Save the Planet)

 
Space heaters ain't cutting it (shanleystudios)

Space heaters ain't cutting it (shanleystudios)

 

Recently, we gave landlords the head's up about Heat Season starting Oct 1. This week, we're going to focus on how you can save money on your heating system.  Some ideas will probably be nagging points that you've heard before, but others might surprise you.

1. Hear Your Tenants

Last week we mentioned that you should consider your tenants your first line of defense. We mean that (it's pretty much our thing.) Good communication with tenants might alert you to a problem before it costs you a lot of money. If you encourage your tenants to reach out to you, here are some things they might tell you about your heating system:

Pipes clanking -  When water builds up over time in pipes and comes into contact with hot steam, it bursts (it's called a "water hammer").  At best, this means your system isn't operating efficiently and at worst it means your pipes could be damaged to the point of replacement.

Wild temp differences -  Upstairs is freezing, downstairs is boiling.  It's common, but could be a big problem: your heat timer is broken and/or needs to be reset. Your system is working overtime to produce heat that isn't getting distributed properly or at all. 

Funny smells - We all remember the East Village gas explosion in 2015.  Make it easy for your tenants to tell you something is out of the ordinary and make sure you or your tenants quickly report it and contact ConEd.  Wasting money is one thing, wasting lives is another.

 
Chances are you have steam (energy.gov)

Chances are you have steam (energy.gov)

 

2. Clean and Inspect

Heating systems are a complex matrix of machinery and good old fashioned science.  It's actually pretty fascinating when you think about how they work. But they age, get dirty, and break down.

Without proper maintenance you lose money twice - first on inefficiency and second on expensive equipment replacement.  Maintenance isn't sexy, but it's savvy. 

An old system can still work well if it's clean. So use data from tenants to help identify what parts of your system need attention.  Scheduling a deep clean for your system at least once a year (off-season) is a great way to increase fuel efficiency and extend the life of your system. 

Additionally, the city has to inspect your boiler, but there are other parts of your system (the outdoor weather-head, pressure and temperature controls, return-line sensor) that you should also get inspected annually. 

Stay ahead of these issues by setting up personal reminders to check these instruments. The bare minimum of system maintenance gets the bare minimum of system efficiency. 

 
50% of the energy used in multi-family buildings goes to heating (nycmayorsoffice)

50% of the energy used in multi-family buildings goes to heating (nycmayorsoffice)

 

3. Upgrade for the Environment

A 2015 report states that the energy NYC buildings use accounts for 75% of the cities' greenhouse emissions - and 50% of that energy goes to heating.  

It also says that NYC landlords could save $147 million annually by taking small steps to improve their heating systems.

The city has set up the NYC Retrofit Accelerator to help landlords find ways to improve their buildings heating system. 

Some solutions are bigger projects like downsizing your boiler or transitioning to other fuels, but others are small and high-impact.  Installing heat sensors and smart thermostats to control distribution, or better insulation can improve efficiency. 

Even involving your tenants can help. Installing a simple orifice plate in each unit's radiator takes 5 minutes and can lower costs while providing tenants with greater discretion on heating their apartment. Asking them about this could save you a lot of money and help all of you save the planet!

 

 

homeBody is the free communication app for landlords, tenants, and neighbors

NYC Landlords, Heat Season Begins Oct 1: Do You Know the Laws Changed?

 
It's coming sooner than you think (ryanshanley/shanleystudio)

It's coming sooner than you think (ryanshanley/shanleystudio)

 

For the average person, the term “heat season” might bring on thoughts of heading to the beach, loading up on sunblock, and eating gelato. It’s the opposite for landlords. For you, it means the weather is turning cold and it's time to turn on your building’s heat.

Whether you’re a first time landlord or a grizzled professional, there are a few new things you should know about this upcoming 2017 heat season.

1. The Temperature Requirements are Higher

Heat season is October 1st — May 31st. Legally, you are required to turn on your building’s heat during this period. You already know that. But make sure you know the new night time requirements:

Day Time 6AM — 10PM: If the outside temperature is below 55 F, the inside-apartment temperature must be 68 F.

Night Time 10PM — 6AM: As of this season, the inside temperature at night must be above 62 F regardless of what temperature it is outside.

TIP: Take a picture of your thermostat for your records whenever you can. It's low-tech, but can cut down on potential conflicts with tenants and can help you track your system’s efficiency.

(NYCHPD)

(NYCHPD)

2. The Inspection Process Has Also Changed

The city requires an annual inspection for your boiler if your building is mixed-use or has 6 or more families. You have to have an inspection done by someone licensed from the DOB or an authorized insurance company.

As of August 14, 2017, you can no longer submit your inspection reports by person. They must be submitted online at DOB NOW: Safety.

TIP: You should also schedule additional maintenance inspections with experts. Whether you use oil or natural gas or your system is steam or water, chances are soot is building up that could damage your equipment.

 
inspector.png
 

3. Know the Fines If You Don’t Comply

Tenants have a right to heat and hot water. If they don’t have adequate heat, and they can’t get in touch with you to fix it, they will likely call 311. HPD will try to reach out to you, but generally they will set up an inspection.

If you haven’t restored heat or met the temperature requirements, HPD will issue a violation, which is almost always followed up by a court proceeding. You could be subject to significant civil penalties:

  • $250 — $500 each day per violation until a follow up inspection

  • $500 — $1000 each day per subsequent violation

  • $200 per additional inspection after the first two

 

TIP: Think of your tenants as your first line of defense! Their feedback/complaints are frontline reports about your heating system. Make it easy to reach you before they reach for 311.

 

Next week, we’ll tell you how you can save money on your heating costs — and help the environment.

 homeBody is the free communication app for landlords, tenants, and neighbors.

NYC Passes New Tenant Protections, But Needs More From State

The city is, but will the state? (urbanjusticeleague)

The city is, but will the state? (urbanjusticeleague)

On Wednesday last week, the New York City Council passed a series of bills aimed at protecting tenants from harassment caused directly or indirectly by landlord’s construction projects.  In all, 18 bills were passed and are expected to be signed by Mayor de Blasio.  The “Stand For Tenant Safety” package comes in light of other recent efforts by the city to help tenants such as right-to-counsel and shows a remarkable shift in housing policy as a response to the ongoing affordable housing crisis.  However, without a larger comprehensive redesign of rent regulation laws, these efforts only raise the potential cost of abuse rather than remove the underlying motivations for landlords and developers. 

When a rent-regulated tenant moves out, the landlord can raise rent a lot more than they can if the tenant stays.  That basic logic creates a perverse incentive for some landlords to try to push the tenant out.  Such tactics have included cutting off power, heat, or gas; not properly protecting tenants from in-building construction work; physically damaging a tenant’s unit during construction, or doing work or inspections at odd hours of the night or early morning.  The intended purpose of these practices is to make life so unbearable for a tenant that they voluntarily move.

In other cases, landlords begin construction projects under the guise of upgrades only to intentionally create damage that forces certain tenants (or potentially every tenant) to move.  There have been several high-profile criminal cases recently involving landlords who have used these tactics and the stories are difficult to comprehend.

It’s safe to say most landlords and developers do not resort to unethical, even criminal, behavior, but it is impossible to know how widespread even milder versions of these practices are across the city. Up until now, the city hasn’t had clear guidelines to identify such practices.

Stand for Tenant Safety is designed to find out just how often they occur and to raise the cost of these behaviors.  The bills have three main focuses: first, one creates an Office of Tenant Advocates within the Department of Buildings to make it easier for tenants to log complaints about construction work. Second, it increases penalties for construction jobs without proper permits and proper tenant messaging to cut down on scopecreep. Third, it classifies visits or calls from landlords at odd hours as harassment.  

The bills will make documenting potential abuses much easier for tenants and city officials and will serve as a bulwark against landlords attempting to harass tenants through sabotaging a building’s quality of life.  These are much needed protections for all tenants, whether they are regulated or market rate.

However, the basic logic that I spoke of earlier remains the core problem in the rental market.  Specifically for rent-regulated units, the lure of vacancy decontrol – the ability for a landlord to significantly raise rent after a tenant moves out or when the rent hits $2500 – remains too tempting a target for landlords.  (It’s easier for landlords to raise rents on market units obviously, but the speed of appreciation in certain fast-growing neighborhoods raises the specter of such tactics even for market-rate tenants.) 

The current mechanics of the market and the regulatory regime within it guarantee that capital will find ways to force out tenants in order to raise rents. And it will continue to attract the speculator landlord/developer over the service provider landlord/developer.

There is an entire cottage industry within the real estate world that specializes in identifying and buying buildings with rent-regulated tenants with the explicit purpose of forcing them out, or to “de-tenant” then flip the building.  The industry of course uses euphemisms like “under-performing assets” or “under-utilized inventory” to describe the buildings and uses others like “revitalize” or “reoptimize” to describe the process of kicking out tenants, but the message to investors is clear and universal: Buy low, sell high.

Without removing the incentive provided by vacancy decontrol (and other loopholes around rent regulations) all the tenant protections in the world won’t prevent certain landlords from looking for ways out.  Only the New York State legislature can change the rent laws to address this fundamental issue. There are many political reasons why that is unlikely to happen anytime soon.

I always think of rent regulation in terms of Abraham Lincoln’s famous “A House Divided” speech on slavery.  NYC can’t function in the long run half regulated, half market.  There is little logic or basic fairness to the system now – for landlords and tenants alike.  It needs to be either one or the other. 

I’ve strongly advocated for universal rent regulation for rental apartments in order to avoid the more fundamental problems that our current mixed market encourages.  Only with an entirely new rent regulatory system, one that doesn’t look like the system we currently have to be clear, can we really avoid the type of speculative displacement that is eroding the long-term health and diversity of the city. It's also the only way to remove the more speculative, short-term actor from entering the landlord business in the first place.

In the basic Econ 101 model, rent regulated units are akin to any distressed asset like a failing business.  If an asset is not performing to its “highest, best use” you change some variables and try to make it more productive.  This type of business will always attract a certain type of speculative buyer.  That’s fine if you’re talking about a restaurant or even a publicly-traded company. It’s not so simple if you’re talking about a home.

A home is more than an asset.  How you measure the utility of living in a home – especially one that the resident rents – is difficult to measure in our classical economic models.  That doesn’t mean it’s impossible to measure, it just means that it involves assigning value to certain activities or behaviors that most economists have shied away from historically.

As a result, we have plenty of economic research about the “costs” and “damage” of rent regulations (although all data collection is subjective to a degree) based on classic models, but don’t have much research that measures the broader “health” of a city with rent regulations.  These models aren’t interested in the empirical state of a city as much as the theoretical state.

The discussion about rent regulations comes down to one of values.  On the one hand, creating more economic activity and growth is a good thing for the city.  On the other, how much activity and where it occurs can be a bad thing for the city if it isn't spread out. 

Mayor Bloomberg famously thought having every billionaire in the world living in NYC would be great for the city.  We currently do have the most amount of billionaires, but it’s hard to argue that the city greatly benefits either through their economic contributions, tax contributions, or social contributions. 

For a democratic society to truly be healthy, you need a variety of incomes (and their resulting economic and social contributions) to be stakeholders at the city and neighborhood level. If housing is treated as a commodity, that system breaks down over time, as it has been in NYC. Our failing rent regulatory regime is just a symptom of this larger illness. Until we address this problem on a larger, fundamental level, we’ll never escape the cycle of landlord’s looking to get around rent regulations. No city-level laws will ever be able to keep up.

4 Reasons To Be Excited for Community Land Trusts in NYC

Cooper Square CLT shows they already work in NYC (urbanomnibus)

Cooper Square CLT shows they already work in NYC (urbanomnibus)

This past week marked an exciting development in affordable housing policy in NYC.  HPD has announced that it will give $1.65m through a grant program from Enterprise Community Partners to four groups to develop or expand community land trusts around the city.  Though it is a small amount of money, it is a giant step for the city and could serve as a larger evolutionary step in housing policy.  What happens next with these groups will be important, but undeniably a new policy tool has entered into the housing debate.  There are many reasons to celebrate this and I’ll outline four today.

A Community Land Trust is an alternative form of ownership that separates the value of land from the value of the shelter on it. It does this by placing the land in a community-controlled trust that removes it from the private market permanently.  This separation removes the speculative nature of real estate from the cost of shelter, maintaining a consistent level of affordability. 

CLTs have been around, notably in Burlington, Vermont, for decades, but have had limited support and awareness in NYC.  One of the groups receiving funding is Cooper Square, the only current CLT in the city.  Its success over several decades has played a considerable role in getting the city to believe in the model.

Along with Cooper Square, the other three groups are Interboro CLT, a new partnership of organizations, East Harlem/El Barrio, a brand new tenant CLT, and the NYC Community Land Initiative, the long-running regional group dedicated to helping groups form CLTs.  These groups, along with the New Economy Project, have been working on getting to this point for years.

I’ve always believed CLTs could work in NYC (and worked with NEP back in 2012 on a CLT project) because there are so many opportunities with the right combination for success: organized community groups and lots and lots of small, existing properties.  Given how the Mayor has put such a priority on affordable housing and has tried to frame it as a vehicle for community control and inclusive growth, community land trusts are a no brainer. Let’s turn to why.

1. They are Really Cheap

As an affordable housing tool, CLTs are really inexpensive because they rely on existing housing stock (but can still create new development), which is always going to be cheaper than new construction.   The basic model would include a single, upfront subsidy provided through an agency like HPD, or potentially a non-profit like ECP, to purchase a parcel or parcels of land to turn over to a CLT.  After that contribution, CLTs are effectively self-sustaining. (There are legitimate questions about how much subsidy is needed in addition to land costs to make individual units even more affordable, but these are best left to individual cases.)

Compare this model with our current reliance on market-based solutions that cost hundreds of thousands of dollars per unit.  As I mentioned in last week’s blog, the mayor’s plan relies on tax incentives that make each new “affordable housing unit” come in at between $400,000-$600,000.  Spending billions of dollars on building new units at that cost just doesn’t make sense and will never produce the number of units the city needs.

