MIT Research Shows Elimination of Rent Control in Cambridge Increased Property Values by $1.8 Billion

What is the cost of rent regulations in New York City?

A recent analysis of the impact of decontrol in Cambridge may offer some clues. According to economists at MIT, property values in Cambridge increased by $1.8 billion in the 10-year period after decontrol in 1994. Interestingly, property value gains were greater for property that had never been controlled than for previously controlled property.

Since there are vastly more rent regulated properties in New York City than in Cambridge, $1.8 billion may be a fraction of the increased property value to garnered by decontrol in New York.

Any economist out there want to extrapolate the potential tax revenue to be gleaned by decontrol in NYC?

 

                                               – Jack Freund, Executive Vice President, Rent Stabilization Association 

(Views and opinions expressed are those of the author and do not necessarily reflect the policy or position of the RSA.)

 

The complete study can be accessed by clicking here.

Why There is an Affordable Housing Problem In NYC

A recent analysis by the City’s Independent Budget Office found that 35 percent of City tax filers (or 1.3 million households) paid no income tax in 2010. Filers who did not pay income taxes reported an average income of $9,108.

With an average income of $9,108 annually, this one-third of City  households can afford a monthly rent of only $228 per month based on the Federal affordability standard of paying only 30% of income for rent. Clearly, there are no apartments available, other than subsidized housing and a few rent regulated at less than subsidence level, that rent at less than $228 per month.

So, is this a problem of lack of affordable housing, or a problem of lack of income adequate to afford even a moderately priced rental in New York City?

 

                                                    – Jack Freund, Executive Vice President, Rent Stabilization Association 

(Views and opinions expressed are those of the author and do not necessarily reflect the policy or position of the RSA.)

 

 

 

The 47 Percent Here? Far Fewer Escape City’s Income Tax

By SAM ROBERTS and PATRICK MCGEEHAN

 

In New York City, the “47 percent” is only 35 percent.

That’s the share of city tax filers who, according to an analysis by the city’s Independent Budget Office released Thursday, paid no city income tax in 2010 — as opposed to the 47 percent of Americans that Mitt Romney, the Republican presidential nominee, said depend on government handouts, pay no federal income taxes and will vote for President Obama.

Most of the 1.3 million New York households that filed returns but paid no tax — 67 percent of them — reported income below the threshold for owing city income tax. Another 28 percent of them would have owed taxes if they had not received tax credits. The remaining 5 percent reported negative income as a result of investment or business losses (their income, before losses, averaged $43,100).

Over all, the 35 percent of filers who did not pay city income tax reported an average income of $9,108.

Filers who owed taxes reported average income of about $100,000 (and paid an average of $2,925 in city tax).

Among those who did not pay, fully half said they had earned wages from full or part-time jobs, but not enough to make them liable for income tax.

“A significant share of these people are in the labor force and working, but they are not paying taxes because even though they are working, they didn’t have a lot of income,” said George Sweeting, deputy director of the Independent Budget Office.

 

Source: City Room

High rents hitting middle-class New Yorkers

“Here’s a new twist on the affordability scale: middle-income renters have greater affordable housing issues than low-income renters! Tell that to the low-income housing advocates. I guess the affordability issue doesn’t die until everyone gets a subsidy. “ 

              – Jack Freund, Executive Vice President, Rent Stabilization Association 

(Views and opinions expressed are those of the author and do not necessarily reflect the policy or position of the RSA.)

 

High rents hitting middle-class New Yorkers

Families in the middle squeezed the most over the last decade, according to a new study.

By Tania Karas

Skyrocketing rents are increasingly squeezing middle-class New Yorkers, according to a report released Wednesday by City Comptroller John Liu.

The report shows that almost half of city households spend more than 30% of their income on rent, compared with 26% of households nationally. Federal benchmarks deem rent unaffordable when it exceeds 30% of household income.

Middle-income renters, defined as those earning between $35,000 and $75,000 annually, face the most pressure in Manhattan, where 45% pay rent that is officially “unaffordable.” But even those living in less expensive Staten Island and Queens aren’t much better off. There, 44% of middle-class residents in both boroughs shoulder unaffordable housing costs.

According to the study, 30% of New Yorkers devote more than half their income to rent alone. The high cost of living here is threatening to drive the middle class out of the city, Mr. Liu said.

“Working families should not be forced to leave town or live in inferior housing,” he said. “We need to invest more in affordable housing for middle-income renters so that our city is not only home to the very wealthy and the very poor but also to the vast majority of New Yorkers who fall in between.”

Some 70% of New Yorkers rent their homes, compared with 30% nationally. The vacancy rate of rental housing is 3% in New York City, compared with 10% nationally, and falls to less than 1% at peak times of the year.

The comptroller’s study, titled “Rents through the Roof,” cited census data showing that the high cost of living in the city disproportionately affects middle-income households. Low-income and high-income families don’t face the same pressures. Those earning less than $35,000 can turn to affordable-housing programs, while those in high-income brackets spend a similar percentage of their income on rent as the rest of the U.S.

And relief for the middle class is nowhere on the horizon, the study points out, as New Yorkers continue to face rising rents and record-low vacancy rates. In 2000, 23 of the city’s rental units were unaffordable to middle-income households, but that figure had jumped to 38% in 2010.

Source: Crain’s New York 

New Report Highlights Long-Term Problem for Subsidized Housing

 

The Regional Plan Association (RPA) recently released a report that highlights a major problem with affordable housing created through project-based government subsidies: as the government subsidies expire, they create periodic crises which can result in the loss of affordable housing unless they are resolved by new injections of government subsidies. Indirectly, the Report raises the issue of whether or not there are other, more effective, means of providing affordable housing – and I believe there is an evident alternative.

The RPA report, “East Harlem Affordable Housing Under Threat: Strategies for Preserving Rent-Regulated Units, (August 2012)”, estimates that there are 40,500 units of rent-regulated housing in East Harlem. Interestingly, the smallest share of this universe, 9,900 or 25% of the total units, are rent stabilized or rent controlled.These units do not expire, the Report acknowledges, but are subject to some “inevitable” and un-quantified deregulation under current law. The majority of the “rent regulated” universe in East Harlem consists of Public Housing (14,700 units), or 36% of the total. Public Housing units also do not “expire”.

The largest category of affordable housing in the Report, “other rent-regulated housing”,  consists of 15,900 units of housing financed under a hodgepodge of programs including Mitchell-Lama, low-income tax credits, Article 8A loans, J-51 tax exemptions and other City, State and Federal subsidy mechanisms. This category of affordable housing is threatened by the expiration of one or more of the various subsidies involved and has become a focus of attention by other organizations, principally the Furman Center at NYU which has begun to catalogue the inventory of such subsidized housing throughout the City.

The question that keeps occurring to me whenever affordable housing “crises” of this type are discovered is: why don’t we avoid this crisis by providing rent subsidies to needy tenants, via tax abatements to private owners, rather than laboriously construct subsidized housing which we know would require financial restructuring after a defined term?

 

 

                                  – Jack Freund, Executive Vice President, Rent Stabilization Association 

(Views and opinions expressed are those of the author and do not necessarily reflect the policy or position of the RSA.)