Governor Cuomo

3 Reasons Local Landlords Should Support Stronger Tenant Protections

(@homebodynetwork)

(@homebodynetwork)

Cynthia Nixon, the former actress and longtime public education advocate who is mounting a primary challenge to Governor Cuomo, announced a progressive housing plan that continues her disciplined assault on the governor’s dismal track record from the left. The plan, called Rent Justice for all, outlines many long-sought after reforms to protect renters across the state. A few real estate publications, including the Real Deal, have been quick to point out that landlords won’t like it.

I think this is partially true. Some landlords will absolutely hate these proposals and many of those landlords are quite powerful. However, I’m here to argue that I believe there are other landlords that should welcome stronger tenant protections — the majority of landlords, in fact.

Small, local landlords own more than half of the 2.18 million rental units in NYC and most have very little in common with bigger developers, publicly traded property management companies, or private equity firms that have flooded parts of the NYC market. However, small landlords don’t come close to having the same political power, which often means their interests are ignored or actively subverted.

Despite this contradiction, these more powerful interests continue to successfully flatten the perception that all landlords are the same homogenous blob (buffered by the generally uncritical real estate press in NYC). This narrative is obviously false, but big developers and Governor Cuomo trade in it freely. For example, the Governor’s Affordable New York plan does nothing for small landlords and gives away millions of public dollars to major developers (while failing to provide enough actual affordable housing).

This narrative maintains the strict landlord vs tenant political divide that feeds the toxic decades-old political status quo in New York: A small contingent of highly dedicated tenant groups fight to maintain tenant protections while the affordable housing stock slowly disappears. Small landlords get squeezed. Big developers get more tax concessions and rezoning opportunities. And the affordable housing crisis continues on unabated.

Breaking this toxic political status quo is the first step towards addressing the affordable housing crisis on a meaningful level. Housing advocates can start by rejecting the narrative that all landlords have the same shared interests and recognize that small, local landlords are hurt by this dynamic too.

We must do more to convince small landlords that they have more cause to work together with tenants. There is no meaningful solution to the affordable housing crisis that doesn’t incorporate small landlords and doesn’t make it easier for them to operate. As Matthew Desmond points out in his Pulitzer Prizing winning 2016 book Evicted, 3/4 of all affordable housing in the US is provided by small, local landlords. We must make the argument that these landlords will benefit from stronger tenant protections.

In previous blogs, I have written how I think a universal rental control could work, but to sum up quickly, I stress that it would not represent a simple extension of the current system (to be clear, I support the measures in Ms. Nixon’s proposals but think they must go further). It would be an entirely new system that would also need to offer more diversity in housing options (from co-living to senior living) and would absolutely involve trade-offs that no doubt would appear to be painful, particularly for some older rent controlled tenants. Measures to protect these tenants would have to be included (preferably with federal aid). Clamping down on the small minority of tenants that abuse the current system would also be a necessary step as part of a new system. This is no small task and I understand that many readers will be skeptical of even engaging in this discussion.

That being said, the first step in a larger reform is making the easy argument that small, local landlords will have more success by working with tenants rather than bigger landlord interests. Here are three reasons why I think this is true:

1. Simplifying compliance reduces costs and hassle

It is no secret that managing multiple classes of tenants makes compliance more challenging for small landlords. Many of these types of owners are landlords as a second source of income and are not professionally trained or resourced. This invites a lot of mistakes that can turn into costly problems that hurt both parties.

Having all renters fall under the same level of protection would remove a number of the steps that most small landlords trip over. Rather than having to follow every evolving law, loophole, MCI exemption, or annual RGB guideline and see how that impacts certain units, both sides would know exactly what to expect and what is required under a universal system.

A system where protections are offered across the rental landscape for every unit would potentially alleviate a lot of the tensions between rent stabilized tenants and landlords, particularly on fixing infrastructure within units. Much of the distrust that arises between both parties comes from a landlord’s reasonable need to make upgrades to a unit and a tenant’s reasonable fear that this will trigger a rent increase that may lead to a larger decontrol. Without the fear (and perverse incentive) of vacancy decontrol and bonus, both sides can operate in good faith.

It could also offer tenants more options. In many cases right now, landlords and neighbors change while a rent stabilized tenant remains. In a classic example, a tenant might age while their neighbors get younger. This might not be the ideal environment for that tenant, but moving to a better-suited location is virtually impossible financially. Knowing that a system is in place that could provide a similarly priced unit (again, presumably with some federal or state aid) with similar long-term protections could make moving more attractive.

2. More tenant protections mean fewer expensive eviction processes

Eviction is an ugly, painful process for all parties involved. However, the loss of shelter is simply nowhere near the loss of rental income. Greater tenant protections mean more resources to keep tenants in their homes — and to keep the rent checks coming to landlords.

This is already happening in NYC. Mayor de Blasio signed a Right to Counsel bill last year that guarantees tenant legal aid in housing court. These resources mean that fewer disputes will lead to evictions (which could save the city $320m a year). Intervening earlier in the cycle gives the tenant more opportunity to receive the necessary help to maintain good standing with their landlord.

No doubt there are bad actors in real estate (more on that later) but for the most part, small, local landlords aren't; they don’t have the resources for a lengthly eviction fight and don’t want it to get to that point. Landlords also generally don’t want to kick people out of their homes outside of the most extreme cases. They want peace and quiet.

More resources for tenants means a greater ability to intervene at critical junctions when a tenant may be at risk of falling behind on rent payments. Every landlord can support a process that appeals to their humanity and their bottomline.

3. Discouraging bad actors from the market opens up space for more local landlords

One of the biggest, if perhaps abstract, benefits of universal tenant protections to small, local landlords would be the shift in the market that would transpire over time.

The vast commodifcation of the American housing market caused the Great Recession. Instead of solving that crisis by reducing the incentives to speculate on homeownership, the economy has morphed into exploiting rental housing.

Large investment companies, private equity firms, and foreign capital all compete on small-scale properties in NYC. It’s difficult information for the casual observer to find, but, particularly in neighbors facing displacement concerns, these entities are forcing out small landlords who are often local, community-connected operators (which is why I have been stressing the ‘small, local’ modifier.)

The idea that the best, highest use of capital is virtuous on its own merits doesn’t hold up when you see the practical implications of this trend in housing. In many neighborhoods across NYC, poorer residents (many of them minorities) are being replaced by wealthier (largely whiter) residents. (This is a particularly shocking reality in California as well.) Many of these properties sit vacant as investment shields or as Airbnb cash cows.

NYC is already one of the most economically stratified cities in North America. Continuing this trend (which mirrors other trends of disinvestment in public institutions and local infrastructure) is simply not sustainable. The long-term viability of the city, let alone a given neighborhood, is at risk if it is simply closed off to all but a select wealthy population.

NYC is a city of immigrants, entrepreneurs, and artists — many of them start out poor. Many of them start out renting from small, local landlords. This can not end.