So much focus has been put on new development and the need to create more density that we forget that preserving existing units in many neighborhoods accomplishes the same affordability goals for a lot less money and in a shorter time frame.  It’s estimated that over the next few years, 100,000 affordable housing units will be lost to deregulation and vacancy decontrol.  Think of what a difference putting those units into CLTs would make for overall affordability and think about how quickly and cheaply that could be accomplished. It is stunning.

2. They Prevent Displacement

Another complimentary feature of CLTs in NYC is that they are likely going to be most effective in neighborhoods that are on the brink of gentrification but haven’t seen new development or upzoning yet.  The land will still be affordable in most cases, keeping the subsidy cost low.

More importantly, establishing a CLT will allow existing residents to remain in their communities.  The logistics of converting a market-rate, or even rent-stabilized building, into a CLT is seamless and doesn’t involve tenants moving. 

New construction generally means displacement when an old building is torn down, with very little likelihood of those tenants returning. New construction also begets more new construction, which drives the speculative nature of real estate into new neighborhoods. Very few existing residents benefit under this dynamic (although its complicated.) Even building on empty lots under the current model makes it difficult for existing tenants to have access to new “affordable” units. 

By allowing existing residents to remain in their homes, especially renters who don’t have the benefit of equity gains as neighborhoods gentrify, even low-income residents have the opportunity to benefit from the positive aspects of growth and new development.  Rather than continue with a generally zero-sum development pattern, CLTs allow neighborhoods to have more inclusive growth.

3. They Provide Community Control

Along those lines, CLTs are the ultimate tool for community control.  They allow residents to have a larger say in their neighborhoods through the voice of the CLT.  Renters in particular are generally underrepresented as stakeholders in an area, but as members of a CLT, they become more powerful advocates.

To be clear, I don’t see this as a NIMBY/YIMBY issue.  Community control doesn’t mean community resistance to change.  The dynamic now, and why so many neighborhood groups do resist any change (although with limited success in reality), is that development doesn’t help existing residents.  Who would want to allow massive disruption in their neighborhood that will probably result in having to move at the end of it?

When long-term residents have the ability to be part of the long-term change in their neighborhood, when they can rightfully envision their futures’ there, then it becomes less about resisting and more about shaping.  The end result is a more economically, socially, and politically dynamic neighborhood which is what the whole city should look like.

4. They Compliment Private Development

A big point of supporting CLTs that I want to make clear is that they are a complimentary piece in a larger policy toolkit.  I don’t think they are a panacea or even appropriate in every instance.  But having them as a pillar or at least an option creates more space in housing policy for community control and non-market solutions.  This can eventually allow more resources to go into new construction of private or public housing with government assistance.  It’s all connected.

If we can create a policy frame work for CLTs that allows a significant number of units to be preserved at a very low cost, that leaves more room and potentially more money to drive new development in more targeted ways.

I’d rather see some of those billions of dollars the Mayor has allotted to subsidize private development used to improve the subways and buses.  A better transportation network extends the housing options for all New Yorkers.  I’d rather see it go towards supporting NYCHA, which houses over 400,000 New Yorkers. Pubic housing has been a vastly successful government program that should continue to be a priority. Finally, I’d rather see our public funds going towards building working class and middle-class housing where it is needed rather than subsidizing luxury construction in glitzy parts of Manhattan.

The total amount is modest and the details of how the model could work in NYC still need time to develop, but trying community land trusts in NYC should excite everyone concerned about affordable housing and the future of NYC.  Provided with the right support and deployed in the right areas, CLTs could be a major evolutionary step for the city as it struggles to solve the affordability and homelessness crises.

The Mayor’s Housing Progress Shows Why Relying on Market Isn’t Enough

But is the Mayor listening? (propublica)

But is the Mayor listening? (propublica)

As Mayor de Blasio gears up for his re-election campaign, he has been touting his progress on his signature policy initiative, affordable housing.  In an Op-Ed for The Daily News last week, he highlights how his $41 billion plan to create or preserve 200,000 affordable housing units over 10 years is on budget and on schedule.  In the last fiscal year, nearly 24,00 such units have been allotted, the most in a single year since 1989 (for a total of 78,000 since 2014). 

The administration’s focus on affordable housing has been commendable and real progress has been made, but the larger picture is less sanguine.  The affordability crisis and the homelessness crisis in NYC (which the Mayor appears to treat as a separate issue here) will not be solved by market-based solutions alone. We need much deeper federal government intervention on a number of fronts.

The Mayor’s affordable housing plan relies on several key premises (which mirrors the national focus of the LIHTC). First, it calls for attracting private development to drive construction.  Second, it requires those developers to include a certain percentage of affordable housing units with each project.  Third, it incentivizes that private development with tax breaks. The second and third premises have been highly controversial, while the first one has not been as much. 

Starting with the second premise, in 2016, the Mayor passed his Mandatory Inclusionary Housing and Zoning for Quality and Affordability laws which require developers to set aside a percentage of units for “affordable housing” and continues a general trend to upzone new neighborhoods in the city.  These were both met with heavy resistance from neighborhood groups worried about displacement and new development, but ultimately passed the City Council.  That it takes so much political capital to create a basic environment for more development is disheartening and, despite his plan’s flaws, the Mayor deserves credit for recognizing this and following through.  However, it’s not surprising that residents would be wary of private development based on other experiences in the city.

The third premise has also run into controversy, though of the political variety.  The Mayor’s plan relies on tax incentives, notably the toxic 421a program. Governor Cuomo stunned many people when he allowed the program to expire and used it as a political football to undermine the mayor’s plan. The Governor claimed he had a better plan himself (which never really materialized) and the program has been rebranded as Affordable New York.  A recent article estimates that the subsidy costs NY taxpayers $400-600k per unit  - while not producing nearly enough units (or in some cases any affordable units, due to lax oversight). Somehow this is "just how it works."

This brings us back to the first premise, which is the original sin of all of these policies.  Relying exclusively on the private market to create (and to a lesser extent preserve) housing units is an expensive, inefficient, and inequitable way to create affordable housing.

To state the obvious, it is incredibly expensive to build in NYC.  Land, labor, materials, planning, and design – all of these things are expensive and, for the most part, there are no secret shortcuts around them.  The lack of productivity gains in the construction industry in recent decades is a fascinating sideshow to this larger conversation, but the important point is that these costs are largely fixed for any type of developer.

Once you accept this, the only way to really build cheaper is to have the federal government involved.  First, it can borrow money for a lot less than the private sector, which keeps costs down (we’re missing a golden opportunity to improve our infrastructure as a result). And second, it doesn’t have to turn a profit.  This means it can build the housing that NYC needs rather than what the market rewards. All of the tax incentives in the world will not cover the difference between what is good for the bottom line of a private company and what is good for the public interest in the housing market. 

Relying on the private sector also crowds out alternative models of housing and ownership. The Mayor isn’t staffing people with this experience, isn’t listening to housers with this experience, and isn’t drawing political contributions from people with this experience. Large-scale co-living spaces, community land trusts, or (heaven forbid) more public housing all get ignored as policy tools or goals when a market-based approach runs through planning. This is a missed opportunity to consider new ways to use existing funds and assets under city control.

A truly transformative housing approach would include market-based and non-market based solutions because the goal would be simply to lower the cost of shelter.  The goal for the mayor’s housing plan includes this, but also includes keeping powerful real estate developers happy and at least keeping neighborhood groups and homeowners from openly revolting politically.  It also internalizes a hostile Albany and an indifferent Washington.

I don’t envy the Mayor’s need to balance these political realities, but clearly a bolder vision is not only necessary, but could be very popular with voters, and serve as a rallying point to change the nature of housing policy in the US. 

Mayor de Blasio was elected on a progressive platform not seen in the city for 20 years, which remains popular (perhaps even more so after 2016). He doesn’t appear to have any major rivals despite constant badgering from the press (not entirely undeserved). And yet 27,000 arguably affordable units is the best we can get? It is under a market mindset. 

We have been tinkering with neoliberalism for the better part of 40 years at the national and local levels and it demonstrably isn’t working for 80% of the country.  Voters want new ideas.  Many technocrats want those new ideas to come from local city governments given the paralysis at the national level.  So far the Mayor has passed on matching his progressive rhetoric with progressive reforms in housing.

It’s a shame because there are lots of good ideas - some old, some new, but hardly any that are radical - that the mayor should be willing to explore. Many of them can be tried without Albany or Washington.

But the truth is the Mayor de Blasio needs the state and particularly the federal government to take on a larger role in the affordable housing crisis. There are too many macro economic forces at play with the affordable housing crisis, which is why over 99% of US counties are suffering from it. Only a stronger federal commitment to housing, to wealth equality, and to tax policy can make a difference on that level.

The Mayor can be more helpful in forcing Albany and Washington to change the status quo on housing.  NYC is the biggest city, the most powerful real estate center, with the largest public housing population in the country.  If you want to change the conversation on housing, NYC is the place to do it. That change must include thinking about housing outside of the narrow, flawed lens of the market.  The Mayor needs to think bigger and I think he would be rewarded for doing so.

Why New York Should Have a Constitutional Convention, But Still Needs the Feds

Not exactly what we had in mind (newamsterdamny.org)

Not exactly what we had in mind (newamsterdamny.org)

Since the election of Donald Trump, a lot has been made about the need for more localism.  With the federal government either locked in partisan paralysis or actively cutting back on services, there is a compelling argument for letting states run their own affairs – after all, states are the great laboratories of democracy.  However, we can look at the recent talk of holding a Constitutional Convention in New York to see why this argument is ultimately flawed.

There are two main reasons that localism can’t help improve how our cities/states are governed. First, our society has evolved into a highly complex, integrated national and global environment where the actions of distant players have local consequences.  We need a strong, active federal government to manage the needs of loosely connected people and places.  Despite what many would argue as too many onerous regulations from the federal government (on things like environmental policy), the larger trend over the last 40 years is the retreat of federal policy (on financial policy as one example), which has produced some of the greatest inequality in our country’s history.

Second, this assumes that states are functional enough to handle more responsibility, which is, sadly, not at all clear.  Part of this goes back to the first reason. Our economy and society are too complex and integrated for state-level governments to be able to address all of their citizens’ concerns. Even well run states can be left behind as the economy and demographics shift. But part of it is bad governance.  New York State is a prime example.

I’ve written a lot about the flaws within New York State’s governance (and though I’ve been highly critical of Governor Cuomo, most of those flaws are structural and not his fault per se.)  The quirks of history and geography have put a mostly rural state together with the country’s greatest city.  It has also separated commuters across three states that have more in common with each other than their other fellow citizens.  These issues are beyond the reach of a (state) Constitutional Convention, but show the limits to what a state can address.

However, here is a brief list of what could and should be fixed in New York.  These changes, along with many others certainly, could improve on the quality of governance in the state, but the larger point is to demonstrate that they still couldn’t address the larger trends that pose current and future problems for the state.

1.     One Full-Time Legislature

Many states have a two-body legislative system with part-time legislators based on logic from the US Constitution intended to spread out political power across regions and classes. The idea of the citizen-legislator has romantic undertones, but in practice it means you get an unprofessional class of elected officials who are ripe with conflicts of interest.  

The increasing nationalization of all politics and flooding of out-of-state money into local elections further undermines this quaint notion.  Post-election, lobbyist groups like ALEC often write legislation word-for-word in many states and provide funds and perks for many elected officials all to eager to lighten their load.

The "Three Men in A Room" Era of New York politics has been the opposite. Not only have two of those three people ended up in jail, but also the system made a mockery of both bodies of representation.  The dynamics of New York politics dictate that downstate voting power dominates the Democrat-led Assembly and downstate financial power dominates the Republican-led Senate. This unholy alliance works because we have too many weak legislators.

Paying professional politicians and staff to govern our state through one representative house would produce better outcomes with more transparency.  Singapore has shown how paying comparable private-sector salaries can improve the efficiency and efficacy of government.  We get what we pay for, and I’d rather pay fewer people more to do a better job. 

2.     Home Rule

Localism as it is described in many circles calls for cities to control more of their destinies in the Trump Age. That belies the fact that they can’t.  The US Constitution does not mention cities at all and empowers states exclusively outside of the federal level.  This means that a city like NYC doesn’t control its own transportation, taxation, or even education. 

The honest truth is that NYC is special (obviously I have fully embraced my NYC-centric worldview) and needs to run its own affairs.  It’s one of the world’s premiere cities and needs to have autonomy to run its own affairs to complete with global cities like London or Hong Kong.  That it can’t manage its sprawling obligations and opportunities as easily as Paris or London can costs NYC, New York, and the US. 

Some ideas have been floated for the Convention about returning limited home rule to NYC or as radical as creating autonomous regions (see the picture above) or even succession.  If there was some compromise that cut out a special designation for the 5 boroughs given its unique nature, but would still guarantee some upstate financial exchange - that might just work. But if such a scenario that could benefit both the city and the rest of the state (and the rest of its cities) even exists remains to be seen. And I for one don't want to create a scenario where one region suffers because the other separates.

Furthermore, it’s unlikely that upstate communities would want to surrender access to NYC tax dollars. More importantly, it’s unlikely that upstate politicians would want to surrender access to downstate political money, which would evaporate if upstate influence wasn’t needed.  And no governor, certainly not the current one, would want to surrender the power, and access to the spotlight, that NYC provides. 

3.     Debt Service

Technically, this is more about transparency, but how the state borrows money is in need of a major overhaul.  Right now the Constitution says that voters must approve any state borrowing over a certain amount but that hasn’t happened in decades.  This is because most state borrowing comes through sub-state authorities and agencies that are explicitly exempt from voter referendums. 

Many elected officials, including at one time Governor Cuomo, have criticized this “back-door” borrowing but when push comes to shove, it is a very convenient tool to get projects funded, so the practice continues.   At $300b, New York has the second highest state debt in the country (although, it has been on sound footing for several years.) 

It should be said that debt is not a bad thing for a state to have, especially when it is borrowing for infrastructure and public services that have long-term benefits. The problem is less the outright number or the state’s current ability to fund its debt service and more the ability to determine priorities. The assumption is that most voters won’t know enough or care enough about the state borrowing for a new bridge and might vote it down with enough protest.  This is unfortunately true in some cases. 

