News From the Human-Scale City: December 3rd, 2019

This is the city, and I am one of the citizens.
Whatever interests the rest interests me.”
-Walt Whitman

In this issue:

  • Human-scale Things to Do
  • Quote of the Week
  • Articles of Interest
  • Shopping at Amazon?
  • Roundup of Battlegrounds
  • Six Problems with the New Bill for Commercial Rent Control
  • Lifting Height Limits in Manhattan?
  • Donate to Humanscale NYC

 

Send errors, corrections, typo alerts to coordinator@humanscale.nyc

 


 

Human-Scale Things to Do

A Curated List for the Weeks Ahead to Enjoy the Human-scale City

 

  • Thursday, December 5, 7:00 at Caveat on Clinton Street, Manhattan, “Why Your Train is F*Cked: Service Changes” (Comedy)
  • Friday, December 6, 7:30 p.m. Depending on where you live, try the Northern Manhattan Community Land Trust Holiday Party (here) up in Inwood, or head over to Brooklyn for the Fort Green Association Holiday Party and Fundraiser, RSVP required here. or, if Manhattan-based, check out and if not then Amahl and the Night Visitors at the Holy Apostles Soup Kitchen 296 9th Avenue
  • December 6-22, Strasbourg-Alsace Christmas Market in Bowling Green, Manhattan, 11 a.m.-9 p.m.
  • Saturday, December 7, 7:00 The architecturally obsessed might want to check out the kinda cheesy film “House of Bamboo” made in 1955 and featuring footage of post-war Tokyo and Japan in full cinemascope under American occupation, 4:30 p.m. at the Japan Society. Or, explore Sunset Park and do some shopping at Bust Magazine’s annual, Women-owned Craftacular Holiday Fair at Industry City in Brooklyn from 11-7, and of not exhausted, go listen to “Classical Guitar in a Brownstone in Clinton Hill” via groupmuse, one of the great ways to hear music in NYC.
  • Sunday, December 8, Do some more shopping at the Holiday Handmade Calvacade at the Brooklyn Historical Society, then head over by 3:00 p.m. to The Boiler in Greenpoint, Brooklyn t hear a Panel Discussion on Rezonings with real urban planners: “Mulling the Record: Rezonings and Community Responses to City Planning

 

 

  • December 9, 7:30, 188 Suffolk, A Bar Talk: How our Societies Arise, Thrive, and Fall
  • December 10, 6:30, Support the Historic District Council at their annual gala at the University Club, or, check out a lecture at Graduate Center CUNY, “The Future of Global Capitalism: Branko Milanoic in Conversation”
  • December 12, 7:00 at Caveat on Clinton St: Political Circus: Why Democracy is F*Cked (And What To Do About It)
  • December 13, 7:30, Uncle Vanya (the play, with our own treasurer in the cast), Columbia University
  • December 14, Feminist Pop-Up Holiday Market at The Floor in Brooklyn, (310 Atlantic Avenue)
  • December 15, 6:00, Washington Square, Unsilent Night Parade of Music to Tompkins Square Park
  • December 17, Albertine Books, Manhattan, panel discussion of Marie N’Diaye’s book, Three Strong Women

 

Quote of the Wee

Sean Khorsandi, Executive Director of Landmark West wrote:

 

 

Articles of Interest

 

Buck the BQE: The City Should Not Replace Key Stretch of the Cantilevered Brooklyn Highway. (Daily News)

 

Restoring Brooklyn’s Queen of Department Stores
The cast-iron facade of the original Abraham & Straus store in Downtown Brooklyn was saved and attached to the base of a new glass tower.
(NY Times)

 

Real Estate Thought It Was Invincible in New York. It Wasn’t.
This was the year that New York bit back against big real estate. First, a slate of Democratic candidates declared that they would not take money from real estate developers and were swept into state office last fall, displacing incumbents who were friendly to the industry. In February, Queens officials scuttled Amazon’s plan to open a huge headquarters there. Then in June, the new Democratic majority in Albany passed historic protections for renters, reversing decades of a Republican-controlled Senate chipping away at these laws. (New York Times)