I will continue to advocate for more public housing and alternative forms of ownership, but I also believe that the private market must play a central role in property management in NYC. But this must be in the form of local landlords. New Yorkers should be able to cycle into ownership and renting in their communities. As housing advocates, we must acknowledge the importance of local landlords and reach out to them as allies.

Cuomo is Full of It On NYCHA and Has Always Been Full of It On Housing

They haven't aged well (nymag)

They haven't aged well (nymag)

Governor Cuomo is apparently shocked, shocked that NYCHA is crumbling. He has spent the last couple of weeks visiting a few buildings, surrounding himself with cameras, taking shots at Mayor de Blasio, and touting his resolve to bring in more state money. No doubt this money will help residents who have been suffering greatly this winter and beyond, so it is welcome, but the fact that these trips represent the majority that the Governor’s has made to a NYCHA property since he took office in 2011 should tell you all you need to know about his commitment to public housing. The truth is, Governor Cuomo has always been a cynical opportunistic when it comes to housing. He’s built his career on it and hopes to carry it all the way to the White House (he won’t.)

Cuomo rode his name to the top of HUD and then abandoned it’s legacy

It is one of those obvious things that gets lost over time, but Governor Cuomo is Governor Cuomo largely because his father was Governor Cuomo. The son worked on the more popular father’s campaigns and what he lacked in his father’s robust liberal principles, he made up for in sharp insider elbows.

It was housing where Andrew stepped out from his father’s orbit (as much as you would want or need to when your father is a popular governor toying with the presidency) by setting up a non-profit, Housing Enterprise for the Less Privileged (HELP). The organization did good work then and still does today and I make no suggestions otherwise, but its clear that Cuomo saw housing as a means to score liberal cred while building relationships with powerful developers, a play he has repeated many times since.

This cred led to a position under Mayor Dinkins (where he came into contact with future nemesis Mayor de Blasio) as chair of the Homeless Commission where he backtracked Dinkins housing-first policy goals and claimed that homelessness was a “human” problem not an economic one. 

After Dinkins lost re-election, this “tough thinking” led to a position in the Clinton Administration as an assistant secretary at HUD. His father’s legacy as a working class ethnic liberal from the northeast made his son an easy choice for the southern, conservative Democrat. Both were cynical politicians fluent in empty gestures.

Contrary to his father’s robust liberal legacy, Cuomo’s record at HUD is very similar to his later record as governor — lots of big talk, lots of press coverage, some decent ideas, but little follow-through that would challenge powerful interests in finance or politics. 

He became HUD Secretary in 1997 (Mayor de Blasio was hired to run HUD in NY-NJ) and served till the end of Clinton’s administration very much in the fashion its neoliberal triangulation that has haunted the Democratic Party ever since.

That triangulation helped lead to the Mortgage Crisis in 2008, which Cuomo played a role in creating. While half-heartedly warning against lowering standards for mortgages and against the rise of pernicious lending practices, he raised the benchmarks for banks and Fannie/Freddie to issue more mortgages to lower-income households that the agencies ultimately couldn’t back when the market tanked. Some have argued that he is more responsible for the crisis than any other single person. That might be a stretch, but he has never accounted for his role in the crisis.

He also did nothing for public housing. This is partly because the Clinton Administration embraced homeownership over rental assistance, which itself was very much a bi-partisan standard given the general dominance of conservative ideology during the era, and also because the Clinton triangulation required the deconstruction of the welfare state. Along those lines, public housing was seen as a place people needed to be moved out of, not into.

There were positive efforts to address extremely distressed public housing during the Clinton Administration, but much of it occurred while Governor Cuomo was assistant-secretary in community development. Those efforts lost steam when he became Secretary, despite his claim otherwise

For the most part, HUD abandoned the mission of public housing and oversaw the destruction of many public develops and the withering away of funding for remaining ones. Cuomo didn’t cause the current crisis in NYCHA, but he did nothing to stop the squeezing of federal funds that has crippled it. He has also never accounted for this legacy.

The governor has always been a generic product of the political times he exists in and his effort to promote homeownership (a disaster that both parties were guilty of) along side the Clinton Administration’s dismal record on affordable housing, came at the expense of public housing funding and later the nation’s economy.

Then he rode his housing experience at HUD to Albany and abandoned that

His spotty record at HUD didn’t stop Cuomo from running for governor (again) on his housing cred and name, winning in 2011. Given that he ran on that experience, his subsequent disinterest in housing policy is even more egregious.

He could have used that experience, especially the lessons learned from the crisis, to become a major leader in changing national and state housing policy away from subsidizing homeownership and towards funding sustainable affordable housing by supporting NYCHA, rent regulation laws, and alternative housing policies like community land trusts. His campaign narrative could have turned into transformative, highly-experienced governing.

Instead, Governor Cuomo ignored housing issues. When he did have to address them, he was lukewarm on protecting let alone extending rent regulation laws and unquestionably friendly to subsidizing big developers. His big public talk always resorted back to closed-room deals with private interests. Not surprisingly, that’s why it costs taxpayers $400k–$600k per unit under the Governor’s affordable housing plan.

Governor Cuomo has also completely ignored NYCHA for 7 years. While threatening to declare a state of emergency for the housing authority (which would put its 178,000 homes under state control, bypassing the existing leadership in the agency and the city) and touting an additional $250m for the agency, he keeps reminding us all that the state has no obligation to fund NYCHA. Aside from the obvious shot at Mayor de Blasio, this statement shows on some level the Governor knows his lack of support looks bad. Because it is bad.

It also looks bad that the state had already approved $200 million for NYCHA but hasn’t allocated it. He had previously committed $300m in 2015 that hasn’t materialized yet either. This pattern of promising lots of resources for housing but failing to deliver them is a long-established habit. We should be extremely skeptical that these announcements will turn into funding that helps residents any time soon.

 We should also be concerned that these funds will come with strings attached. He has also already entertained the idea of bringing in private developers if he does declare an emergency. This would only reinforce the perception that for all his talk, he is interested in helping his powerful developer-backers first. Any help for NYCHA residents is welcome, overdue, and deserved, but the fact that we are left to wonder if, when, and to whom it will materialize is a scandal.

NYCHA faces a truly daunting list of challenges, some of which are entirely self-inflicted. But it is short $20 billion dollars in maintenance and capital costs. The Governor’s pledge, especially as the former head of HUD, is a sick joke compared to that.

And now he wants a promotion

Many people have noted that the timing of the Governor’s new found interest in NYCHA comes as he is preparing for re-election and a potential run for the Democratic nomination in 2020 thereafter. He knows Mayor de Blasio is unpopular in many circles (for some self-inflicted reasons, much like NYCHA) and hopes folks that haven’t paid attention to his own indifference for years will see his efforts now and line up to support him. It is an insult to New York voters, but it has worked in the past.

But it’s not clear that Cuomo will get much traction or credit for his intervention in NYCHA now (or how sincere he will even be in the long run). Residents know that as rough as they’ve had it under Mayor de Blasio, they haven’t gotten help from Cuomo. It won’t take much to remind them that Cuomo ignored them at two different jobs.