However, this is myopic.  The larger truth is that New York, like most states, gives money away for terrible projects all the time without facing voters’ wrath.  The city and state gave close to $500m to Yankee Stadium, without a “yes” from voters.  The Governor gave billions of dollars to upstate, without a “yes” from voters.  Just two weeks ago, it was announced that Aetna, the publicly traded insurance giant, will receive $34m in city/state money to move 250 jobs to Chelsea. Without having to justify expenses to voters, the state has wasted billions and will continue to. 

This all while expansion of public education, transportation, and pension funding all suffer.  It’s always the big-ticket items that get political pushback, but too many little things get through the cracks. This happens because the state thinks voters are ignorant and lazy when in reality they are ignored and misinformed.  Only by changing the way we control our taxes will that change.

There are a lot of other issues that could be addressed in a Convention and there are risks that silly ideas or even bad ones will get traction or distract the process.  These potential issues don’t outweigh the need to reboot the state of New York.  It is entirely healthy for citizens to revisit the organizing documents of its government. I hope that we do this fall. But it’s clear to me that without stronger federal action, cities and states can’t fend for themselves no matter how well run they are.

Forget the $1 Million Prize, Here’s How to Fix the NYC Subway for Free

Delays expected (huffingtonpost)

Delays expected (huffingtonpost)

The A Train derailed last week, injuring 25 passengers.  This incident is just the latest problem facing the Metropolitan Transit Authority (MTA) during the “Summer of Hell” for transit commuters.  As the subways deteriorate before our eyes, the agency, and Governor Cuomo (who runs it), are under immense pressure to provide relief. 

As a result, on Thursday, the Governor declared a state of emergency for the system.  Additionally, he created a $1 million “genius challenge” in three categories to improve the system.  The three categories are: “Modernize Signal Technology,” “Deploy New Cars Faster,” and “Increase Communications.”

I see the value of the first two more than the last (Gov. Cuomo seems to be an unhappy victim of greater Wi-Fi access for riders already) but the challenge falls comically short of addressing the structural challenges facing the MTA: overcrowding, maintenance, and waste. The only real solution to these problems is fixing the politics around the MTA – but there doesn’t seem to be a category for that.

Overcrowding

In a basic sense, the strain on the subway is a sign of its success.  NYC has grown by over half a million people over the last 20 years and there are now over 6 million daily riders on the system, up from 3.6 million during the same period.   Tourism has also grown considerably during this period from 22 million in the early 90s to over 60 million today (although its dipped). People want to live and work and visit NYC in record numbers, which is great, obviously.

Growth in riders hasn’t been matched with additional capacity, which isn’t great.  In 1990, there were 5,255 subway cars for 1 billion annual riders. Today there are 5,282 subway cars for 1.8 billion riders.  This causes delays as people get on and off trains, which backs up the entire system (overcrowding accounts for the biggest reason for delays.)

Some of the increase in subway rides is at the expense of the bus system, which has seen a significant decline in ridership recently.  How much is caused by ride-share apps like Uber and Lyft is a matter of debate (do more cars on the road harm bus service enough to have people skip it?) but addressing this is a major under-discussed issue as well.

For a system that is over 100 years old in parts, handling that capacity at all is a stunning achievement, though it is clearly at its breaking point. But you can’t fix overcrowding until you fix how the system is maintained.

Maintenance

The NYC subway system is really old.  Infamously, many of the signals that monitor where individual trains are on various lines (which controls their frequency) date back to the 1930s and have ceased to be available on the market.  This means that MTA workers must rely on small-scale ingenuity to keep the system working.  It would be difficult enough to do this work without the additional ridership. But there is no helping overcrowding without adding more trains, and they can’t add more trains without better signals.

It’s been fairly obviously that the system needs new signals for a number of decades, but over that period, particularly during the fiscal crisis in the late 1970s, the system had bigger challenges.  And when the city rebounded, political focus turned to adding new lines like the 2nd Avenue Subway.   

Superstorm Sandy compounded this issue when it did considerable damage to the subway system five years ago. Since then, the recovery has eaten up a lot of capacity for maintenance, setting back a number of initiatives.  It’s partly why the L Train will be shut down for at least 18 months starting in 2019. But you can’t improve maintenance, or the MTA’s credibility on it, without improving the culture of waste in the MTA.

Waste

People that rely on the L Train (including this writer) are understandably freaking out about losing the entire line, not least because the MTA has very little credibility with commuters.  Everything the MTA does costs way more and takes way longer than they estimate. 

The 7 Train Extension cost $2.1 billion and took an extra 2 years (and was only close to budget by dropping a planned second station on 10th Ave).  The three stops on the 2nd Avenue Subway cost $4.5 billion (an overrun of $700 million) and took an extra 3 years (or 70 depending on your perspective.)

It’s impossible to look at the MTA and not see considerable waste.  Some of this seems to be a blood feud between the operational and capital sides of the agency.  Some of it is the complexity of doing business in NYC.  But a lot of it is simply poor planning and execution resulting in a flabby operation.

I’m not blaming the labor union here, either.  Many criticize the salaries of MTA workers, their healthy benefits, and their pensions.  Certainly there were some bad contracts negotiated over the years that have given rise to some egregious behavior, but providing living wages and reasonable benefits should be a basic standard in all employment.  You can absolutely improve some of the marginal human costs, but the larger principle matters here.

Politics is the Problem and the Solution

All of these issues come back to the central problem that must be fixed.  Poor leadership with poor accountability explain why an agency that has an operating budget of $15 billion and a 5-year capital plan of $32 billion (half for the subway) still can’t address these three issues. 

Notice I haven’t listed money as a problem. It isn’t with the MTA. They have had access to funding through direct state subsidies, in-system revenues, or the bond market, and aren’t strapped for cash.

The issue is the structure of the MTA and how it tries to do too many things with too many people having small pieces of it.  Since it was formally created in 1968, the MTA has run the subway, the buses, bridges and tunnels, the LIRR, Metro-North, and Penn Station.  Though most of their operational portfolio involves transit, it’s easy to see how such a wide range of sub-units and constituencies makes it difficult to focus on the subway even though it’s the largest entity by far (72% of all subway rides in the US are in NYC and half of the MTA’s budget.)

The Board of the MTA consists of 9 members, 5 of which are appointed by the governor giving him/her de facto control over the MTA.  This is why Governor Cuomo has been roundly mocked for pretending not to be in charge of the MTA.

Living in a democracy, we must accept a certain imperfection in our systems.  Politics are always going to be messy and frustrating.  However, the structure of the MTA leaves the politics of transportation in the metropolitan New York area fatally flawed.

Challenge #4: How to Fix the MTA

Some have argued to return the control of the subway and bus systems to the city and I would love to see that (and more home-rule in general) but that’s not going to happen.  Partly because no Governor would voluntarily surrender that amount of power, partly because the level of debt within the MTA makes it hard to see how you could restructure that with independent agents (or how an independent subway/bus system could borrow at the same rates on its own.  Admittedly I don’t have much background on this.)

Mostly though, we need to have a regional approach to transportation. We need to tax cars and trucks for using our bridges, tunnels, and streets to subsidize public transit.  We need to further tax rider-sharing apps like Uber and Lyft beyond just the regular 8% sales tax to subsidize public transit.  We need to charge congestion pricing for our busiest streets.  We need to incorporate NJT and the PATH to the greater NYC system. We certainly can’t do this if we Balkinize the subways and buses. 

I propose creating a Metropolitan Transportation Authority that has dominion over the roads, rails, bridges, and tunnels of the metropolitan area spanning NYC, northern NJ, LI, Westchester/Rockland, and the Metro-North commuter shed.  This agency would have a board appointee from each state’s governor and two from the Mayor of NYC.

Every form of transportation, every type of commute impacts the other.  Every commuter in the metropolitan sphere would be supporting the system whether they drive or ride.  The only way to organize this is to stop fragmenting it around artificial state-lines and even more artificial political lines. 

I don't know what optics the Governor is looking for with this challenge, but presumably enough to declare victory as he leads up to his re-election.  Just as Governor Christie in NJ failed commuters and citizens of NJ by canceling ARC in 2010, Governor Cuomo risks his legacy by neglecting transit and by failing to think bigger in a time of crisis.  Without a larger, regional effort that radically shifts the focus of transportation policy, the summer of hell will turn into a permanent hell.  It doesn't take a genius to fix it, it takes someone with courage.

 

NYCHA, Don't Sell Out - Hold Out!

Jacob Riis Houses, a pillar of public housing success (homebodynetwork)

Jacob Riis Houses, a pillar of public housing success (homebodynetwork)

It’s budget season and President Trump’s first proposal to Congress has sent shockwaves through all levels of government for the audacity of its cuts.  Nowhere is that clearer than at HUD, where he is proposing $6b in cuts.  NYCHA, which gets two-thirds of its $3.2b operating budget from HUD, could be devastated.  However, recent plans to inject private capital into NYCHA (to offset some of its $17b in outstanding capital needs) show how much is at risk to the long-term mission of providing public housing by grasping for private sector funds under these circumstances.

The Trump Administration has always been clear about gutting HUD and why – because it helps the wrong people.  Much of the President’s “skinny budget” is merely symbolic posturing, with little chance of passing through Congress, but I would bet a lot of these HUD proposals would find sympathy from conservative Republicans.

NYCHA is a telling example.  By far the largest public housing agency in the country, it provides homes for over 400,000 poor and low-income residents across 2,500 buildings and 176,000 units. In addition, it also provides housing assistance through Section 8 vouchers for another 200,000 residents.  If it were its own city, it would be the 30th biggest city in the country.

However, it’s made up of poor and low-income residents, many of them very old or very young, with the majority of them representing minority communities.  When President Trump speaks of“making America great again” and “America first” he is simply not speaking to or for this population.  The Republican Party, and frankly some parts of the Democratic Party, has little interest in helping residents of New York City in general, and poor, minority residents specifically.

That’s why NYCHA has already received word to expect $35 million in cuts for the rest of 2017.  This would dramatically reduce the agencies ability to fund its operations and Section 8 programs – even before the more dramatic cuts to HUD in the president’s budget proposal. It has been called “devastating” by Shola Olatoye, the chair of NYCHA.

Public housing still gets a bad rap in the broader public image, but the truth is far more inspiring, which makes these cuts all the more depressing.  Despite years of poor management in the past, in 2016 the agency actually saw a surplus of $21m - which is now entirely wiped out. And despite some major issues, to be expected across such a large footprint, the vast majority of residents have a positive view of their homes.  There is a waiting list with nearly 260,000 families who want to move in.  This isn’t a failed government program, it’s a shining example of a living, thriving public commitment to housing.

The main problem facing NYCHA is the $17b in outstanding capital needs that remain unfunded (compounded by the missing $3b promised by FEMA for Sandy recovery.)  Many of the complexes were built at the height of the New Deal and are over 70 years old.  These buildings need new roofs and plumbing, remodeled fixtures and appliances, lead paint removal, new electricity and energy investments - just to name a few of the daunting list of projects.  This was true even before the Trump budget proposal and only becomes more of a threat to NYCHA’s long term viability if its operating budget keeps getting hacked apart (it was already potentially facing a deficit of $200m by 2020).

Starting during the Bloomberg Administration, NYCHA has increasingly turned to the private sector for ideas to make up for its funding gap.   One part of Mayor de Blasio’s 2015 plan, NextGeneration NYCHA, has called for selling underutilized NYCHA-owned land to developers in exchange for committing 50% of new units to affordable housing. It hopes to net 10,000 additional affordable units on NYCHA land, with about 7,000 market-rate units.

This part of the plan has been extremely controversial with residents and housing advocates. Though there are reasonable arguments to be made around selling certain pieces of land on individual developments, ‘underutilized land’ in many cases seems to mean a parking lot or a playground. Many residents would question how underutilized this land actually is (and some feel under-represented in these conversations).  

NYCHA has also partnered with private developers to upgrade some of its existing housing stock in exchange for equity stakes in those developments, which some advocates worry is the beginning of a slow creep towards privatization of public housing.

In the Far Rockaways, NYCHA has placed over 1,400 units in HUD’s Rental Assistance Demonstration Plan (RAD) that removes them from public housing and instead enrolls them in a Section 8 program. This allows the agency to partner with private lenders to qualify for mortgage-backed tax breaks netting significant revenue while removing fixed costs.

The program began under President Obama and has many supporters in the housing world, however, despite its outlined tenant protections, there is a distinct risk that these units will eventually lose the federal funding that protects them (more likely now, surly) forcing them to convert to market rates eventually.

In the East Village, NYCHA has sold 50% of its stake in several developments, notably Campos Plaza on Ave C to L+M and PDP Triborough in exchange for $350 million over the next 15 years.  Campos I has already seen parts of the $100m investment from developers in the form of remodeled units, a remodeled façade, and a new park.  However, a portion of those units can now be rented at market rate, with the private developers capturing the difference between market rates and the 30% income cap NYCHA can charge residents. 

In both cases, NYCHA has contractual protections in place to dismiss their private partners if they are unhappy with their services; and they have right of first refusal if they wish to sell their stakes.  That sounds good, but in reality NYCHA has gone down a road where they can’t risk scaring off potential private developers by dismissing them and they can’t anticipate being more financially solvent in 15 or 20 years based on current federal and state support. 

Private developers, even the most progressive, know this.  Maybe things work out well under this model, but these developers have more protections than NYCHA if it doesn’t. The risk is real that these units will leave public housing. It’s also opened the door to rationalize more private intervention in the future, perhaps across entire developments.

It’s difficult for me to criticize the Mayor or NYCHA employees for pursuing every option to fund its operating costs, especially given the federal hostility to its mission even before President Trump’s arrival.  The majority of the initiatives outlined in NextGen deserve our support, including investments in infrastructure,  more effort on efficiency gains in management and energy, tenant-centric empowerment and reach out, and new interior/exterior design guidelines, and a non-profit fundraising org. If you accept the reality that we live in, this is probably the best you can get.

However, this already frustrating reality is going to get a lot worse very quickly because so much of NYCHA’s plans rely on current HUD funding commitments.  Those are going to decrease, even when the President’s budget gets chopped down through Congress. How much can this plan work without the predicted fed funding? Mayor de Blasio has come out forcefully against the proposal but, cautioned that it's just the beginning of the process.  That reeks of hoping for the best and reeks of not working out.

