Less Regulation to Produce More Housing

What’s the best way to increase the amount of affordable housing in New York City. The New York Times digital edition recently featured a collection of proposals that address this issue.

Most of the proposals were more of the same old: strengthen rent regulations, preserve public housing, tax increment financing, nonprofit ownership and other mechanisms that have been used in NYC to a greater extent than anywhere else, but have all failed to solve the “affordable housing crisis”.

Only one proposed solution has not been tried in New York and it comes from Ed Glaeser, an economics professor at Harvard University, who understands the laws of supply and demand. Professor Glaeser proposes a simple solution of easing housing demand by increasing the supply of housing. And the way to increase supply is to remove the barriers to building created by land use regulations such as zoning, historic preservation and air rights (and we should add rent regulations and labor practices).

But New York City, under Mayor Michael Bloomberg, has moved in the exact opposite direction. Major rezoning, affecting 40% of the city, has downzoned neighborhoods where developers were building higher-density market-rate housing without taxpayer subsidies. Development has instead been funneled into smaller development zones where even greater density will be required, together with subsidies to produce affordable housing.

Historic Preservation versus Affordable Housing

Multi-family property owners have known for decades that a Landmark District is the kiss of the death for their properties: Landmarking makes it much more expensive to maintain and improve residential properties. Now, our brethren at REBNY have uncovered another negative of historic districts. In a recently released report, REBNY had found that landmarking of historic districts precludes the development of affordable housing. See the links below for a copy of the report and the Editorial view of Crains New York Business.

A Night in the Dumpster

 

Is this the future for micro-units in New York City? 

– Jack Freund

 

 

Anne Kadet Spends Some Time in Artist Gregory Kloehn’s Creation

[image]

Artist Gregory Kloehn on the roof deck and inside his converted dumpster at Pioneer Works in the Red Hook section of Brooklyn. Source: Kevin Hagen for The Wall Street Journal

 

By Anne Kadet

I’m writing this column from inside the dumpster I slept in last night. It’s a little stuffy, but not as cramped as you might expect. And it’s peaceful. No upstairs neighbors tromping overhead. Just the occasional truck rumbling by.

No, this isn’t my personal dumpster. It belongs to an Oakland artist named Gregory Kloehn. When he stays in New York, Mr. Kloehn lives here, in a 6-by-6-foot metal garbage bin parked on an art center’s fenced-in lot in Red Hook.

Perhaps you’ve seen a bit of Mr. Kloehn’s home already—videos of his charming dumpster were all over the Internet these past weeks. He has his $1,000 trash can tricked out with a bed, toilet, sink, granite counter, hardwood floors, lights and a single-burner stove. The metal roof cranks up to reveal two windows.

As soon as I heard about the dumpster, I called to suggest a home swap. Could I spend the night in his garbage bin while he stayed at my place in Cobble Hill? “Well, sure!” said Mr. Kloehn. He even offered to haul his dumpster home to a more desirable location. Would I like to spend the night on the waterfront? In Central Park?

Governor Cuomo Wastes $6 million in Unnecessary Effort to Protect Tenants

The RSA has just gotten its first look at the some of the ultimate outcomes of the investigations launched by the Tenant Protection Unit (TPU) created by Governor Cuomo within the State Division of Homes and Community Renewal (DHCR) and it’s not a pretty picture.

The RSA received copies of three “Notices of Audit Determination”, each of which involved Individual apartment rent increases (IAI). In each of these cases, the TPU disallowed certain expenses claimed by the owners either because they were not adequately documented or were not considered to be eligible expenses. In each case, the TPU recalculated the legal regulated rent and directed the owner to amend prior rent registrations to reflect a lower legal rent. And, in each of these cases, the actual rent paid by the tenant was not affected because the owners were charging preferential rents which were lower than the legal rent as calculated by the TPU.

These cases raise some serious issues about the justification and the role of the TPU. If the $6 million allocated to the TPU this year alone was intended to protect tenants, then the evidence so far seems to indicate an extraordinary waste of taxpayer dollars because the TPU audits in no way benefitted the tenants in occupancy. However, we suspect that the real purpose of the TPU was to hamstring owners and lay a foundation for further rent restrictions and the TPU is well on its way to meeting that goal. A schedule of allowable costs of IAI’s has never been promulgated and owners must now operate in unchartered waters. We encourage owners to maintain a detailed record of all IAI work going forward including contracts, invoices, receipts and cancelled checks as well as before and after pictures.