It will also be fascinating to see what the governor says about rent regulation laws which are up for renewal in Albany again next year. The annual Rent Guidelines Board meetings will be taking place over the next few months and we can expect many advocates to press the Governor on his position now. 

His record, as I’ve already stated, has been dismal. Expect him to tout his support for the laws and to mention his $20 billion five year plan for housing in the state but to angle for concessions to developers as he tried to get during the 421a renewal last year. It could blow up in his face this time.

This is because, after all these years of triangulation, the Governor is in trouble. He had a taste of this last year during the budget shutdown. Whatever he decides to do with NYCHA and rent regulations, he will alienate a key element of his re-election strategy. He needs Democrats, especially progressives, to back him (or at least remain divided), but he also needs his usual wealthy backers. There are few plausible scenarios where he can secure both.

The Governor has never had a strong constituency or political base either in NYC or outside of the city. He has relied on New York’s horrendous voter apathy and deep-pocketed developers to aid his re-election before. Now, however, in the Trump Age, progressives have woken to enemies within both parties and many are gunning for him on the left (even before former-actress, qualified lesbian Cynthia Nixon announced her primary challenge.) Even if he continues his cynical lurch left, very few progressives will buy it and many more voters will be paying closer attention for the first time.

Governor Cuomo’s record on affordable housing is clear. He has been at best indifferent and at worst hostile to policies that don’t include massive subsidies to private developers. Under his administration, help for public housing, rent regulation laws, and alternative housing models like community land trusts has been largely ignored, slow-walked, or superficially supported.

That hasn’t stopped others from acting in his absence, but the lack of leadership has been glaring given that his entire career is based on his alleged housing expertise. Trying to make up for years of indifference now might get him some press, but it won’t erase a career of opportunism around housing. That isn’t the only reason will never be president let alone the nominee in 2020, but it might very well jeopardize him even in 2018.

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.

 

Budget Process Continues to Expose Governor Cuomo

Different story this time around (cnn)

Different story this time around (cnn)

New York State is still without a budget and will likely remain so for the immediate future.  The Senate has left for its Easter Break, though the Assembly remains (unpaid) in Albany for now. They have collectively passed an emergency extender for two months, but there is a lot of bad blood circulating in Albany over why a budget agreement hasn't been struck.  As I laid out in last week's blog, the problem can largely be placed at Governor Cuomo's door.  Despite attempts to blame the uncertainty of the federal budget or the major differences between priorities in the legislature, the Governor can't distract anyone from his lack of leadership in a changing political landscape.  Housing shows why.

Given the affordable housing crisis gripping New York (primarily in NYC but not exclusively) major state action has been needed for a long time. Over the last few years, Governor Cuomo has happily stepped up to the microphone with grand proposals for addressing the crisis head on.  He has talked about turning JP Morgan settlement money over to homeless programs.  He has talked about reforming the controversial 421a tax program. And most famously, he has outlined an ambitious 20-year, $20 billion affordable housing plan. These grand promises were met with a lot of support, particularly from wary housing advocates.

However, almost none of these promises have been kept or even outlined in detail. Instead, we've seen the Governor feud with Mayor de Blasio by withholding state funds for housing. We've seen him spike a deal at the last minute on a revamped 421a plan the Governor himself proposed called Affordable New York. And we've seen almost none of the billions of dollars of funding called for in his plan allocated to affordable housing projects.

All of this posturing could be viewed as the Governor wielding considerable power over the political mechanics of the state, in a presumed ramp up to a 2020 presidential run. In reality, it has revealed a politician weakened in a new landscape, mired in his own contradictory impulses, and exposed for lacking a strong political base. Who is the Governor's core constituency?

The Governor has tried to please the strong downstate progressive element of his party in the Assembly while also trying to please the powerful, more conservative, developer interests aligned with upstate Republicans in the Senate. This balancing act works when the stakes are lower or when the issues are unrelated. 

The Governor can come out in favor of issues like gay marriage or anti-fracking because they don't impact developers' bottom line.  He can come out in favor of 421a reform, over the objections of many housing advocates, because it can be framed as an affordable housing mechanism even though it is largely a tax giveaway for large developers.

It doesn't work when those two worlds collide, which is what is happening over housing in budget negotiations. This budget requires some hard compromises on housing that simply can't match the Governor's promises to progressives and conservatives.  It doesn’t appear that the Governor anticipated the political environment he was entering, or at the very least, how this new environment would force him to make choices that he could previously avoid.

As of Wednesday, these negotiations have collapsed and state legislatures have walked away from the process without a deal. I don't want to suggest that housing is the only issue holding up the budget, but the issue shows how the Governor's leadership style has led us to this moment. 

Building housing in New York is difficult. Building affordable housing in New York is really difficult. These realities are partly structural - there are so many local variables, policies, and market forces that clash with each other that its nearly impossible to streamline a single affordable housing initiative. But these realities are also political. It's not impossible to pass a cohesive plan that addresses these structural issues, but it means pissing off somebody. Or lots of somebodies. 

Some politicians thrive under those partisan circumstances and some political systems even incentivize that type of style. Governor Cuomo is not that politician and New York State is not that system.  

That is the worst thing in the world necessarily.  There is something to be said for being a steely-eyed dealmaker and there is something to be said for a system that operates through old-fashioned power brokering rather than ideological extremism. Indeed, the previous six budgets during the Governor's reign have been passed on time and without going over major fiscal cliffs. 

However, over the years this has meant the “Three Men in A Room” style of governance involving the Governor and now disgraced Senate majority leader Dean Skelos and Assembly Speaker Sheldon Silver.  Both men were removed from office and convicted of federal corruption charges, radically altering the political landscape. Albany has always had the stink of corruption, but these developments, some of which have creeped into the Governor’s orbit, have undermined much of the Governor’s standing and power.

This ethical gray zone is largely why Governor Cuomo has maintained considerable control over Albany over two terms, with a hoped for third term on the way in 2018.  He has been able to strike deals in the legislature that have avoided big flair ups between parties by relying on his ability to maneuver in back rooms. But that is not the case anymore. (Although ethics reform has taken a back seat in this budget process.)

Without his fellow leaders to keep reigns on the political process, the Governor doesn’t have the type of cover he once relied on and it shows.  It is now up to him to make tough policy trade-offs in a much broader political arena than he is used to.  He has lost the initiative in crafting the budget process and can no longer control each chamber as he once could.

This isn’t lost on the Governor. His comments on the 421a negotiations show an almost child-like surprise that there are other motivations in politics than triangulation: “What we’re down to is truly ideological issues. 421a is an ideological, philosophical issue.”  Evidently, this is the first budget season where the Governor has had to consider actual political theory.

This openness has led to some truly bad ideas coming out of the negotiations, including linking 421a to rent regulation laws (which come up for renewal again in 2019.)  The Governor has come out against this line of thinking and it seems unlikely that a deal like this would be struck, but it shows that whatever deal does get done, Governor Cuomo will likely face the unpleasant realty of owning a divisive budget that he ultimately had less control over than his previous budgets.