But I also think this reality is unacceptable, cuts or not.  NextGen talks about the origins of NYCHA during the heights of FDR’s New Deal through LBJ’s Great Society.  There were 30 years of successful federal and state commitment to public investment in housing, along side a viable, competitive private sector. That's the reality we should live in again - with public housing on the offensive, not the defensive.

But don’t conflate the two.  Public housing should remain committed to being public.  Selling off to the private sector slowly over another 30 years will betray the values at the heart of the program.  As a republic, we should commit ourselves to offering affordable housing to all citizens. We already have a model that shows it can work if we remain committed to it. Even for all its leaky roofs, NYCHA still serves almost half a million New Yorkers, which shows that public housing is a strong investment the city and the country. 

Instead, for the last 30 years, too many housing advocates and government employees have been apologizing for the decline in funding, largely amongst themselves, rather than making the easy case for more funding to the broader public. They have accepted that the private sector is the only answer even though it hasn’t been in previous housing crisis.   They have accepted a reality that will only lead to public housing’s demise. All Americans would suffer in its absence.

We should, once and for all, reject the outdated narrative of public housing’s failure and reclaim the real one – that public housing works. Public housing is a commitment to and an investment by Americans for Americans.  It has worked in the past and continues to work today. 

We should be parading NYCHA around the country as a sign that supporting public housing is not just a great social program, but also a phenomenal economic development program. We should be organizing NYCHA residents together with NYCHA employees to promote its virtues to other Americans, rural or urban, who would benefit from more federal intervention in housing. We need to be a loud, passionate group that shifts the conversation politically.  A Tea Party for government investment.

NYCHA is fighting for its life, but if it recognizes and embraces that its fight is a bigger one for the right to affordable housing for all Americans, for a return of federal commitment and investment in public life, I believe it will find allies across all parts of the country.  Rather than being a symbol of past ‘failed government overreach’ it should be a symbol of hopeful, smart government investment.  The cause has the security of being true and the obligation of being right. 

The answer is clear – NYCHA must endure without conceding to the private sector.  It must endure without conceding to cynical dismissals of its purpose or possibilities.  It must endure in the Trump Age, because the ebb and flow of history will inevitably bring in another age, one committed again to the power of government and the power of public housing. NYCHA, its residents, and supporters should focus on bringing on that age sooner than later.

Stop Blaming the Mayor for the Homelessness Crisis, It's On Us

More like a flood (NYDailyNews)

More like a flood (NYDailyNews)

A lot has been made this week of Mayor de Blasio’s announcement of new homeless shelters around the city.  He has been criticized from all different sides, from community groups opposed to more shelters in their neighborhoods, to non-profit groups worried about getting paid for their services, and by political rivals questioning the Mayor’s effectiveness on the crisis.

However, this week also saw a settlement of a lawsuit at the state-level over rental assistance that quietly did more for the crisis than anything the mayor can do.  This speaks to the deeper structural problems causing homelessness in the city and why the political charade around the shelter system is missing the point entirely. The problem is bigger and deeper than any mayor can handle and we’re all partly to blame.

The lawsuit stemmed from the state’s Family Eviction Prevention Supplement (FEPS) program that started in 2005.  For women with children under a certain economic threshold facing eviction, the program offered rental supplements based on a formula set when the program began.  Rents have of course skyrocketed since 2004 while the payments remained flat, so many families were simply not benefiting from the program.

With the help of Legal Aid Society, two women successful sued the state to change the rent allotments to reflect the changing market.  A family of three that used to only qualify for $850/m now can get $1515 a month.  The new formula isn’t perfect, but it will no doubt help thousands of families in New York City under threat of eviction to stay in their apartments.

This is an important program because it has a simple mission: prevent eviction to prevent homelessness.  There are over 60,000 homeless in NYC of which 48,000 are women and children.  The number one cause of homelessness for this group is eviction.  Keeping these vulnerable citizens in their homes not only safeguards their well-being and future prospects, but it also saves taxpayers millions of dollars and lessens the burden on the few communities that host these shelters.

As the Mayor is finding out, it is both expensive and, at times, unpopular to shelter the homeless.  And he can’t simply ignore it.  Since 1979, the homeless in NYC have had a legal right to shelter. The Giuliani and Bloomberg administrations both fought to undermine this law, so it is a credit to the de Blasio Administration for not taking the easy way out.

It is a significant financial burden for the city to maintain the shelter system. NYC Department of Homeless Services has an annual budget of $1 billion and the Mayor’s Office estimates that it costs $44,000 to shelter a family for a year.  However, even the most ardent supporters recognize that DHS is barely a stopgap that doesn’t come close to meeting the basic sustainable needs of New Yorkers entering the system.

The shelter system also clusters in only a few communities in the city, which puts a potentially unfair burden on them relative to others.  It’s important to note that very few shelters actually cause ancillary quality of life problems for surrounding communities.  However, when only a few communities host most of them, this concentration inevitably has an impact that other neighborhoods don’t experience. It's unfortunate that many citizens don't want to help the homeless, but it's reasonable to ask all of us to share the burden equally.  We are not. 

All of this is to say that the Mayor has a nearly impossible task.  He has clearly placed too much political capital on his ability to solve this crisis, which is now costing him, but he has made progress.  Guaranteeing counsel in housing court for low-income tenants is a major victory in preventing homelessness. Finding additional resources for new shelters, however controversial, is also commendable.

Look, Mayor de Blasio can’t end the homelessness crisis. No mayor can.  The politics around the mayor’s handling of the crisis mask the larger problems that must be addressed at all levels of government.  Many people recognize this, even if most of the media only focuses on the horserace stuff.  

For example, today State Assemblyman Hevesi, a Democrat from Queens, proposed a state bill to provide comprehensive rental assistance to families receiving public aid.  The plan, called Home Stability Support, would replace FEPS and potentially help 80,000 families across the state, including NYC with real, reliable rent assistance.

The program is estimated to cost $450 million a year, but Assemblyman Hevesi makes a compelling case that it save money in the long run.  Compared to $44,000/year to shelter a family, this program would potentially cost just $11,000 per family.  Scott Stringer has estimated that the plan could the city save hundreds of millions of dollars.  Of course there are complex issues to address around intended/unintended consequences, but this seems worthy of support.

It’s not clear how much support there would be in Albany, though, and it seems very unlikely we can bank on federal help, so the future of the bill is questionable.  But it makes a strong economic argument for supporting greater rental assistance.  We are already paying an immense amount of money sheltering the homeless in NYC and that won’t end anytime soon.  Why not intervene earlier and put less money towards a more efficient policy?

It is crass to approach the homelessness crisis on economic terms, but starting there hopefully allows us to consider the issue on moral terms.  And we should.  We are making the choice right now not to help thousands of citizens who are economically insecure, who have lost their home or are close to losing it.  It is entirely in our power to solve this problem if we choose to. It is wrong that we do not. Blaming Mayor de Blasio lets us off the hook too easily.

As much as the right to shelter for the homeless has been fought by various city and state officials over the years, we must think bigger.  A right to housing for all residents should be an obligation of the state that falls under its public welfare mandate.  New York has always been a laboratory of progressive governance and we should continue this tradition when it matters this much to so many.  We need to make sure the state follows through on this obligation. 

Far from requiring huge amounts of new revenue, committing to housing as a right would allow the city and state to review the many programs and laws that currently apply money as band-aids all along the housing cycle.  It’s easy to see how such a simple policy goal could unleash innovative public programs, private partnerships, and lead to an overall reboot for thinking about housing in New York.  This is clearly what we need to do if we want to address the homelessness and affordability crises - and actually end them. It starts with every one of us deciding that housing is a right.

The Bigger Problem: Why Didn't Tenants Have Right to Counsel in First Place?

Long wait for justice (NYT)

Long wait for justice (NYT)

 

Recently, housing advocates celebrated the announcement that New York City will provide free legal counsel to low-income tenants in housing court. This relatively inexpensive program will undoubtedly improve the lives of many vulnerable New Yorkers by reducing the risk of eviction.  But why didn’t these tenants have access to legal representation in the first place?  Therein lies the bigger housing problem with our legal system and our country.

The obvious place to start is the difference between criminal and civil court in the US.  The 6th Amendment guarantees the right to counsel in all criminal proceedings (although surprisingly it wasn’t expressly outlined by the Supreme Court until 1963).  Anytime the state brings charges against you, you are guaranteed fair, conflict-free legal counsel through the public defender system (though some are cared for more than others.)

However, unlike most western democracies, you are not guaranteed the right to counsel in civil court in the US.  There are some exceptions to this - if there are concerns over due process or if the case risks your personal liberty.  This narrow view is partially based on Lassiter v Dept. Social Services in 1981.  It’s an utterly heart-breaking case and I strongly recommend you read this article about it to understand the sexist and racist assumptions that went into the broader argument against providing counsel for civil cases.

In New York City, the Housing Court (which was formalized as its own branch of the civil court system in 1973) sees 350,000 filings a year with just 50 judges. That makes for a painfully slow process that favors those who can afford lawyers who are familiar with its pace and process (and who can afford to take that long).  As of 2015, 90% of landlords had legal representation and only 10% of tenants did.

Now, ask any landlord and they will tell you its exceedingly difficult to evict a tenant in New York (which is absolutely true, certainly relative to other states) but with such a discrepancy between representation, it’s clear that tenants don’t have the same access to due process.  It’s also a substantially different circumstance when your home is at stake vs. part of an investment. 

It’s not hard to see why this is a problem.  According to the Coalition for the Homeless, eviction is the number one cause of homelessness for women and children in the city, who represent over 75% of shelter system residents (about 48,000 out of 62,000 people).  The right to counsel will have a profound impact on this particularly vulnerable population.

But why did it take this long to address? Because we don’t think of housing as a right.  Or, put another way, we don’t think the loss of a home is the same as loss of personal liberty

And therein lies the problem with our civil legal system (putting aside how unacceptably overworked and underfunded that system is) and our broader society.  Who defines personal liberty? Would a mother with several children consider herself free if she is homeless? Is she not deprived of her personal liberty and her children’s? Not being able to afford a home is not the same as choosing not to have one.

Courts have generally shown concern about the ‘slippery slope’ of where to draw the line on personal liberty.   That’s reasonable and one that the courts ultimately shouldn’t have to decide.  We should.  The right to counsel to prevent evictions is a wonderful start, but we must go further as a society.  We must decide that housing is a right.

To be clear, I don’t mean to suggest that it is the landlord’s obligation to provide that right.  There are malevolent landlords out there for sure, but there are also many more that are trying to make ends meet just like everybody else.  We can’t simply put the burden of providing free housing on landlords or demonize them when they are trying to get a return from their property.

We must think bigger. Adopting housing as a right as an organizing principle would have several major policy implications to do just that.

First, at the local level it would have a liberating effect on the stifling status quo of our current rent, occupancy, zoning, and property tax laws that collectively play a large role in the affordable housing crisis.  It would spur significant innovation around these regulations that would likely provide gains for all stakeholders.

Second, it could fix the federal government’s wasteful role in housing.  For too long, and at far too high a cost, the federal government has supported homeownership exclusively.  This choice has caused generations of systemic segregation, degraded our environment and civic life, and nearly destroyed our economy.  Building more types of housing in more kinds of communities for more types of people could arguably create a sustainable, equitable economic boom the likes of which we haven’t experienced in decades, if ever.

Finally, it could also potentially lead to a cultural reboot; something that Americans of all political identities appear to agree is needed.  For too many people, it’s not clear today what America’s role in the world is or will be.  It isn’t clear that our system is producing the type of peace and prosperity we’ve come to expect - or that it’s capable of fixing itself in order to do so.  It isn’t clear what America is. Let’s fix that.

Let’s start by getting back to basics. What is “life, liberty, and the pursuit of happiness’? Is it merely positive liberty (the freedom to do something) or is it also negative liberty (the freedom from something)?  How can you pursue happiness, liberty, or life without a place to call home?

We’ve always been our best when we’ve used our noble ideals to defend the vulnerable and innocent from the violent injustices of the world, here and abroad.  Surly we can address the housing needs of millions of Americans.  In the process, we can rediscover the ideals that have made us such a beacon for the rest of the world.

The Market is Failing the Public, Just Look at the High Line

Who is better off now? (Friends of the High Line)

Who is better off now? (Friends of the High Line)

Robert Hammond, the co-founder of Friends of the High Line, did a revealing interview last week where he lamented how neighborhood residents around the High Line haven’t benefited from the completion of the park and the corresponding development boom. It’s admirable that Mr. Hammond has recognized this, but, as he points out, it’s too late.  Perhaps Mr. Hammond has learned the bigger lesson from the High Line: we can’t rely on the private market to create public good. 

The High Line was originally a 1.5 mile elevated industrial railroad built in the 1930s that connected the Meatpacking District to Hudson Yards (back when they were a meatpacking district and rail yard, respectively.) It closed by the early 1980s and remained a local, grassy oddity until the late 90s.  That was when Mr. Hammond and others that started Friends of the High Line saw the potential for a unique public park and successively prevented the Giuliani administration from demolishing the infrastructure.

Mayor Bloomberg also saw the possibility of the park within his vision for the vast redevelopment of the western edge of Manhattan. The mayor helped push the park forward with a total of $123 million in city money.  The remaining $50 million came from private donations.  The first segment opened in 2009, followed by the second (2012) and final (2014) around the Hudson Yards development. It has quickly become the most visited attraction in New York City with nearly 8 million visitors last year.

As a result, the park has played a central role in the rapid redevelopment of Chelsea and the Hudson Yards area.  Hundreds of new high-end residential units and commercial space are open or opening over the next few years at a dizzying space   (not counting the multi-billion dollar project at Hudson Yards).   The High Line has fundamentally shifted the center of gravity in the city towards the west side and is expected to generate over $1 billion in tax revenue over the next 20 years.