Here’s Why Your Rent Is So Ridiculously High (Rent Control)

With the average asking rent rising over $3,000, New Yorkers continue to wonder “Why is the rent so high?”. Business Insider Writer Josh Barro detailed several key reasons in an article titled “The 8 Reasons WHY New York Rents Are So Ridiculously High” to offer insight into the rising cost.  He attributes factors such as limited space, high property taxes,  and high constructions costs. Interestingly enough, #3 on his list is “Rent Control”.  Here is an excerpt:

 

 

3. Rent stabilisation raises your rent if you’re not rent stabilised. While the average rent for available apartments in New York City is now over $3,000, the U.S. Census Bureau says renters in New York City were only paying a median of $1,125 in 2011. What gives?

The answer is, there are lots of cheap apartments in New York. You just can’t get one of them, because they’re rent stabilised, and tenants with great rent stabilised deals cling to their apartments until they die.

The Cato Institute produced some great charts on this back in 1997, but the same dynamics still hold in the market today. In cities without rent control, rents for available apartments form a normal distribution around the Census median rent. Here’s a chart of Philadelphia rents in 1997:

Continue reading

If You Live in New York and You Rent, You’re Paying a Huge Tax You Don’t Even Know About

By Business Insider

If you live in New York City, you probably know that your income taxes are high. A combined city and state tax rate of 10.4% kicks in at just $22,000 of taxable income for a single person.

You probably don’t know that New York City has some of the country’s highest taxes on apartment buildings—and if you’re not subject to rent control, much of that cost is flowing through to you as a renter.

Not all property taxes are high here: New York actually has very low taxes on owner-occupied homes. Our property tax system is a perverse cross-subsidy from relatively poor renters to relatively rich homeowners.

If we just taxed all property at the same rate, apartment building taxes would fall by $1,000 to $1,500 per unit.

Here are a few charts that show just how bizarre New York’s tax system is, and how renters are getting screwed.

Continue reading

Most Renters Think NYC is Unaffordable but Still Plan to Stay

 

By LAURA KUSISTO

For all the talk from mayoral candidates about the middle class and proposals to make New York City more affordable, most New Yorkers think City Hall can’t do much to bring down their cost of living, according to a Wall Street Journal/NBC 4 New York/Marist poll.

 

Source: WSJ/NBC NY/Marist poll of 1,118 NYC registered votes conducted June 17-21 (2013)

 

And while few believe the city is affordable, most New Yorkers said they plan to stick around, according to the poll, highlighting the city’s complicated relationship with the high price tag of living here.

Continue reading

Mayoral Candidates Pander to Housing Advocates, but Weiner Defends Vacancy Decontrol Vote

 

Mayoral candidates Bill de Blasio, Adolfo Carrion, John Liu, Bill Thompson and Anthony Weiner answer questions from affordable-housing advocates at a forum Tues., June 26, 2013.
Mayoral candidates Bill de Blasio, Adolfo Carrion, John Liu, Bill Thompson and Anthony
  Weiner answer questions from affordable-housing advocates at a forum Tues., June 26, 2013.

 

By Irina Ivanova

 

Democratic mayoral hopefuls—minus City Council Speaker Christine Quinn—expressed strong support for affordable-housing protections at a forum sponsored by a coalition of community groups Tuesday.

Public Advocate Bill de Blasio, City Comptroller John Liu, former City Comptroller Bill Thompson, former U.S. Rep. Anthony Weiner and Adolfo Carrión, an independent and former Bronx Borough President, spoke in front of about 400 attendees at the Calvary-St. George’s Church in the Gramercy Park area of Manhattan. The candidates agreed broadly on stricter enforcement of building codes, mandatory inclusionary zoning in new developments and reforming the New York City Housing Authority. All five also said that the Bloomberg administration’s ambitious housing plan to create or preserve 165,000 affordable units by the end of June 2014, largely through incentives to private developers, will fall short of meeting the need for affordable housing in the city.