How this will impact the Governor’s fortunes in 2018 let alone 2020 are unknown at this stage. But what is clear, and dispiriting, is that the housing crisis will continue, and many struggling New Yorkers will not get the help promised by the Governor so many times before. 

Cuomo In a Tantalizing Bind Over Housing

Working hard or hardly working, Andy? (ngn)

Working hard or hardly working, Andy? (ngn)

Tonight is the deadline for New York State’s elected officials to pass the next budget before the new fiscal year starts tomorrow. By all accounts it won’t happen. New York is not alone in struggling to pass a budget in the absence of clarity at the federal level.  President Trump has proposed severe cuts, which could imperil the $150b New York budget, making any proposals fraught with doubt.  But the president isn’t the only actor harming the process. Governor Cuomo has placed his ambitions and calculations ahead of the immediate needs of the state, particularly on housing.

I generally don’t care much for the horse race stuff about Governor Cuomo looking towards 2020 for a presidential run, but it is clearly a big part of his calculations right now. Unfortunately, this has a big immediate impact on affordable housing, so I’ll play along.  Though the presidential calendar has gotten shorter and shorter, it’s still too early for any candidate to be discussed seriously.  (For what it’s worth, I predict son following father and ultimately getting cold feet anyway.)

Before the governor can dream about 2020, he must get re-elected in 2018.  That’s likely, but not guaranteed.  That’s why this budget season is so crucial for him.  It will signal what kind of Democrat he will position himself as on the national level.  President Trump indirectly offers the Governor two radically opposed, equally fraught, options in my opinion.

Before I get to those two options, let’s remember a couple of important facts.  First, last year Governor Cuomo announced a huge five year $20b affordable housing plan that would build 100,000 units and outlined a longer-term plan for 20,000 supportive housing units.  Though light on details - it was through a Memorandum of Understanding (MOU) which isn’t handled like a normal budget allocation process and serves more as a wish list -  it was a major policy shift that scored political points from housing advocates across the state.

Second, Governor Cuomo also announced a (slightly) revamped plan called Affordable New York to replace the controversial 421a tax policy that expired last year when the governor blocked a compromised proposal over union wage labor.  The new plan would largely continue the existing framework of 421a, which would create dubiously affordable units at considerable cost to the city and state. Many advocates hate 421a, but developers love it.

In both cases, little has come to show for those initiatives. Of the initial $2b allotted in the 5-year plan, only $150m has been dispersed, while the rest remains frozen.  There is no deal yet on the new 421a/ANY plan either.

This lack of progress is because Governor Cuomo, relying on his love of MOUs, directly linked both proposals and one can’t happen without the other.  Because Democrats dominate the State Assembly and Republicans control the State Senate, the Governor seemingly made a political calculation that he could appease both chambers (or, more aptly their leadership) and deliver on his promises by using both proposals as balancing weights.  That has not panned out, despite the fact that both parties have agreed to allocate the frozen funding.

Governor Cuomo has had a history of making grand promises on affordable housing, attempting to deliver them through MOUs, and failing to do so. In addition to the current mess, has attempted to use settlement money from JP Morgan to combat homelessness to no avail, he has withheld funds for NYC over petty squabbling with Mayor de Blasio, and even his handling of the 421a expiration appeared to have been in bad faith.  It’s almost as if, even as a former HUD Secretary in the Clinton Administration, he isn’t that interested in housing policy.

Now we can return to the two democrats Governor Cuomo could portray himself as if he were serious about a 2020 run.  The first is the pragmatic power broker who gets things built while working with the other side.  This candidate is a more accurate representation of the Governor and could conceivably appeal to the donor class of the Democratic Party as well as moderate Republicans further alienated by the Trump Era. 

The second is the liberal firebrand championing infrastructure spending, gay marriage, and environmental protection that can rally the progressive wing of the Democratic Party without totally alienating centrists. Despite some notable achievements on some ‘liberal’ policies, this is not a natural position for the Governor to hold, even if that’s likely where the electorate will be.

This is why housing has proven to be such a challenge for Governor Cuomo to follow through on, despite his background in it. Right now, today, the issue is forcing him to pick one version of himself to commit to and it’s not clear which he should choose.

If he could deliver on affordable housing, it would further his narrative of being an effective progressive at the national level.  But to do this would alienate much of his bi-partisan bonhomie in the Senate and with wealthy developers whom he needs for his re-election in 2018.  Progressive affordable housing reform is deeply unpopular with these stakeholders and disappointing them poses an immense risk.

If he doesn’t deliver on affordable housing, it would leave him open to attacks from progressives at the state level. The need for affordable housing is so obvious and so urgent that failing to deliver on it could absolutely summon a credible challenger in a primary. This might not ultimately cost him the election in 2018, but it would solidify enough resistance that would damage his campaign and undermine his already flimsy progressive narrative on the national level.

Housing isn’t getting much of the focus in today’s last minute budget negotiations and there are certainly other issues holding up the process.  But that won’t let the Governor off the hook.  Housing looms over everything.

Though the state budget proposal does not spend much time addressing the potential cuts the state faces from the federal government, the Governor and elected officials from either party are rightfully concerned about them.  No one knows exactly how much of a gap this proposed budget will face if federal support dramatically changes over the next few years.

What is entirely left unsaid is that the state will be on the hook for the federal cuts expected to hit HUD and housing programs in general.  Given that NYCHA gets over 2/3 of its $3b budget from HUD, and HPD gets hundreds of millions, among other city-level programs, this leaves a potentially crippling whole that cities, even NYC, can’t possibly fill.  The fact that Governor Cuomo is dodging genuine leadership on housing even before these cuts should be alarming.  What happens if they do come? Will the Governor be there to help?

It’s possible that the budget will get worked out, housing funds will flow as promised, and these federal cuts won’t materialize.  Governor Cuomo could waltz along to re-election and to the national stage and New Yorkers would perhaps finally have some relief from the housing crisis.

But it is also possible that federal cuts will come, that their impact will effectively kill the current housing proposals, and potentially let the Governor off the hook for not delivering, while still appearing to champion affordable housing.  It would be deeply cynical to build a political strategy on this dire outcome, but politicians have done worse.

There are over 88,000 homeless in the New York State and nearly half of NYC renters are rent burdened.  The affordable housing crisis is too large to be viewed through a narrow political lens and it’s unacceptable that Governor Cuomo has chosen to do so.  Even without impending cuts from the federal level, the Governor has not delivered on his promises so far.  History will judge his next actions long after the voters in 2018 or 2020 get their say.

Governor Cuomo Wants You to Pay Developers' Labor Costs

You guys got it, right? (truthaboutguns)

You guys got it, right? (truthaboutguns)

Housing construction is complicated in New York City, but leave it to Governor Cuomo to make a bad thing worse.  The Governor had already single-handedly killed negotiations on 421a, the infamous tax subsidy to developers who agree to construct some affordable housing units, in the midst of Mayor de Blasio’s push to pass his ambitious housing plan.  As a result, hundreds of affordable units, and perhaps the Mayor’s entire housing plan, have remained in limbo. The Governor’s recently proposed solution makes matters worse.