But calling the High Line a public park is a stretch because it really isn’t public or a park.  It is a beautiful piece of repurposed urban infrastructure and offers a unique experience, but it doesn’t offer the types of programs or services that traditionally successful urban parks offer residents.   Most of those activities are prohibited. FHL has conducted surveys with local residents that show that not only do they not use it - they don’t even feel it was designed for them. They are right.

Instead, it is a pleasant conveyer belt for tourists that picks them up or drops them off in trendy Meatpacking District or the soon-to-be-trendy Hudson Yards and takes them through new trendy condos and hotels along the way.  There are a few, hard-to-find access points in between those terminals for local residents to get on or for tourists to get off.  Our tax money was given less to a Public Park and more to a private development showroom.

I have no doubt Mr. Hammond, a longtime resident of Chelsea, envisioned the High Line to be more inclusive, especially given his group’s early local organizing efforts.  But the truth is that redevelopment is not helping existing residents and was never going to. Gentrification is complicated, but the High Line is clearly putting pressure on many people in the area.  

On the other hand, I have no doubt that the Bloomberg Administration and contributing private interests underwriting the design and construction did not share Mr. Hammond’s vision or concerns.  Regardless of whatever practical structural limitations the unique nature of the park had to work around, there were demonstrably exclusive design assumptions caked into the park from the beginning.  Limited access, limited hours, and limited activity were not preordained by any means, but they shaped the design and programing for a specific audience that didn't include local residents, especially children.

These results were, of course, inevitable when private interests shape public space.  The city, despite owning the infrastructure and contributing the majority of the capital, didn’t dictate the planning and didn’t incorporate the usual public input to outline and achieve specific public policy goals.  As was generally true of the Bloomberg Administration, the project brought in a private-sector worldview to what should have been a public-centric design goal (that might have cost a lot less in comparison.) Either way, the city didn’t get a great public space out of it and most New Yorkers didn't get any benefit.

You might ask why it matters – the High Line is wildly popular with tourists and $1b in tax revenue for a $123m investment is great for the city.  There are two reasons.

First, a practical critique about government economic development: if you are a city government getting into the development game, picking winners and losers, you’d better get a good deal from the winners. If the tax revenues from the High Line area are estimated to be $1b (which based on existing tax policy is probably a giveaway), then many, many more times that will be generated in private profit during that period.  If the development of the High Line (coupled with the not-unrelated zoning changes around the area) was that valuable, then the city and taxpayers got a terrible return on $123m while a few private actors reaped the most benefits.  That’s simply an unacceptable transfer of public wealth.

Second, there is the much larger and more urgent critique of relying on the private sector to generate public good in the first place.  The experience of the High Line shows us that the private sector, even when supported by public funds, treats public space as an economic development engine rather than as a center of civic engagement of benefit.  That mindset is not a model for civic progress.  It's why you'll never see a similar city effort with the proposed Queensway.  There isn't the possibility for significant economic development that section of industrial or residential queens (at least not yet.)

You can point to different historical eras where this narrow development view wasn’t the case, or where there was a mutually beneficial balance, but it's clearly one-sided today towards private profit. (Compare the stately grandeur of Grand Central with the vapid consumerism of the Oculus for example.)  What we’re finding out is that the trade-offs leave the public sphere depleted and sickly.

This matters.  Great democratic societies have great democratic spaces. More importantly, great democratic societies are committed to funding the creation and maintenance of these spaces for the sake of civic health. 

From the early days of the New Deal to the dying days of the Great Society, New York City used to be on the forefront of this robust faith in public development.  Whether it’s the parks system, the public school system, the colossal public housing program, monuments to successful public policy surround us.  This model worked in building infrastructure, but more importantly it worked to build a sense of shared destiny and collective effort in public life. It also allowed for new voices and ideas to access those spaces to contest and change its vision, albeit wildly unevenly. This is the definition of a healthy democratic society.

Ironically, this civic model broke down not because people changed and stopped carrying about their communities, but because the private sector changed and stopped carrying about the community.  NYC suffered significant deindustrialization that triggered a mass exodus of working and middle class residents that devastated the tax base.  Industry and the deregulation-happy federal government abandoned the city (and many other cities) over the following decades in favor of a stateless global corporatism. That’s why the High Line was abandoned in the first place.

Along the way we have internalized the distrust and disrespect for the public sphere that the more unseemly segments of the private sector have always held.  It’s a self-fulfilling prophecy: we don’t think the government – at whatever level - is capable of doing great things so we keep eroding its ability to do even basic things. Despite all the physical evidence of what energized public policy can achieve (you can see three examples from the High Line: the Fulton Houses and Elliot-Chelsea houses are NYCHA developments that have provided housing for thousands of New Yorkers for decades) we think we must rely on the private sector to build our infrastructure and institutions. We end up with poor public space while enriching a few.

We won’t get the type of inclusive, free-forming public space that our society needs if we rely on the private sector to build and maintain it for us.   We need to recommit ourselves to building up the public sphere again and reaffirming our faith in public institutions to provide public good.  Good that we define and redefine ourselves.   It starts with recognizing that our current thinking isn’t working and that we must believe again in the power and purpose of public intervention.

Housing is a Right, Not a Lottery

You have better odds at this than with housing (nylottery)

You have better odds at this than with housing (nylottery)

 

This week, an affordable housing lottery in Stuyvesant Town (where I live) opened to the public, which offers a useful illustration of how backwards our thinking on affordable housing is: to qualify for a$2800 1 bedroom apartment, you must have a household income between $84k-$119k. When Blackstone bought the property for $5.3b last fall, the city gave it $221m to keep 5,000 of the complex’s 11,000 units in an affordable housing program.  This lottery is that housing program at work.

Stuyvesant Town and Peter Cooper Village were built in the 1940s by Metropolitan Life Insurance as part of a government-subsidized housing program. It was (for a time, a racially segregated) working class complex that offered nice, modest living conditions protected by rent regulation

That all changed in 2006 when MetLife, getting greedy, sensing a bubble, or both, decided to sell the complex. This caused a feeding frenzy in the real estate market and ultimately led to the largest residential real estate deal ever. Tishman Speyer won with a $5.4 billion bid.

The deal was a disaster from the beginning (and has a lot of fingerprints from city, state, and federal elected officials who should have known better).  It relied on the continuing trends of vacancy decontrol and rising rents to make the numbers work with little regard for affordability or sustainability.  

In 2006 the deal looked like a safe bet, by 2009 not so much. The twin killings of the market blowing up and the Roberts court case (which reregulated 4,400 units - including my own) led to Tishman walking away from the property.  Tishman still made a profit while taxpayers ate $2b of debt through Fannie Mae and Freddie Mac.

After a few chaotic years, Blackstone jumped in to purchase the property for a slightly less historic $5.3b.  Mayor de Blasio and other elected officials, sensing some political leverage given the previous disaster with Tishman, were able to get Blackstone to agree to ‘preserve’ nearly half of the complex’s units in an affordable housing program for 20 years in exchange for around $220m in waived fees or tax subsidies.

A lot of people at the time hailed the deal as a win for affordable housing and tenants, but others questioned the rhetoric and scrutinized the details - and weren’t so sure.  With its fuzzy definition of affordable housing, the continued market pressure on the rest of the tenants, and the underplayed granting of air rights to Blackstone (which will likely represent hundreds of millions of dollars of additional income), the victory seems firmly in Blackstone’s corner rather than the public’s.

I’m not blaming Blackstone.  They are worth billions of dollars and certainly don’t need any tax breaks, so agreeing to any type of affordability deal wasn’t necessary for them.  But if they can score $220m in subsidies by agreeing to some vague promises for political points, why not?

But it’s obvious that our elected officials at all levels failed the public interest on this deal and on the larger challenges of the affordability crisis.  The lottery in Stuytown shows why. 

No one can claim with a straight face that $2800 for a 1 bdr is affordable or that someone making $100,000 needs rental assistance.  The fact that everyone involved with this deal actually is saying that should shock you out of any remaining complacency.

Some of this “tragical” thinking stems from the flawed logic used by the Department of Housing and Urban Development (HUD) in determining affordability that relies on the Greater New York average median income (AMI) which is $90,000, rather than NYC proper which is closer to $50,000.  

That higher AMI is the basis for all state and city affordability requirements including the lottery run by the Housing Development Corporation. Even when the city requires or negotiates a certain number of units below that AMI, it still means a lot of New Yorkers can’t touch any of these units.

Fixing AMI standards would create more accessible, sustainable affordable housing, but it wouldn’t fix the other two major flaws surrounding the Stuytown deal.  Namely, relying on the private market to solve the affordability crisis and treating housing needs differently than other needs-based programs like food stamps or Medicare.

Putting it more simply, we should demand that housing be treated as a basic right and form policy from there.

For decades, New York City has been attempting to survive the affordability crisis with policies designed to promote private development first, and affordability second.  Whether its tax policies like 421a, rezoning, even occupancy laws, housing policies have been billion dollar gifts to private developers. If this created or preserved a lot of truly affordable units, fine.  But look at the recent history of Stuytown and tell me that it does.

Until our elected leaders reject the premise that the market should be driving housing policy, we’ll never get more affordable housing and we’ll never get a better return on our tax dollars. 

This doesn’t mean that the government should replace private developers altogether (though public housing is underrated and due for a cultural comeback) but it does mean the goals should be reversed: affordable housing first, profit second.  Whether it’s looking into community land trusts, dusting off limited-dividend programs like Mitchell-Lama, or creating a state-level Section 8-style program, we have proven models to explore.

For this to happen, there needs to be political change from the bottom-up. Regulated and market rate tenants should ban together with smaller landlords to counter-balance the political power of big developers who dictate state and city policy. Tenant groups and affordable housing developers should embrace new technology both to organize and to promote alternative housing models.  Landlords should actually accept the premise of rent regulation in order to reform its more outlandish abuses. 

Too many actors in housing have been divided politically and have collectively suffered in our current paradigm, while a wealthy few benefits.  Only by breaking this cycle can we introduce, or in some cases reintroduce, innovative thinking to break the affordable housing crisis as well.  We must start by acknowledging that housing is a right, not a lottery.

421a Stinks, Here's a Better Use of Taxpayer Money for Affordable Housing

Community Land Trusts to the rescue? (bedford+bowery)

Community Land Trusts to the rescue? (bedford+bowery)

This week, the Independent Budget Office of New York released a damning report on the impact of the 421a tax program. It argues that over the last 11 years, $2.5-$2.8 billion of taxpayer money has been effectively wasted.  Far from encouraging more affordable development, which has been its main justification, the policy has rewarded condo owners and developers (particularly in Manhattan) with significant tax relief. 

In case you haven’t heard, NYC is in the midst of a massive affordable housing and homeless crisis. Rather than simply rebrand 421a, which is what the governor is proposing, and continue to throw taxpayer money away, we need to examine new ideas that can actually address this crisis full on.  Luckily, NYC Housing Preservation and Development (HPD) is potentially doing that by exploring Community Land Trusts.

421a has long been criticized for being an incredibly expensive and inefficient affordable housing policy, but the simple truth is that it was never an affordable housing policy. 421a was designed in 1971 during the Bad Old Days to promote development, not affordable housing.  Those goals are not mutually exclusive, but they are not one and the same. The checkered history of 421a shows that.

Originally, the policy gave a 10-year property tax rebate on any new housing development on vacant or ‘underutilized’ land.  After Trump Tower received millions from the program to construct exclusively high-end housing, Mayor Koch revamped the policy in 1985.  It then required any housing development using the program in central Manhattan (but not outside) to provide a certain percentage of affordable housing.  The policy has gone through various iterations and lapsed enforcement since, raising the cost of the subsidy while providing vanishingly small amounts of affordable units.  Given this complacency, the Governor’s revamped 421a plan "Affordable New York Housing Program" would cost taxpayers $400k-$600k per unit and apparently that’s OK.  It’s not and this thinking is not sustainable.

The point here isn’t to keep harping on 421a (or on using tax money to promote development in general). It’s to demonstrate two things. First, that focusing on development first, affordable housing second, has failed spectacularly in addressing the affordable housing crisis.  That much is pretty clear at this point.

Second, it is to show that there are existing models that focus on affordable housing first that are much more cost-effective, community-based, and sustainable.  One of those models, Community Land Trusts, is finally getting looked at seriously in New York City thanks to HPD

Community Land Trusts (CLT) have been around for decades, most successfully in Burlington, Vermont (started when Bernie Sanders was mayor).  The basic concept is very simple – remove the value of land from the value of the dwelling. When a CLT buys a house or building, it puts the land in a trust that removes it permanently from the private market. This of course removes the speculative possibility of the land, which is the main variable in real estate deals.  (It’s why Stuyvesant Town, where I live, got bought for $5.3 billion even though the buildings are 70+ years old and showing it. The 86 acres in the heart of Manhattan is what Blackstone paid for. The tax breaks are a cherry on top.)

HPD, after meeting with community groups like the New Economy Project, the NYC Community Land Initiativehas issued a request for economic interest (FREI) to groups that are interested in forming CLTs in the city.  As reported by NextCity, a group of residents formed the East Harlem-El Barrio CLT to take part in the first wave.  The FREI is a modest proposal to see if a CLT can “improve upon, or fill in the gaps of” existing city programs, but it is a signal that the city is at least looking at CLTs.  It remains to be seen how much HPD understands the model or how committed it would be to pursuing it, but residents and developers alike should welcome this move. 

Community Land Trusts could be a much better use of taxpayer money to address the affordable housing crisis because after the initial investment of acquiring the land, the model is self-sustaining.  A trust controlled by a diverse board of interests still collects rents, it can still do major capital improvements and pass along some of the cost to tenants, and it can even offer transferable equity to residents in co-ops or condos in certain cases. Again, this model already exists and has worked in many cities (including Cooper Square, the first and so far only CLT in NYC, which has been around for decades.)

421a cost taxpayers an estimated $1.2 billion this fiscal year alone. For a fraction of that, the city could purchase foreclosed properties or neglected properties and transfer them into either a publicly administered trust or to private non-profit trusts like East Harlem-El Barrio.  Almost instantly, the city would create thousands of sustainable affordable housing units that wouldn’t require anywhere near the level of operating support currently wasted on 421a and other property tax programs.