“We hardly gained anything because we lost an equal number of units from rent regulation and Mitchell Lama,” said Mr. de Blasio. “There’s over a third of the city paying more than 50% of their income for rent.”

They called for the use of nonprofit developers and the implementation of mandatory inclusionary zoning as ways to build more affordable apartments. Inclusionary zoning, which is currently voluntary, allows a developer to build additional units if a certain percentage of the development is set aside for low-income residents.

Candidates also spoke in favor of stricter building code enforcement. Currently, only one-third of the building code violations that is recorded by the city result in fines. Mr. Thompson said he would “dramatically expand” the city’s Alternative Enforcement Program, which imposes additional penalties on landlords of severely distressed residential buildings, and hire more staff devoted to that program. Mr. Liu said the city should penalize building owners with a lot of violations by limiting the number of buildings in their possession.

“Even when they get fines and violations, the Buildings Department keeps giving them more buildings. The left hand doesn’t seem to know what the right hand is doing,” Mr. Liu said.

Mr. Carrión said he would create “a Hall of Shame for slumlords,” and enable the city to take poorly maintained buildings away from their owners.

When it came to reforming the New York City Housing Authority, there was no shortage of ideas. The candidates had harsh words for the mayor’s Infill/Land-Lease plan, which would rent out Housing Authority land for the construction of market-rate apartments. Mr. Carrión said money raised from selling the air rights of Housing Authority developments should go toward repairing existing public housing and building additional affordable housing. Currently, the agency has a backlog of more than 240,000 repairs, a number that once stood as high as 420,000.

Meanwhile, Mr. Weiner said he supported development on Housing Authority land, but for uses other than market-rate apartments such as commercial. “Let’s have specialized housing for seniors,” he said.

All five candidates also supported halting the nearly $100 million payment Housing Authority gives to the city each year for services like policing and sanitation. Many housing activists say the payment, which was instituted during the Giuliani administration, amounts to double taxation on public-housing residents. No other housing provider in the city is required to make such payments.

The mayoral forum was sponsored by a number of community groups, including Community Voices Heard, Good Old Lower East Side, the Association for Neighborhood and Housing Development, Los Sures and the Pratt Area Community Council.

 

Source: Crain’s New York Business

Alms for the Upper Middle Class: Subsidized Apartments Aim at $200K Earners

 

 

 

 

By Stephen Jacob Smith

Standing outside a shiny new red and tan brick building at 401 West 25th Street, indistinguishable from any other late-2000s new construction throughout the West Side, you can catch a glimpse of the future of housing if New York City’s Democratic mayoral candidates get their way.

A young woman who works in finance and moved into this building from a “real shithole” in the West Village, a computer programmer from South Carolina, a lifelong New Yorker who moved in from the projects a few blocks south, and a gay couple—one a playwright, the other a social worker—with a son, who moved from 14th Street and Seventh Avenue.

Inside an Elliott-Chelsea apartment.

They all found places in a 22-story middle-income affordable housing development in an increasingly unaffordable Chelsea. The Elliott-Chelsea, developed by Artimus Construction, rose on New York City Housing Authority property with the help of an alphabet soup of government agencies. Some of the 168 units in the  building are typical low-income units, reserved for families earning under $40,000 a year. But the bulk of the complex is set aside for middle-income earners, a group that this cycle’s crop of Democratic mayoral candidates is eager to court.

Some of these units can legitimately be called middle-income apartments, with half a dozen one-bedroom apartments available to couples earning a combined $64,000 to $101,000 a year. But there are also 45 two-bedrooms that go for $3,421 a month, for households, no matter the size, ranging in income from $119,143 to $190,080. In the world of New York City affordable housing, this is what passes for middle-income.

Continue reading

Why the Rent Is So High in New York

By CATHERINE RAMPELL

In a magazine piece this week (and accompanying blog post), I talked about why many of the goods and services that high-income people consume are cheaper in New York — because it has such a large concentration of high-income people. I also mentioned that the big, glaring exception to this is housing, which is expensive for rich people as well as poor people.

So why is housing so expensive here, and getting even more so?

There are a few reasons. One is that New York has become a much more attractive place to live and work over the last few decades as crime has fallen and other amenities have improved. So demand for apartments here is up — and not just among people who live here full time.

Continue reading