Readers of this blog will be familiar with the problems that arose through the implementation of 421a since it was passed in 1971.  It was conceived while the NYC market was at its nadir, but quietly became a massive cash-transfer for developers when the market rebounded.  It has cost the city hundred of millions of dollars in lost tax revenue over the last decade’s hot market run, prompting many housing advocates to call for it to be abolished outright when it was set to expire last year. 

Mayor de Blasio took a different approach when putting his two major housing policy initiatives together last year.  The Mayor’s plan relied heavily on remodeling 421a with input from developers and construction union leaders.  He appears to have understood the political need for developers and construction unions to buy into his plan and the economic need for some type of tax benefit to spur development with his new requirements.  At the time that the law was up for renewal, the mayor was working with unions and developers on a compromised 421a version that would allow some non-union labor on certain housing projects that fell under the proposed guidelines.

It would be one thing if the Governor was against 421a from a policy standpoint but, in many circles, the governor’s last minute insistence on prevailing wage levels was seen as a direct attempt to kill the mayor’s plan for personal reasons.  The long-simmering tensions between the Governor and the Mayor, despite both being Democrats and broadly agreeing on policy, has been a major impediment to state and city policy-making on a number of issues.  Given the Governor’s track record, it’s hard not to look at his action as a petty lashing out.  The situation may be petty but the stakes are real - over the last eight months, a number of developments have been put on hold or out right cancelled over the 421a uncertainty.

To some degree, Governor Cuomo had political coverage at the time because he promised to announce his own detailed $2b housing plan.  The Governor created the impression that, if he was blocking Mayor de Blasio, it was because his plan was bigger and better. We’ll never know because he has never revealed his plan.  It, along with the $2b, quietly got pushed from the agenda until next year.

Instead, Governor Cuomo sent out a one-page outline to developers that suggested restoring 421a with prevailing wave requirements with the state directly subsidizing the differences for developers.  This type of direct wage intervention is virtually unprecedented. Taxpayers will literally be writing checks to construction workers to the tune of millions of dollars.

At least we think.  We don’t really know the true cost of this proposal because there aren’t many details about where the money would come from, what projects would get covered, who would administer and monitor the payments, and what if any restrictions or caps would be installed.  Although some numbers have been mentioned under some circumstances, the publicly available information is sparse.

To the extent that other parties are able to comment on the proposal as it stands, developers appear to be open to further consideration (as you would expect) and even Mayor de Blasio has offered support if the state holds to its obligation of paying those wages instead of the city.  We can expect a lot of closed-door talks to take place into the fall.

Governor Cuomo’s political antics against the Mayor and NYC in general have always appeared petty and vindictive to me.  It’s not the first time a governor has been nakedly jealous or resentful towards a mayor of NYC, but given the stakes of this particular issue – lest we forget this is about addressing the affordable housing crisis – the governor’s actions are a stunning failure of leadership.

Simply put, no taxpayer should support a vague plan to directly subsidize a developer’s construction costs.  Taxpayers should support the right to fair wages and safe working conditions for construction workers, but these are not, nor should the governor try to make them into, related issues.  This type of policy proposal is ill-conceived and potentially reckless.

If 421a is necessary for all parties to move forward right now, fine.  There will need to be complicated discussions and complicated agreements.  I certainly concede that there are no simple solutions to creating more housing under the existing framework. Though I argue that there are more options to consider and more ideas to explore to improve the creation of affordable housing in NYC, we must get the best possible agreement from all invested stakeholders.  If the Governor is secretly setting on a much better plan, I am all ears.

The Governor should be held accountable for holding up progress on affordable housing in the state.  He should be held accountable for promising then punting on a major $2b housing proposal.  And he should be held accountable for continuing to operate behind closed-doors and in vague terms.  Every stakeholder in the housing market, whether public or private, corporation or citizen, deserves better leadership.

Albany Blows it On Housing (and In General)

Is Albany upside down or just being itself? (ny mag)

Is Albany upside down or just being itself? (ny mag)

Last week, New York's State Legislature, acting more like an embattled frat house cramming for finals, passed a series of largely unremarkable bills in the final hours of its 2016 session.  Although we can all rejoice about now getting Bloody Mary's at 10:01 AM on Sundays, it's impossible not to deem the session a massive failure given what wasn't resolved.  Despite a desperate need for action on housing and a number of key bills and initiatives on the docket, no housing laws were passed.  There is plenty of blame to go around, notably the bitter feud between the Governor and the Mayor, but the bottom line is that the housing market right now is crippled by uncertainty and a lack of vision at a time when the future of affordability, particularly in NYC, hangs in the balance. I will highlight three areas where the Legislature has undermined, skipped, or out right blocked the chance for sweeping housing reform and give my take as to why.

Cuomo's Failed 'Memorandum of Understanding'

When Governor Cuomo announced his massive $20b 5-year housing plan back in April, he included $2b for 2017 to be spent on affordable housing and fighting homelessness.  In place of details, he outlined a Memorandum of Understanding (MOU) that was to be worked out among the "Big Three" (the Governor, the Senate Leader, and the Assembly Leader) at a later time.  This type of action, which excludes rank and file legislators from debate and negotiations, is notorious in Albany and decried by many taxpayer advocates and policy watchers because it is the source of so many shady deals in other areas of government. It has never been used in a housing bill, let alone one of such scale.  The Governor's decision to use this tool is even more stunning when you consider that two former members of the Big Three have been sentenced to prison on corruption charges (more on this later.) 

Back when I wrote about the growing feud between Governor Cuomo and Mayor de Blasio, I pointed to this plan as a signal to see if the Governor was serious about housing policy or simply trying to embarrass and impede the Mayor's own housing plan. If the Governor could reach a sweeping agreement to fund affordable housing, it could be seen as a generational shift in housing policy and in how business gets done in Albany.  Well, here we are in June and there is no MOU and no policy.

Our tax dollars at work (newyork.com)

Our tax dollars at work (newyork.com)

Clearly the biggest unfinished item is 421a, the controversial tax incentive given to developers for including a certain number of affordable housing units per building.  The bill sunsets every 4 years and Governor Cuomo allowed it to expire in January when negotiations over union construction wages broke down. This has left plans for thousands of housing units up in the air and threatens to kill Mayor de Blasio's housing plan in the cradle. Though a compromise is still possible, the fact that one hasn't been found yet shows a shocking lack of leadership and/or a childish level of personal animosity.

I've written a lot about how flawed 421a is as an affordable housing tool.  At best, it is a wildly expensive way to create a tiny fraction of the needed affordable housing units and, at worst, it is a market-warping give-away for developers that prevents more affordable housing units from entering the market. Certainly some advocates welcome the delay on 421a and would like to see it scrapped altogether. Others think that affordable housing can not happen in any form without it.  I certainly believe it should be reformed significantly to create better targets and measurements for affordable housing, but scrapping it abruptly leaves existing projects in chaos. 