This policy might seem like anathema to the real estate dominated political interests of the city, but it shouldn’t.  NYC is an incredibly large city with a lot of property.  Even a large presence of CLTs wouldn’t impact this landscape.

If anything, supporting CLTs would presumably remove the cumbersome requirements of affordable housing that drives up costs for developers.  By creating a separate, robust affordable housing policy, lawmakers could reform current development policies to encourage other priorities, such as mixed-use or transit-oriented development that would allow developers to maximize a development’s potential. Perhaps a developer could receive FAR bonuses or tax breaks by supporting a CLT by providing capital or professional services.

To address the affordable housing and homeless crisis, New York City needs to explore every possible idea out there.  Building new, large public housing developments will never happen again politically. Relying on the private market has made the problem worse economically.  Ungodly amounts of taxpayer money are being wasted every year on poorly designed tax, rent, land-use, and occupancy policies.  Community Land Trusts aren’t the silver bullet to address these seemingly intractable problems, but by supporting them, perhaps we can create space to finally explore truly innovative ideas from the public and private sectors alike.

Cities of Refuge, Country of Refusal

Hello or goodbye? (ericschnurer)

Hello or goodbye? (ericschnurer)

The first week of President Trump’s administration has seen a flurry of executive actions that begin to follow through on many of the promises he made during the campaign.  Though it seems to be a surprise to people, even some of his supporters, it shouldn’t be.

As troubling as this may be for opponents of the President’s agenda, and for the American economy and society overall, there are limits to what these executive actions can achieve. “Sanctuary Cities” will quickly serve as a test case on how effective they will be for the Trump Administration or how effective resistance will be.

On Wednesday, President Trump announced that sanctuary jurisdictions  (cities and counties that don’t cooperate with Immigration and Customs Enforcement (ICE)) “willfully violate the law by shielding aliens,” have caused “immeasurable harm to the American people and the very fabric of the Republic,” and will not be ‘eligible to receive federal grants.”

This means the Trump Administration intends to take draconian measures to force cities and counties into cooperating with ICE or risk losing millions if not billions of dollars of federal aid.  He now seems sincere about deporting all 11 million illegal Americans and wants local law enforcement agencies to be the foot soldiers by effectively deputizing them as ICE officers.  He has also set up a truly Orwellian department within ICE called The Office for Victims of Crimes Committed by Removable Aliens.

(This is an addition to his other executive orders on immigration outlining plans for building a wasteful wall along the Mexican border and banning Muslims (only from countries we've bombed) from entering the US.)

President Trump, the “law and order” candidate, might be unaware that the modern American concept of Sanctuary City actually started through efforts by law enforcement departments in the 1980s.  Many police officers found it difficult to work with communities with high-levels of illegal immigrants. They were attempting to do everyday community policing, but residents were fearful of cooperating.  Cops wanted to remove the fear of immigration status from hurting their greater mission of providing public safety.

Hundreds of cities and counties have followed suit over the following decades. Though there is some disagreement in law enforcement circles about this, many sherifs and chiefs continue to support sanctuary policies in the interest of public safety and budgetary limitations.  Many other social service agencies have adopted similar policies in the interest of public health and public education.  It's a federal issue, not a local one.

Contrary to President Trump’s anecdotes from the campaign, illegal immigrants are less likely to commit violent crimes than Americans.  It is outright demonization to suggest otherwise let alone to set up an additional federal bureaucracy to treat a vanishingly small problem.  These men, women, and children are not threats to the republic or to Americans.  They aren’t even threats to most Americans’ jobs. They simply want to be Americans (many of their children already are) and often do jobs most Americans don’t want to do.

Turning to New York City, it’s no surprise that it is a sanctuary city.  It has been for hundreds of years.  It’s a city built by, of, and for immigrants (including my grandparents). Today close to 40% of New Yorkers are foreign born residents.  Of that, over 500,000 are illegal immigrants, which is one of the largest concentrations in the country.  Yet NYC is also one of the safest cities in America.  Where is this hellscape of crime by Removable Aliens? It’s much more likely that the city would suffer by removing these men, women, and children from our workforce, our communities, and our culture. Just ask outspoken Trump supporter former Mayor Rudy Giuliani about what he said back in 1994:

“Some of the hardest-working and most productive people in this city are undocumented aliens," Giuliani said at the time. "If you come here and you work hard and you happen to be in an undocumented status, you're one of the people who we want in this city. You're somebody that we want to protect, and we want you to get out from under what is often a life of being like a fugitive, which is really unfair."

However, NYC and other cities are breaking the law.  The arguments for doing so have always been framed in practical terms for economic and public safety reasons, but they are still flouting federal laws.  Attempts to reform those laws famously failed in 2013 and fueled the rise of Trump.  And the Trump Administration is going to make NYC and the other jurisdictions pay.

It is unclear if this executive action (or his others) will succeed. Evidently the president didn’t even consult his own cabinet about his executive actions, which makes articulating policy fairly hard. And as President Obama found out with his own executive orders, President Trump can expect a flood of lawsuits

Mayor de Blasio and many others seem confident that the courts will strike down many of the threats associated with federal funding, but there are no guarantees.   It is clearly illegal to coerce local governments to compile with federal laws through denying funds. It is possible that NYC would lose millions of dollars for direct law enforcement support, but that would likely impact anti-terrorist efforts or Trump Tower security, which could cause political or personal headaches for the President.

There is a sad irony that in today’s world of religious conflict, xenophobia, and eroding liberalism sanctuary cities are under threat. They are a concept that spans all religions across thousands of years.  Cities of Refuge can be found in the Old Testament. They were places that granted persecuted individuals or individuals under threat a save harbor under religious and/or government protection. 

The entire founding myth of America is as a sanctuary city.  It is a tragic betrayal of American values. We've had similar periods of xenophobia and anti-immigration hysteria in our past, and they have all been self-defeating stains on our history.  I've always lamented how ahistorical we are as a country, but this current vitriol is heartbreaking and entirely avoidable. 

Most of these periods shared something in common - economic insecurity.  Blaming immigrants for that is seductive because it is easy.  Tackling the actual reasons for it are hard and involve challenging long-held assumptions by the working class and the ruling class.  There have been practical solutions on the table to address our current immigration challenges. Ones that respect the current laws, hold those who have violated them accountable, but allow these men, women, and children to remain in the country that they have called home and to remain productive members of our society.  Political cowardice and cynical misdirection have lead us to this point instead. 

It is cliché to refer to America as an immigrant country, but it is and remains so.  It is cliché to say that immigration is what creates the vibrancy of American society and its economy, but it has and continues to.   What is equally true, and should be equally comforting even to those who fear immigration, is that America remains America even if Americans change.  The only type of people who threaten America are those that wrongly think America shouldn't change.  If they succeed America will still change, but it will be for the worse.

Death and Bad Tax Policy

Actually, not at all. (bizarrocartoons)

Actually, not at all. (bizarrocartoons)

NYC Housing Policy Tools Series

Over the next few weeks, as we prepare for the Trump Era, I will spend time on various housing policies in NYC in order to help frame the the affordable housing crisis.  I have picked four topics related to NYC housing laws: rent regulation, zoning, occupancy, and property taxes.  I concede that there are other policy tools that could be included (particularly around financing) but these four tend to have an immediate impact on the most people.  The hope for this blog series is to explain the current policy tool kit in New York, but also to show why questioning the underlying assumptions about housing policy might be able to expand it. 

Part 4 of 4: Death and Bad Tax Policy

For my final post about NYC policy tools, I come to perhaps the most opaque and the most frustrating topic: property taxes.  I can honesty say that after years of studying housing issues, I think the property tax system is the single biggest source of injustice in housing. The incentives are warped, the metrics are arbitrary, and the goals are backwards.

That last point is an important place to start.  What is the goal of tax policy? It is simply to allow a government to provide a baseline of services – police, fire, water, etc? Is it to encourage or discourage a particular type of activity or behavior? Is it to promote social cohesion through income distribution? Depending on your political ideology and personal experience, you probably have a clear idea of what you think it is supposed to do and not to do.

But if you think tax policy shouldn’t be designed to impact behavior or social outcomes, you might be disappointed to find out that all tax policy does that. All tax policy ever.  Anything that a government chooses to tax or not to tax obviously has social and economic consequences. Any federalist or anti-federalist can wrap their rhetoric on taxes around liberty, strong governance, and whatever they want, but they are attempting to codify subjective values. 

(There are also inherent problems with relying on property taxes to pay for things like public education that impact behavior and social outcomes, but I’ll address that at another time.)

This is what is so confounding about NYC property taxes.  What values are being projected? Nominally, it is designed to provide tax relief for homeowners but it doesn’t exactly do that. It is sort of designed to give tax benefits to condo/co-op owners, but it in fact gives huge benefits to speculators.  It isn’t expressly designed to screw renters, but it absolutely does.  For a city that is two-thirds renters, that is ass backwards.

Since 1981, NYC has split property into four classes with varying tax rates – Class 1: single-family homes (19.991%), Class 2: multiple-dwelling buildings (rentals, condos, co-ops) (12.892%), Class 3: utilities (10.934%) and Class 4: commercial (10.574%).  For this blog, I am only focusing on Class 1 and Class 2.

On the surface, it looks like homeowners get screwed comparatively.  But below the surface, these numbers are almost meaningless to compare.  How the value of each property class gets assessed, what portion of a given property can be taxed, and how often a property tax assessment can change all vary dramatically. 

There are two big differences between how this system works for Class 1 and Class 2.  In Class 1, the Dept. of Finance measures the market value of a property by matching it to comparable real estate sales in the surrounding neighborhood. This gives as close-to-market value for the land as possible.  In Class 2, instead, the DOF measures property income – ie the rent roll – rather than property value. (If you wonder why certain ground-floor retail space remains empty in buildings for a long time, here’s your answer. Unless a landlord can get exactly what they want in rent from a retail space, they have an incentive just to write it off.) 

Second, for Class 1 and Class 2, there are limits to what percentage of the market value the DOF can tax.  Instead of applying the 19.991% or 12.892% to 100% of the property value in each Class, Class 1 has a limit of 6% of a property's market value, while Class 2 has a 45% limit.  

There is also a 20% cap on how much a tax burden can go up over 5 years in Class 1. In other words, a homeowner is only getting taxed on 6% of the market value of their property and pays the 19.991% tax on that number.  And even if the neighborhood has exploded in value, there is a limit to how much the property tax can go up. These factors mean there is an effective tax rate (ETR) much lower than the stated rates.

A few years ago, City Limits showed a stark example of this inequality. Mayor de Blasio’s Park Slop home was valued at $1.4m but assessed $2,894 in property tax. A similarly valued home in Borough Park was assessed $15,000 in property taxes. The difference is how fast the value of Park Slope homes have changed compared to Borough Park.  This means that the biggest tax savings inevitably go to homeowners who live in highly valued neighborhoods. 

Owners of co-ops and condos, particularly in Manhattan, are the biggest beneficiaries in the current system. As I mentioned earlier, because Class 2 combines these with rental buildings, the DOF draws their assessment from the income streams of these buildings even though they are dramatically different enterprises.  (There is also a large tax abatement on the books since 1996 that gives back as much as 25% of property taxes for co-ops and condos.)

In some cases this means that an individual unit in a co-op can sell for more than the entire measured property value of the building.  According to the same City Limit report, a couple of years ago a co-op unit in the UES sold for $54m while the entire building was valued at $41m. That co-op owner’s property tax was on 45% of $41m divided by how many other units there are in the building, minus whatever further tax abatement they were qualified for.

This means speculators can make a killing in this market segment.  It’s why so many foreign interests buy this type of asset (see my blog on the Panama Papers.) I’ve already spent a lot of blog space talking about how 421a distorts the real estate market by giving away tax benefits to high-end developers and their buyers.  You can see how that policy on top of this tax system effectively erases any tax liability for these high-end buildings, which lends itself to favoring speculation.

Let’s talk about why renters get screwed in this system. To begin with, based on the way the Class designation works, renters live in buildings with a higher tax burden than single-family homes and condos/co-ops.  Renters ($41, 262) also have less than half the household income of homeowners ($86,468) in NYC.  As a result, you have a higher tax burden getting passed to individual households with lower incomes, causing a higher relative tax burden on renters.

Renters also don’t internalize the property tax system as much as homeowners do, even though their rent does.  This leaves renters without any political power to change the tax system. Just as I discussed how market-rate tenants don’t organize with rent-regulated tenants, very few tenants organize around property tax reform – they don’t think it applies to them.  This allows a deeply unfair system to remain in place and it robs the city of much-needed and rightfully deserved revenue.

Beginning shortly after the system came into place in the 1980s, there have been efforts by mayors, the city council, and other advocates to reform the system. The problem here is that Albany controls the tax policy.  Specifically, it controls how the classifications are defined, what % of an assessment counts towards billable tax, what the caps are, and how any corresponding abatements apply. NYC can set the specific rates in each classification, but that’s it. 

There isn’t much political will to change this system currently because it means upsetting the powerful developer interests in NYC (who benefit from the high-end speculative market segment) or upsetting homeowner groups.  Without a unified renter effort, it is difficult to change the status quo.

What would a fair property tax system look like in NYC? A good place to start would be reclassification.  Homeowners should be in one class whether they own a single-family home or a condo. This would remove the grave disparities between single-family home and condo/co-op assessments as well as separating owners from renters altogether.  In a city that is majority renter, many of which are poorer, having a system that burdens renters unfairly is self-defeating.  

Second, matching the billable percentages in each class somewhere in the middle would bring an effective tax rate in line to remove differences between owners and renters.  Additionally, this could remove the tax advantages that fuel speculation on the high-end ownership market. This distorts land-use and prevents more productive and equitable development.

Finally, removing the caps on increasing property taxes in popular neighborhoods would allow the city to capture the proportional value increase that a homeowner garners.  Given that the city is providing the same, if not better services to warrant that increase, it is entirely reasonable to do so. If there is concern that a dramatic increase in property tax might be too much for a poorer resident, institute a case-specific means-testing increase rather than a blanket cap.

These are just some of the ideas that have been floated, but there needs to be political action taken to organize renters on this matter. If there is one commonality between all four of these sections it is that point.  Renters are a sleeping giant in New York politics.  If awoken and organized, they can reframe the economic and political policy discussions in the city and create an unprecedented period of innovation and reform that could benefit all parties in the city.