The frustrating thing about this session however, is that there was never any serious talk about reforming the policy, nor was there any ability to given the ambiguity of the MOU.  The initial breakdown came when the carpenter's union rejected the wage floor suggested by the Real Estate Board of NY, which was more or less the same language in the current Republican-controlled State Senate proposal.  That is where the negotiation stood six months ago, and where it stands now.  We are left with a maddening binary decision between extending it as is or letting it die. Neither one makes any sense given the political landscape.

A compromise on this particular element is probably a few horse-trades away and you can argue one way or the other over the union's current position, but the fact that there was no larger review of the policy should anger every voter and taxpayer.   421a is not a short-term or long-term solution for creating affordable housing.  Perhaps, if properly designed and part of a larger effort, it could be an effective tool, but there was no ability for the legislature to debate this. Additionally, the Democrat-held Assembly attempted to expand the nature of the MOU by tying any reform of 421a to additional state funding commitments to NYCHA, but the Governor has not shown any interest in this effort and no deal has been struck.  This appears to be dead on arrival.

Despite the ambitious scale of the Governor's suggested housing plan, we have seen no details or policy discussions, no deal within the existing MOU framework, no sense of what it would take to accomplish one, no sense of how and where billions of dollars would be allocated in housing across the state, and no ability for our elected officials to properly debate these issues.  Is it any wonder that a deal wasn't struck?

Ethics Reform

This question brings us to the other major inter-related failure of this legislative session: ethics reform.  As I mentioned earlier, this past year we have seen two of the Big Three in state government sentenced to a combined 17 years in prison on multiple corruption charges. This is on top of more than 30 state elected officials meeting the same fate over the past decade.  Assembly Speaker Sheldon Silver and Senate Leader Dean Skelos, along with Governor Cuomo (who has been accused of blocking a commission on ethics), effectively ran the state between the three of them for years, during which New York has been seen as the most corrupt state in the Union.  The calls for reform have been deafening, but action has been slow and punchless.

The legislative session did pass one important ethics reform when it agreed to ban public officers convicted of office-related crimes from receiving pensions (it still has to be voted on next year to become part of the State Constitution.) This is a positive step for sure, but fails to address the types of crime that has gotten leaders into trouble in the past.  Specifically, there was no action taken to limit outside income for state legislators, to limit 'housekeeping' donations to political parties, or to close the so-called "LLC loop-hole" that allows unlimited donations from these corporate structures despite the ease with which individuals or corporations can hide behind them. 

2 out of 3 of these guys are going up the river, but stopping before Albany (ny post)

2 out of 3 of these guys are going up the river, but stopping before Albany (ny post)

All in all, here again we see a shocking failure of leadership across all parts of Albany. The fact is that the current system, as corrupt and ineffective as it is to the larger population, works well for both parties.  The unique nature of power in New York State allows for both parties to control just enough to keep the peace (and their seats) while blocking bolder policy initiatives and reforms.  Until ethics reforms pass on a larger scale, the status quo will remain in Albany to the determent of all New Yorkers - and truly sweeping housing policy won't see the light of day.

Airbnb Crackdown

A potential major blow to Airbnb is the final piece of legislation that I'll touch on because it could have an impact on housing in certain neighborhoods in NYC.  The bill, which has passed the Senate, bans any advertising of apartment rentals under 30 days, which is already illegal in NY state, and creates a series of fines for an owner caught listing them.  Whether this represents a true crackdown on the service remains to be seen (it also must pass through the Governor's Office before becoming law.)

It might seem like a surprise for me to include cracking down on Airbnb as a blow against housing, given how controversial the company and the practice are.  In addition to being illegal in NYC, there is no doubt that it has an adverse affect on housing costs in certain, trendy neighborhoods and has negative impacts both on potential renters blocked from finding units and on existing tenants or neighbors surrounded by strangers. (I also have a philosophical problem with a company that is fundamentally based on exploiting peoples' income insecurity around housing, but I'll have more on that at another time.)

I feel better already (weandthecolor)

I feel better already (weandthecolor)

The problem is how to separate the good actors from the bad actors, which this bill (and NY's general dwelling laws) does not do.  A couple going out of town for a long weekend once a year that wants to rent out their apartment, with the consent of their landlord or neighbors, is simply not a problem.  However, despite Airbnb's claims, there are a lot of renters that amass a large portfolio of apartment leases or building owners that opt to focus exclusively on short-term tenants (they also have a huge problem with racial discrimination by renters on the site, which they are are trying to combat). Airbnb doesn't release much data, but when it does, it appears that these types of actors are the majority of its listings.  Airbnb won't be completely honest about this for the simple reason that they make the majority of their money on 'professional' Airbnb renters. They can't justify their model to investors if they do rely on that couple going out of town once a year.

I think there could be a responsible way of allowing landlords/tenants/neighbors to make short-term rental agreements, but no doubt pressure from the hotel industry simply won't allow that discussion right now - and that's really where this bill came from.  This is less a win for tenant advocates as it is for hotel developers.  What could have been a chance to force Airbnb to evolve and become a stakeholder in NYC has instead likely inspired the company to double down on aggressive lobbying to fight the existing laws rather than improve its practices. Housing in NYC will continue to suffer in any event.

I have advocated for a broad reinvention of our housing and dwelling laws before and I absolutely think we should include short-term rentals in the discussion.  The toothpaste is out of the bottle with Airbnb and bad actors will still find ways around even this law. Rather than try to force it back in, we should...find more toothbrushes to put it on? (I'm tired and need to publish this before the Mets game, sorry.) At any rate, this bill doesn't come close to considering how best to handle Airbnb and similar technology-driven companies. (A bill to allow Uber and Lyft to expand upstate was blocked in the Assembly.)

The Airbnb law is the perfect example of rhetoric masking reality in state politics. New York isn't alone in this, but it is certainly more naked about it (not lease because of how many people seem to fail at balancing the act and get busted.) Special interests have a right to lobby their elected officials, but unfortunately that comes increasingly at the expense of the common good, which is never as well organized or funded. Albany is evidently trapped in a particularly vile cycle of sacrificing the public good whether out of greed or flawed ideology or both.  This could have been a significant legislative session given the public demand for action, the amount of ideas on the table, and the amount of actors across all spectrums who were engaged in the debate, but it wasn't.  The more the state government fails to take advantage of these circumstances, the harder it will be for them to materialize again.

The End of the Beginning: the Challenges Ahead for the Mayor's Housing Plan

Victory lap might be a short one for the Mayor (capitalnewyork via mayor's office)

Victory lap might be a short one for the Mayor (capitalnewyork via mayor's office)

Only a week has passed since the City Council approved Mayor de Blasio's ambitious housing plan, but already some observers have begun to discuss the many hurdles facing it that could spell trouble.  Though it will be years before anyone can assess the true scale and impact of these changes - and if they will deliver on the promise of more affordable housing - we can at least start to consider what this trouble could look like. Though there are a number of factors to consider, for this post, I will focus on three that seem particularly important to watch.