Unoccupy Occupancy Laws

The future returns (pinterest)

The future returns (pinterest)

NYC Housing Policy Tools Series

Over the next few weeks, as we prepare for the Trump Era, I will spend time on various housing policies in NYC in order to help frame the the affordable housing crisis.  I have picked four topics related to NYC housing laws: rent regulation, zoning, occupancy, and property taxes.  I concede that there are other policy tools that could be included (particularly around financing) but these four tend to have an immediate impact on the most people.  The hope for this blog series is to explain the current policy tool kit in New York, but also to show why questioning the underlying assumptions about housing policy might be able to expand it. 

Part 3 of 4: Unoccupy Occupancy Laws

No good deed goes unpunished and I submit NYC’s occupancy laws as a good example.  Before we get to that, it’s important to know how miserable live in New York actually was less than 100 years ago – loud, dirty elevated trains; waste-ravaged streets; overcrowded, dank tenements.  Urban life for most people would look positively barbaric to New Yorkers today.  Improved technology, greater public health awareness, and socio-economic shifts radically changed the built environment of NYC, but that all happened because of active governance.

Occupancy laws - a blanket statement for multiple-dwelling law and housing maintenance law - from the first several decades of the 20th century reshaped how New Yorkers lived for the better.  The famous tenements of the Lower East Side made it one of the densest habitats on the earth, ripe with disease, malnutrition, and other physical dangers.  The city simply couldn’t sustain such a careless and inhumane growth trajectory.  

Progressives of the time created our modern occupancy laws to protect individuals and families from economic and environmental exploitation while protecting the broader public body from gross health and safety risks.  They did this by passing laws requiring basic amenities like natural light and windows, guaranteed heat and water, sanitary bathrooms, fire escapes, and other things we take for granted today.

Modern urban life would be intolerable, even impossible, without these types of far-reaching policies.  We are so accustomed to certain benefits of government intervention like this that we forget how necessary it was – and is.  Our private lives are vastly improved by sound public policy.

However, a byproduct of that amnesia is the slow, deliberate shift in our public policy from inclusive public good to exclusive private gain.  Here’s where the good deed of occupancy laws gets punished.  

NYC used to have a staggering variety of housing options.  Single residency occupants (SROs), boarding houses, and long-term hotels, private room rentals – all allowed residents across any income spectrum options to live affordably, if not luxuriously. These types of housing also fostered a deep, shared connection and sense of community, particularly among immigrant populations and transient workers.  This type of social capital was the bedrock of American society and kindled its economic progress.

Starting in the late 1950s, and especially in the 1960s and 1970s - when the city faced the crippling social and economic effects of deindustrialization – incumbent residents organized against these types of housing.  Some of this trend is an understandable, if ultimately uncompassionate, response to increased drug and criminal activity.  Neighborhoods didn’t like having SROs and boarding houses around because they were housing-as-last-resort for many disabled or addicted New Yorkers.  The corresponding social problems could have an economic cost to property values (though there isn’t much evidence of this.)

These residents responded by advocating for and succeeding in changing occupancy laws.  Most SROs and boarding houses were officially outlawed and have utterly disappeared over the following decades.  Renting out private dwellings – like basements and attics - was radically cracked down on.  Minimum room sizes and unit sizes were enacted. And finally, in 1987, apartments were no longer allowed to be constructed without full kitchens, bathrooms, and at least 400 sq. feet of space.

I’ve already discussed how rent laws and zoning laws have empowered the housing crisis, but occupancy laws are just as important.  When the city began its steady rebound by the 1990s, it didn’t have the housing flexibility it used to have during previous boom periods and we have all suffered as a result.  I believe the current and future demographics of NYC strongly indicate that an economic incentive does exist for amending our occupancy laws.  There are two broad trends that support this. 

First, a lot of New Yorkers live alone.  In 1960, 185,000 New Yorkers lived alone - today it is 1.8 million.  The housing stock is simply not designed for that type of isolated living.  We often lament the fact that too many commuters drive alone to and from work, clogging the roads and polluting our environment. I would argue that one person taking up so much space and resources is a similar economic and environmental ill (not to mention the impact of social isolation and loss of social capital).

Second, New Yorkers (like the rest of America) are aging.  1 in 5 Americans will be 65+ in twenty years and already 20% of New Yorkers are - up from 12% in 2000.  The cost of supporting an older population in isolated, dispensed homes is already causing panic in many health policy circles.  NYC is not prepared for this at all.

I should speak for a second on two related trends – Airbnb and shared housing.  Airbnb has gotten into trouble for violating many occupancy laws, but the primary one is having a non-resident live for less than 30 days in an apartment. They grossly overplayed their hand and have eaten crow in NYC (and other cities) but the basic problem for them is that their model turns a residency into a hotel. I don’t think amending occupancy laws should support this model at all.

Shared housing is sort of a niche millennial market at the moment with some notable big players toying with it.  It’s a sound concept and one in sync with many of the principles we share at homeBody.  The problem with shared housing in its current iteration is its limited reach and appeal.  It is prohibitively expensive to join one of these living arrangements.  Part of that is simple economics - marketing to a well-identified audience - younger, wealthier tech savvy workers who are more open to shared living experiences. But part of it is also practical reality – they have to work within a narrow lane of occupancy laws. 

This is also true of micro-apartments, an en vogue idea that has some sound concepts but relies, fatally in my opinion, on the status quo of occupancy laws.  To date, I don’t know of any efforts of these organizations to lobby for changing occupancy laws, but they would be strong partners to help.

I believe we should amend occupancy laws to encourage a return to more flexibility in the housing market.  Shared housing, micro-apartments, SROs, senior housing, combined-housing (different non-related demographics sharing) are all ideas that have succeeded in the past and are currently succeeding in small amounts in NYC and elsewhere. 

If someone new to the city/country wants to live closer to a job downtown cheaply and doesn’t mind sharing a bathroom and kitchen, why not? If a student wants a cheap (or even free) place near school that includes living with senior citizens, why not? If several families want to pool resources and share space, why not?

Experimenting with occupancy seems to me like a cheaper public policy tool than tax incentives (which we’ll cover next week) and a more equitable policy tool than current rent laws. This is not to say the basic public good initially ensured through occupancy laws should be relaxed – healthy and safety standards can be protected while still introducing more innovation.  This is a vastly under-explored topic that should get a fair shake in public policy discussions. Remembering why these types of laws were passed originally is a good start.

How to Use Land

Don't worry, it makes sense to someone (reversezone)

Don't worry, it makes sense to someone (reversezone)

NYC Housing Policy Tools Series

Over the next few weeks, as we prepare for the Trump Era, I will spend time on various housing policies in NYC in order to help frame the the affordable housing crisis.  I have picked four topics related to NYC housing laws: rent regulation, zoning, occupancy, and property taxes.  I concede that there are other policy tools that could be included (particularly around financing) but these four tend to have an immediate impact on the most people.  The hope for this blog series is to explain the current policy tool kit in New York, but also to show why questioning the underlying assumptions about housing policy might be able to expand it. 

Part 2 of 4: How to Use Land

Unlike rent laws, zoning laws in NYC fall under the city’s purview, which makes them a very popular and powerful tool for its elected leaders.  Mayor Bloomberg rezoned nearly half of the city during his administration and Mayor de Blasio passed two significant inclusionary zoning plans earlier this year.  However, everyone from radical libertarians to the Obama Administration have criticized zoning regiments (in NYC and other cities) for being a major factor in the affordable housing crisis. 

The appeal to local elected officials is easy to understand – zoning can steer public policy in a certain, albeit ambiguous direction while enticing the private sector to pay for it.   It has the rhetorical promise of revitalization and the practical guarantee of profit – just the type of policy-win with little immediate political downside that an elected official covets.  

This also shows the central problem with modern zoning as a public policy tool.  It outsources too much public policy to the whims of the private sector and special interests and has many clumsy side effects that undermine other public policy goals.  

Zoning has become an incumbent-favoring, technocratic process that focuses on incremental adjustments rather than strategic objectives. To be fair, the latter is what the process was designed to do because urban planners, particularly in NYC, ignored public input and caused massive, lasting damage to many neighborhoods in the middle of the 20th century.  But rather than understand why we need zoning or question what we want zoning to accomplish, participants have lost sight of the larger opportunities it presents.

There have always been ‘natural zoning laws’ in every civilization dictated by the same impulse that drives real estate now – location, location, location. New York City became a trading powerhouse in the 18th and 19th centuries because it had a deep, safe harbor with a long coastline.  Industry naturally developed around the North (now Hudson) River and East River because there was quick, cheap access to shipping. Merchants and financiers centered close to the ports, which is why Wall Street formed where it did. Immigrants settled in the Lower East Side because it was close to port and trade jobs.  Wealthier residents built large estates further north to escape the smells and disease-incubating congestion of the downtown. You can trace any city’s development along similar economic activity driving locational decisions.

However, since Manhattan is an island, people started running out of space for building things.  That scarcity created more competition for land-use and more thoughtfulness about what should go where.  It also created the economic rationalization for taller buildings (more on that in our next section.)

This made New York City the first major city to enact zoning laws in 1916. Perhaps surprisingly, public health was the primary motivator and political justification. People recognized the risks to placing intensive industrial factories next to residential quarters, and they worried about newly created skyscrapers blocking out the sun and fresh air from vast swaths of city streets. The first zoning laws attempted to address these concerns by separating types of land-use and limiting the scale of a building on its lot. 

Our current zoning laws are based in on the 1961 plan, which firmly separated land-use into residential, commercial, and industrial areas. It gave some incentives for higher density in commercial and residential towers, but largely instituted low-density everywhere else. That means that much of the city outside of Manhattan and parts of Queens and Brooklyn, is low-density and car-dependent.  It means that virtually the entire the city is extremely segregated by land-use type, which has exacerbated racial and social segregation. It also means that much of our policy framework on zoning remains tied to 60 year old assumptions from when the city was still an industrial, blue-collar economy.

In short, we have a highly-technical, complex process built on outdated or entirely irrelevant policy thinking.  There have been some periodic reforms of our zoning laws, most notably with the introduction of the bottom-up ULURP process as a reaction to top-down urban renewal programs.  Mayor de Blasio’s experience with his Mandatory Inclusionary Housing and Zoning for Quality and Affordability plans show how difficult it is to even tweak the margins of the process.  But the plan also shows how lessons learned from the previous zoning mindset can create better policy today.

However, it is unlikely that there is enough political interest in writing an entirely new zoning plan for NYC.  The public and private centers of power in the city are too invested in the current process to willingly allow such a dramatic shake up.  Though the system seemingly allows for public input and can indeed slow down major developments, a highly connected and well-capitalized private interest can still get what they want in the end.  This type of gaming isn’t altogether shocking or even wrong. Preventing the process from working for a broader public good is.

If we could rewrite a 2017 Zoning Plan, what then would it look like? First, we would absorb the lessons of the 1916 plan – public health should be a major consideration of zoning.  Second, we would absorb the lessons of the 1961 plan – what type of public infrastructure are we designing to serve the city? We are a post-industrial city, so what does that require? Finally, we should think bigger than before and ask new questions – what do we want our city’s civic identity to be? The public good must stop being an empty rhetorical concept and become the starting point for anything in the built environment.

Here are just a few quick ideas that have either been suggested or should be suggested already:

Public Health

  •  Transit Oriented Development zones should have as-of-right double density within 15-min walking distance of the 470 MTA subway stations.
  • Density bonuses for giving funds or expertise to designated public projects for parks, hospitals, emergency services, or elderly services.
  • Inclusionary housing requirements expanded to include options for elderly, disabled, or homeless facilities.

Public Infrastructure

  • Community District quotas for public infrastructure – waste management facilities, MTA outposts, public schools, homeless shelters, etc.
  • Mandatory funding for climate resiliency to develop in potentially threatened neighborhoods.
  • Mandatory multi-purposing for public buildings – combining new schools with retirement centers, police facilities with social services, etc.

Public Good

  • Require mixed-use zones for commercial and residential developments, with small-business support bonuses.
  • Rezone existing areas for mixed use and encourage redevelopment of old infrastructure along mixed-use policies.
  • Minimum requirements for affordable housing units in every Community District based on census track per capital income and means-testing.

No, Rents Are Not Falling in NYC

The rental landscape in today's NYC (archdaily)

The rental landscape in today's NYC (archdaily)

Even though the nation is in the midst of an unprecedented affordable housing crisis, and that 50% of New Yorkers are rent-burdened, it’s entirely unsurprising that the media seizes upon news about falling rents instead.  This is how the media covers housing and it’s almost always wrong.  One of the immediately obvious problems with the recent spate of articles about “Rent In New York Is Falling” is that it isn’t true. 

Well, not entirely true.  A more accurate title would be “Some Rents In Some Parts of New York Are Sort of Falling” but obviously that lacks click appeal.  I’ll get into the numbers in a moment but most of us shouldn’t get our hopes up anytime soon.

These types of articles are examples of my frustration with how the real estate market is covered in the media.  Frankly, I have never liked the language we default to: Real estate is property as an asset. Housing is structure as a shelter. Of course there is strong overlap in the rental market, but we shouldn’t conflate the two experiences. In some of my previous blogs (here and here) I have talked about the difference between this confusion in terms of  “asset market” and “shelter market” but generally the media doesn’t make that distinction.

This failure leads to our constipated conversation about housing policy. It also leads to false articles about rents falling.  From the perspective of a small segment of the real estate market, this might be true right now. But from the perspective of housing in general, for most renters, this isn’t true at all.  Too often the media internalizes the narrative of the asset market at the expense of addressing the broader, more troubling narrative that is the affordable housing crisis.

The recent pieces about rent falling are a good example.  They stem from monthly reports from Streeteasy, Douglas Elliman, and Citi Habitats showing that in October and November rental prices went down slightly in Manhattan, Brooklyn, and Queens and vacancy rates crept up slightly in Manhattan (from 2.02 to 2.11) compared to last year.