Governor Cuomo: Oh, yeah? (thewire.com)

Governor Cuomo: Oh, yeah? (thewire.com)

1.  Albany: 421a's & Heartbreak

The Mayor's plan has solidified political support in the city, but much of its success will depend on what transpires in Albany in the coming months and there are a lot of unknowns.  As I've outlined previously, Governor Cuomo has made his relationship with Mayor de Blasio something of a bloodsport; he has taken every chance to exert power over the city by withholding housing funds and creating excessive state oversight on projects wreaking havoc with city officials and developers alike.  It's not a stretch to see how much the governor would enjoy toying with the mayor over his signature policy achievement.

Perhaps no issue in Albany in the hands of the Governor could determine the fate of the housing plan more than the status of the expired 421a tax exemption.  I've gotten on my soapbox about 421a before, but the reality is that it was a major, if wildly flawed, tool for encouraging development of affordable housing.

Lawmakers, including officials from the de Blasio administration, had agreed on significant changes to the program when it came up for renewal in January, but the Governor surprised many and killed the talks by backing a call for developers to agree to new union contract stipulations to qualify.

As a result, 421a is off the books and many projects have been thrown into serious doubt while new projects will likely slow down as well.  There is no doubt that its previous form was a huge handout for high end developments that didn't come close to producing the needed affordable units, but simply killing it was political brinkmanship at its worst. Many people in real estate question if the mayor's plan can even work if 421a does not get extended.  Though the industry has a clear incentive to get 421a back as-is, the reality is tax policy is a major component of the mayor's plan and without buy-in from Albany, it's hard to see how the units get built.

Some of the Governor's political maneuvering might make more sense when he announces his own housing plan soon.  As I've speculated, if his plan greatly resembles the Mayor's but with more power and credit going to the Governor, it will be hard to defend.  If, on the other hand, it spells out a new direction in housing, and solves long lingering flaws in policy like 421a, then we might have something worthy of discussion. In either scenario, the Governor has made it clear that the Mayor's plan must go through Albany first and it remains hard to picture that being a pleasant journey.

CB15 (Sheepshead Bay) voting against the mayor's housing plan (sheepsheadbites)

CB15 (Sheepshead Bay) voting against the mayor's housing plan (sheepsheadbites)

2. Local Opposition: CB86'd

Though the City Council supported the plan by votes of 42-5 and 40-6 on the two major proposals, all but a handful of the city's 59 Community Boards rejected it.  CBs are made up of local residents and business owners and their votes are only recommendations, but their near-universal opposition was a chilling rebuttal to the Mayor and a potential sign of the pitched resistance these groups might undertake in the months and years ahead.

This opposition has practical implications because these same bodies review every development proposal in their districts under the city's ULURP land review process. Again, these votes are only recommendations and can be overcome through other city agency approval, but when time is money, opposition from a CB can delay and even derail projects.  If many residents have already opposed the plan overall, you can expect that this will continue with specific projects. For example, CB5, which includes East New York - singled out by the Mayor as a major focus of the plan- unanimously opposed the plan. It isn't likely that they will be open to the many projects already being discussed

The philosophical implications of local opposition are also important to consider. Though it is easy to dismiss some of these votes as naked NIMBYism, as the Mayor has unfortunately been close to doing, the issue is much more complicated.  No doubt, though, some of these positions are based on the more disappointing aspects of NIMBYism and resistance to the inevitability of a changing city.  

Preventing more density, more height, and more transit-focused development could have dire economic and environmental consequences for the city and the region, but it's hard for an individual to accept that when it means their trains or schools might get more crowded, their neighborhood might become a construction site and look very different at the end, and their parking could disappear. These are entirely understandable, if intractable, concerns.

However, it isn't just NIMBYism at play here, as many neighborhoods have built up mistrust towards the city over decades - whether it's from the scars of urban renewal projects, the slights of feeling overlooked by programs and services, or the perceptions of forced integration and change, community boards evolved from a resistance to top-down management and have long been wary of city-wide policies. New Yorkers have seen large scale, Big Idea type-plans before and are right to be wary of their true costs and benefits. 

It is up to the Mayor to outline these issues, outline the underlying causes, and explain why this plan is different and why it will be better for New York and for New Yorkers. There may well be many benefits in the housing plan for these communities, but there will also surely be trade-offs and negative consequences. The Mayor has obviously not done a good enough job of framing this discussion around those realities or to speak to the legitimate hopes and fears of New Yorkers regarding the plan.  For a Mayor who campaigned and won by recognizing the populist mood in the city, so far he has missed the opportunity to approach this plan through the same lens and vernacular.

The Mayor and his administration must do a better job of selling the tangible benefits of this plan while acknowledging the unavoidable pain of change.  Though the CBs are only advisory boards, their near-universal rejection of the plan could create havoc for his plan in the short term and greater consequences as the next election approaches in 2017. 

 

What (potentially) goes up, must (inevitably) come down (citylab)

What (potentially) goes up, must (inevitably) come down (citylab)

3. The Market: The Giveth and Taketh 

The real estate market is the easiest factor to overlook in all of these discussions, but ultimately it will have the final say in the future of the housing plan.  Many of the assumptions built into the plan, from the tax incentives available, to the expected population growth, are based on an ascendant market.  There are some early signs that the market may be headed for a correction or even something larger.  Given that the housing plan relies on the market to drive it, if the market tanks, it's unlikely that many units will be built, affordable or not.

Relying on the market has been a criticism voiced by many housing advocates as the Mayor's plan went under review, but given the power of the real estate industry and the construction unions in the city and the state, I don't think it would have been possible for the Mayor not to get their buy-in and still deliver a plan.  It might be incremental, but it is a necessary step in this political environment and the need demands that some action be taken right now.

The problem with a market-first approach, however, is relying on a market that is not healthy or functioning well to begin with.  Even what we talk about when we talk about 'the market' isn't terribly useful. It hides the fact that in reality, there are two markets in the city: the "asset" market and the "shelter" market.

The asset market has produced 432 Park on the high end and thousands of shiny doorman condos on the other end, many of which will sit empty for the majority of their ownership; this market has had severe ups and downs as would be expected when it is a function of the global economy, but it has created most of the new housing units in NYC over the last decade.  This operates more or less as a market should.

The shelter market is much larger but has not operated as a market should; it has had relentless pressure put on it without the necessary relief.  With the population of NYC expected to continue to rise, and the demand for all types of housing only increasing, a healthy market in theory should offer the incentive to produce a corresponding number of units.

The fact that this isn't happening owes to many complicated reasons, most of which we have discussed in this blog previously, but the main takeaway is that we're in a housing mess because the overall market is terribly distorted and there isn't much discussion about how to change it or even if it should be changed.  As a result, relying on said market, unaltered, to fix it is potentially a fool's errand. 

Much remains to be seen about the future of Mayor de Blasio's housing plan because so much of it falls outside of the Mayor's control, or anybody's for that matter.  The Mayor has much work to do in order to see the plan implemented and to see the types of benefits he, and many others, believes will result from it.  