The media coverage of these reports have failed to provide context for this data (even though each report does.) The reports are designed for asset market participants – investors, brokers, leasing directors, etc - and are intended to be snapshots of certain sections of the market as opposed to a comprehensive view.  Most people following these closely understand that, the general public might not. There are obvious problems with the media failing to clarify.

First, these reports don’t track all rental data in the city. They only cover Manhattan and Brooklyn (Douglas Elliman covers northwest Queens too.) Even that’s misleading. Though most reports cover a decent amount of Manhattan neighborhoods, only a handful of the tonier Brooklyn neighborhoods are tracked. Drawing conclusions about the NYC market from these reports that cover less than a quarter of city neighborhoods is clearly absurd.

Second, the lowering numbers in these reports are exclusively centered around the luxury market – the sleek glass towers popping up in downtown Brooklyn, LIC, and parts of Manhattan.  Although it is a heavily capitalized and flashy segment of the market (and represents virtually all of the new-build data in the city) it still represents a small fraction of rental transactions overall.

Undoubtedly this market is softening and will continue to. The sheer volume of new inventory (either currently on the market or coming soon) was bound to impact prices in this segment.  It’s the closest the city has to an honest-to-God rational supply and demand relationship. There are simply too many units and not enough renters at these current price points.

But does that signal some crash on the horizon as some people in the media are wondering? No.  During the last housing crash in 2008, thousands of finance jobs were lost in the city, which caused a considerable rippled effect across much of the rental market. That level of economic upheaval hasn’t happened and doesn’t seem likely in the immediate future (not to say there isn’t risk of a slowdown of course.)

But even in 2007-2009 a lot of the housing market remained largely unaffected.  A longer look at the data shows that some rents at the upper-end of the market hit a bump during this period while the rest of the market continued to climb after a brief slowdown. Much as we’re seeing right now, the asset market fluctuates as any market is supposed to in relation to the rest of the economy. 

However, the shelter market hasn’t responded that way and remains under considerable, sustained pressure.  Even if prices continue to dip on the high end of the market, that won’t help most renters in the shelter market for three reasons.

First, even a dramatic short-term fluctuation won’t change the fact that those rents are still too high for most New Yorkers and will only go up considerably at some point in the future. Maybe a few types of young professionals will get a good deal on in new building right now (more power to you), but most renters aren’t in a position to capitalize on the softening.

Second, the type of housing flooding this market isn’t what most renters need in New York. The one-to-two bedroom lifestyle buildings packed with rooftop patios and gyms aren’t designed for families, older residents, working class immigrants, or most types of younger students/artists. 

Third, they (mostly) aren’t located in areas that make practical sense for many renters. Much of these developments are in areas rezoned by Mayor Bloomberg that were formally industrial centers that don’t have the typical infrastructure necessary for residential life – whether its readily accessible transit, schools and churches, or even simple bodegas.  That infrastructure might fill in eventually, but it doesn’t exist yet.

The affordable housing crisis is a national scandal. It exposes how poorly our institutions and policies have adapted to a connected, globalized economy.  Holding our leaders in the public and private sector accountable for these failures and finding new solutions to solve them should be what our media focuses on.  As 2016 has shown, our media is just as flat-footed as anything else.

Airbnb Forced to Squat in NYC

Will Airbnb get evicted from NYC? (pbs)

Will Airbnb get evicted from NYC? (pbs)

Last week, Governor Cuomo signed into law a bill making it illegal to advertise short-term rentals in the state of New York and outlined extensive fines for the people doing so. As a result, Airbnb, the short-term rental $30 billion unicorn, has filed a federal lawsuit to stop the bill.  At stake for Airbnb is its largest single domestic market in the US (over $1b in revenue annually) and possibly more. How has it come to this and what will happen next?

I’ve written extensively about Airbnb and what I see as the pros and cons to the service.  It’s complicated to say the least. But I have no love for how the company has operated in New York. They set themselves up for such a dramatic (and expensive) loss.

The majority of business activity conducted on Airbnb has been illegal since 2010. That’s the basic premise to understand here, and what Airbnb knew from the get-go.  You can argue if the state should care if you rent your apartment or room for under 30 days or not, but that’s what the law currently says. Airbnb chose to ignore that, to lobby to relax some of those regulations, and half-heartedly crack down on egregious bad actors on the platform.  

They wanted to shoot first and ask questions later, much like Uber did initially, which was an obvious template as a business strategy to enter NYC.  The thing is, Uber eventually came around and played ball with the state and the city.  You have to be a TLC certified driver on Uber.  That was a big, undesirable concession that Uber chose to make. 

Airbnb didn’t seem to learn that lesson and continued to stonewall the state on data sharing even as Attorney General Schneiderman's 2014 report showed that 72% of listings were illegal. (Jared Meltzer, the NY public policy leader for the company, used to work for Schneiderman.)

So two years ago, Airbnb had a choice to make.  They could make some concessions (such as voluntarily removing ‘professional’ hosts – people renting out multiple properties for extender periods of time - or share data and crack down on bad actors) or they could holdout and hope the tide turns in their favor.  The basic economics were clear – the majority of the company’s revenue in the city came from such professional listings.  They followed the money.

They also made political mistakes by ignoring legitimate concerns from housing advocates and local politicians.  Their PR strategy was to demonize any resistance to Airbnb as being in the bag for the price-gouging hotel industry.  The hotel lobby is a powerful and rather unsympathetic special interest group, one that certainly lobbies hard against Airbnb, but the company was wrong to dismiss the concerns many New Yorkers have about affordability in their neighborhoods.

As a result of this strategy, it became an all-or-nothing situation and they lost.  Now, they have to turn to the courts with great uncertainty about the possible outcomes.

Airbnb stakes its legal defense on two points: first, under the Communications Decency Act, Internet companies can’t be held responsible for any content published on its site by its users and, second, the law also violates the company’s and its users’ First Amendment rights. 

The problem for Airbnb is that the law doesn’t hold them responsible – it fines the hosts posting their listings.  It doesn’t actually block anyone from using the platform; it just raises the stakes to use it illegally.  A First Amendment case also falls into dubious grounds because the state isn’t blocking any form of communication for the company or users; it’s just preventing postings that violate other state laws.

The other challenge for Airbnb will be how to make the case that their business doesn’t rely on others violating other laws.  If 72% of their NYC business was in fact illegal, it’s hard for a court to find an unfair hardship.  Does Airbnb bring a separate case against the state on those occupancy laws? Doesn’t it kind of have to?

This isn’t an isolated case for Airbnb, either.  They are under fire in several cities in the America, including their hometown, and in other countries.  The stakes couldn’t be higher for the company.  At some point they have to alter this model significantly and/or alter a lot of local laws.

It’s a shame that Airbnb resisted reasonable attempts at compromise with New York.  When it seemed clear that Governor Cuomo was going to sign the bill into law, they made an 11th hour attempt to do so, but it was too little too late.  They have not made enough friends on either side of the aisle in Albany.

They also assumed, incorrectly, that “average New Yorkers” would universally support the company.  They clearly misread or ignored the impact the affordable housing crisis is having on those average New Yorkers. Whether Airbnb actually harms housing affordability is difficult to determine (short answer, yes, but only in a few neighborhoods) but even the perception of a company damaging the affordability of the city is enough to turn off a lot of New Yorkers. It was hubris not to understand that.

That’s not to say that the courts won’t find some middle ground for the company and the state/city to go back to the drawing board over.  There clearly is some compelling argument for this type of economic activity for New Yorkers and there are enough New Yorkers who were using the platform legally that now might be thrown into legal limbo as a result.  It's easy to see where the court would argue that the law is an overreach

Whatever the result is, it won’t be good enough for Airbnb. Their entire business model is based on the revenue generated from the professionalization of their hosts.  They need more of those hosts renting more rooms for more nights if they want to justify their investor’s expectations.  That simply won’t happen if the company has to rely on hosts listing their spare room once or twice a year. 

I’ve said before that I think Airbnb is a great small idea, but a terrible big idea.  Someone renting out their kid’s bedroom now that they have moved out or a couple renting out their apartment for a weekend once a year hurts no one.  But once you take giant amounts of venture capital and have to grow exponentially to justify it, you have to chase the bigger sources of revenue.  You have to hope that neighborhoods turn into permanent hotels.  So far, that seems to be a losing strategy. 

Harlem and the Definition of "Neighborhood"

Langston Hughes in Marcus Garvey Park (lawrencejournal)

Langston Hughes in Marcus Garvey Park (lawrencejournal)

NextCity had a piece recently about local artists and community members attempting to preserve the home of poet Langston Hughes in Harlem. One of the beacons of the Harlem Renaissance, he lived on 127th Street in an unassuming brownstone. The writer’s house has been on the National Register of Historical Places since 1982. It has also been on the market since 2003 (then listed at $1m, now it is at $3m according to Streeteasy.) The groups attempting to save the home have not been able to raise that kind of money and its future remains uncertain.

The attempt to preserve the Hughes home offers an opportunity to discuss a larger set of questions: what is a neighborhood and who gets to define it? Every neighborhood (in this sense, the arbitrary physical boundaries) has three constituencies that contest its definition: the past, the present, and the future. How these ‘groups’ interplay, overlap, and evolve create a neighborhood’s sense of itself and its direction. It’s rarely simple or stable. Harlem is a stark example of this.

Harlem is experiencing the same development and displacement pressures that many neighborhoods are in New York City. What stands out about Harlem, and why Langston Hughes home is so important, is its unique identity as a center of Black American culture. Indeed, this is likely an attractive quality for many developers and new residents. However, Harlem was “black” and most new residents are not.

The deep, challenging questions here offer no easy answers and no clear policy prescriptions. How can we preserve the history of Harlem in the face of rapid economic growth? How can we preserve the present-day identity? Can its current residents benefit from the arrival of new residents or is it a zero-sum game? Is Harlem merely a historical center of Black culture or does it still have a role in modern Black culture? What about the future of Black culture? Does it need Harlem? What about the future of Harlem? Does it need the old Harlem or the current Harlem?

I recognize that it’s problematic to write about any group’s culture or community as an outsider and I want to make clear that I don’t, and definitely can’t, speak for or about Black culture with any direct experience or deep knowledge. And some of those questions are more anthropological than what I’m discussing today anyway.

Regardless, I have always appreciated the role that Harlem has played in the history of America, how it has, perhaps uniquely among American neighborhoods, represented a practical as well as symbolic hope for many Black Americans, particularly during the Great Migration.

It is a neighborhood that embodies the duality of the American experience — on the one hand it is a product of the heights of opportunity found in America, whether through business, artistry, or spirituality. On the other, it’s very existence, always conditional, was a product of the basest impulses found in America — racism, economic exploitation, and systemic neglect. I struggle to think of a single other neighborhood that so concretely calls this complexity to mind.

The singular role Harlem has played in New York and American history is unquestionably worth preserving. As in the case of Langston Hughes’s home, the physical locations where people and events shaped our history are living memorials to, and also living connections with, those people and events. We need these physical reminders to understand the broader ideas that those places reflected and produced.

But historical preservation has costs — for the owners of designated buildings, who lose out on the economic potential of the site, to the city for monitoring the process and removing potential tax revenue, and to the residents who potentially see higher housing and development costs, particularly if an entire neighborhood is listed.

It is also true that historical preservation can be used as a political weapon against development for those who are connected and savvy enough to do so. Harlem residents have been late to that game, but over the last 5 years have been attempting to catch up. There are 9 proposed historical districts in Harlem currently in some stage of planning or review (in addition to the two currently recognized historical districts in Sugar Hill/Hamilton Heights and Mount Morris Park.)

As a history nerd and an urbanist, I am perpetually torn between the instincts to preserve and to create. We are dangerously ahistorical in America, which pollutes our political discourse. Preserving physical history is only a small part of addressing this issue, but it is critical.

But we can’t live in a museum, either. Harlem is a living entity that has an equally bright and complicated future ahead of it. Preventing any further growth will only increase the pressures of gentrification, which do nothing to help the plight of current residents.

It’s easy to picture Harlem as some sort of West Village North in a generation by following this path. Preserving the historic look of Harlem becomes more about rewarding the owners of those properties (and future owners who can afford the increases in value) rather than preserving the history those properties created and witnessed.

There are plenty of people that don’t see a problem with that. Capital should flow where it has the most potential to grow, they say. This is a healthy product of a capitalist system, they say. And it’s true that a neighborhood left alone in the market will inevitably be defined by which constituency (the past, present, or future) has the most capital. That isn’t always the future and it isn’t always pro-growth. But is that what should define a neighborhood in the end?

Ideally, in the case of Harlem and New York City, you’d be able to balance all three constituencies. You’d have a more balanced economy that brought opportunity at all levels of income. You’d have a more dynamic housing market that decreased rent burdens across the city and allowed more diversity of housing in a given neighborhood. You’d have the ability for people to climb economically while still living in the same neighborhood and still being stakeholders in its future. You’d have room to preserve a neighborhood’s history, physically and socially, while allowing for growth and evolution.

We’re a long way from those scenarios. And there will always be trade-offs even in the best of circumstances. Maybe Langston Hughes’s home is bought by someone who wants to turn it into a museum. Maybe a family who wants to live there for the next 50 years buys it. Maybe it’s bought by a developer and eventually demolished for a Whole Foods. What would be the best or worst outcome? I wish that there were simple answers.

New York is an old city and Harlem is an old neighborhood. The diversity of architecture and landscape, the diversity of people and ideas, sounds and smells, are the products of the hard-fought, ceaseless passage of time. It takes decades, even centuries, to build up a neighborhood and a collection of neighborhoods. 

Surely what Harlem ‘was’ one hundred years ago would shock people who had lived there before that time. What Harlem became in the 1960s and 1970s would shock the leaders of the Harlem Renaissance like Langston Hughes. What Harlem is becoming today is perhaps shocking for many people who have lived there for a long time. What it could become tomorrow might shock even the newer residents. Maybe that’s unavoidable. Maybe it has to be. 

Langston Hughes grappled with this problem as well. “Let America Be America Again” sums up the realistic and aspirational views of a neighborhood, or even a country, that is perhaps forever changing while forever failing to change enough:

O, yes

I say it plain, 

America was never America to me,

And yet I swear this oath;

America will be!