Why Mayors and Governors in New York Rarely Get Along and Why it's a Problem

Leave the bonds. Take the Cannoli. (north country public radio)

Leave the bonds. Take the Cannoli. (north country public radio)

Several news outlets in the city are reporting on the latest beef between Mayor de Blasio and Governor Cuomo and how it could harm upcoming housing projects in the city.  This particular beef is over federal tax-free bonds made available to states to encourage construction of affordable housing, but it represents just one rift of many between the two Democrats.  Troubling as this feud is for residents of NYC, it is part of an old, long-standing Great Game between the two most visible elected offices in the state and represents a much bigger problem with politics in New York.

First, the details of the bond feud matter a great deal in the ongoing affordability crisis in NYC. For decades, federal bonds (worth about $900m in 2014 and $700m in 2015) have been dolled out from New York State to New York City with little state interjection. These funds are tax-exempt on the federal, state, and city level which makes them attractive to developers and generally follows certain guidelines ensuring the creation of affordable housing units. The city has used these bonds in about 40% of recent affordable housing projects according to the NY Times article.

However, starting last year the state has begun to withhold money, which already delayed a city plan to develop 1,200 units. This trend has continued as state officials have been quietly informing city officials and developers over the last month that the city will no longer receive the same levels of money.  The funds that the city will get will now be micro-managed by the state through the Empire State Development Corporation and Public Authorities Control Board.  City officials and developers appear to be confused about why this change has occurred and are uncertain about how it will affect developments that have been approved or are close to construction. 

The Governor has downplayed the changes stating that they are intended to "supplement" rather than "supplant" the city's plan but so far has not made any of his own $20b housing plan's details public (he is expected to do so in April.) Given that Mayor de Blasio has made affordable housing a signature policy focus, these changes in funding options clearly put his housing plan at risk and the timing of the announcement has certainly raised eye-brows across the city and state.

The big question is if the money will still eventually be allotted to the same projects with the same goals that the Mayor has laid out.  If that is the end result, it will be hard not to view the move as a petty power grab by the Governor.  If, on the other hand, the Governor's housing plan is radically different than the Mayor's then it would be easier to claim that it represents a new policy focus, but could still have severe consequences for current projects. Either way, it is very public rebuff of the Mayor's agenda and throws many affordable housing projects up in the air.

Though some of the feud between the Mayor and the Governor might be chalked up to personality clashes or political differences, the reality is that this dynamic has been common in New York state politics for decades and speaks to a larger issue of political disfunction. The main culprits for this dynamic are New York State's unique history and geography.

New York State counties by geography and relative population size (maps4office)

New York State counties by geography and relative population size (maps4office)

The modern state border of New York evolved through a series of (still contested) treaties with the Iroquois Confederacy before and after The French and Indian War and the British after the Revolutionary War but also through equally contested agreements with Connecticut, Massachusetts, Pennsylvania and New Jersey. This has created a widely varied geographical entity with little practical cohesion.  In 1797, Albany was chosen as the permanent capital city because it was central enough for state legislators to travel to and it didn't overly bias the state's business towards the dominance of New York, which by 1835 became the largest city in the country. This tension defines the state to this day.

As a result of its geography, New York State is better viewed as two distinct sub-states which are referred to as "upstate" and "downstate".  The definitions are debated, but generally Upstate New York is considered everything north and east of Westchester County and made up of smaller cities and rural communities while downstate consists of the metropolitan region of New York including Westchester and Long Island.  Out of 19.7 million state residents, 63% live downstate with 40% living in NYC. 

Politically, upstate has generally been more conservative than the downstate metropolitan region but the population difference has made New York an uncontested blue state, voting Democratic in every presidential election since 1988.  However, at the state level, given the structure of the State Senate, Republicans have held power almost exclusively since WWII, balancing out the large population difference between upstate and downstate.

This creates a unique political dynamic that some have even argued should be formally separated. That's not going to happen, but it shows just how different the two sub-states are in reality.  It also explains the different constituencies that a mayor and governor have to play to.  Even though Governor Cuomo and Mayor de Blasio are both Democrats, and both broadly agree on many issues, they have to navigate vastly different political territory and interests. 

This is absolutely true of any governor/mayor relationship, but the size of New York City and its importance both nationally and internationally create different perceptions of the two offices. With the potential exception of Illinois/Chicago, no other state has a situation where the mayor of its major city is better known than its governor. That can create some bruised egos.

Further complicating the relationship is the fact that, though the mayor of New York City is generally higher profile, in reality the governor has significantly more power over the city.  Whether its tax policy, economic development funds, the MTA, the Port Authority, or housing laws the Governor controls much of New York City from Albany.  This creates a lot of tension between the offices, especially when they are held by the same party - whether it was Mayor Lindsay-Governor Rockefeller in the early 1970s, Mayor Koch-Governor (Mario) Cuomo in the 1980s, or Mayor Bloomberg-Governor Pataki in the 2000s.  If you're the mayor and the governor is the same party, you almost have to expect more opposition given the structure of power in Albany.

The upstate/downstate divide isn't just about political personalities clashing for headlines.  It has a major impact on policy decisions because it warps voter representation and turnout.

I've already mentioned how the population tilt makes it a safe blue state nationally for Democrats while the balance of power in the State Senate has been dominated by Republicans since WWII because of redistricting.  This balance is a false and dangerous one perpetuated by both parties.  Senate districts have overrepresented upstate while Assembly districts have overrepresented downstate making sure the status quo remains intact. This has resulted in stunning corruption across the state and has frozen the political discourse.

Senate Districts (latfor)

Senate Districts (latfor)

It has also caused historically low turnout.  In Governor Cuomo's re-election in 2014 (33%) and Mayor de Blasio's election in 2013 (28%) the state and city experienced their lowest turnout on record. Some of the low turnout in those elections can be explained by the lack of a real contest.  For Mayor de Blasio, winning the primary assured a sweeping victory in the general election. Governor Cuomo had a closer race, but was excepted to sail to victory and did.  

A more troubling explanation could be voter disillusionment.  It's not hard to become cynical when Senate Majority Leader Dean Skelos and Assembly Speaker Sheldon Silver (two of the "Big 3" in state politics for a long time) were both found guilty of corruption while scores of other state officials have also been charged and convicted.  Voters don't have much faith in state politics and have turned away in New York State and beyond, which is surely fine with varied interests that benefit from the status quo. When voters aren't paying attention, a lot of deals can be made that they wouldn't like regardless of their political persuasion. 

It is natural and even healthy for tension to exist among elected officials.  Though much of the mayor-governor clashes in New York have been ego driven, some are based on policy and vision, which is how any healthy democracy should operate. The fact that the current dynamic between the Mayor and the Governor potentially distracts the media and voters from the larger issues of fair representation, transparency, and accountability at the state level is dangerous, however.  We can already see how the feud impacts affordable housing policy.  

 The ongoing calls to reform Albany must be repeated by the media to reach voters currently sitting out the process.  Only when more voters reenter the political discussion will we see the types of ethics reforms and policy changes that the state, whether up or down, needs.