 

Artists Chase Disappearing Space
Faced with rising residential and commercial rents, a dearth of inexpensive neighborhoods left to move to and a dwindling supply of affordable artist-friendly industrial spaces, more and more of them are working out of bedrooms, living rooms or rented studios split two or three ways — in many cases changing their practices to accommodate the costs and constraints of living in the city. (New York Times)

 

Battery Park City again leads Manhattan and America with the highest average rent: report
Even though condo prices are falling, rental prices are rising. RENTcafe recently released a report that explores which neighborhoods in the country, by ZIP code, are among the most expensive in 2019. According to their findings, out of the top ten most expensive areas, seven ZIP codes were in Manhattan. (The Villager)

 

MTA negligence, inspection flaws led to Brooklyn Borough Hall ceiling collapse: Audit
Years of negligence and “serious flaws” in inspection techniques led to the high-profile, partial ceiling collapse in the Brooklyn Borough Hall station last year, according to a new audit. (AM-NY)

 

Underground Lives: The Sunless World of Immigrants in Queens
An open secret, the basements are a haven for thousands of people who work in restaurant kitchens, on delivery bikes, in small factories or on construction sites. (New York Times)

 

Like Restaurants, Buildings Will Get Grades (D’s for Energy Guzzlers)
Next year, New York City buildings will be required to display their letter grades on energy efficiency just like on restaurants. The new grade system springs from Local Law 33, which was passed in 2017. The main goal of that legislative package is to reduce the greenhouse gas emissions of buildings, which are responsible for two-thirds of emissions in the city. Biggest guzzlers are tall glass buildings! (New York Times)

 

Cuomo panel moves closer to keeping Working Families off the ballot in NY
A panel created by Gov. Andrew Cuomo and the Legislature approved a plan Monday that could put the left-leaning Working Families Party and other minor political parties out of business. The Public Campaign Finance Commission voted to raise a requirement for minor parties to maintain ballot status from 50,000 votes in statewide elections to at least 130,000 or 2 percent of the total vote. (New York Post)

 

Could New York City Eliminate Free Street Parking?
Car culture has already been changed by bike and bus lanes. A transportation panel in Manhattan has floated the idea of eliminating free street parking entirely. ( NY Times)

 

NYCHA lead czar had toxic record with city’s private housing stock
Before Mayor Bill de Blasio tapped Vito Mustaciuolo as the NYCHA’s general manager in January 2018, he oversaw the enforcement division at the city’s Department of Housing Preservation and Development — which bungled nearly 6,500 lead cases in less than two years.
(New York Post)

 

With flip tax, a push to save Affordable Housing (Brooklyn Daily Eagle)

 

 

Shopping at Amazon?

 

As we are heading into the holiday season, some things to think about regarding Amazon:

 

The Life and Death of the Local Hardware Store – Better, Cheaper and Faster Than Amazon (NY Times)

Chasing Amazon, Retailers Are in a Never-Ending Arms Race (NY Times)

Amazon’s Expansive, Creeping Influence in an American City
Amazon’s shipping last year eclipsed that of FedEx and U.P.S. put together.  In Baltimore, there are two mammoth Amazon warehouses, built with heavy government subsidies, operating on the sites of shuttered General Motors and Bethlehem Steel plants.  Computers monitor workers during grueling 10-hour shifts, identifying slow performers for firing. (NY Times) 

Paris to Amazon: No Free Delivery for You  
The Mayor of Paris, Anne Hidalgo, uses New York’s capitulation to Amazon as a warning: Manhattan has “become a huge delivery area where anarchic shutdowns block all traffic…the nightmare that awaits us.”  Hidalgo’s proposal would limit deliveries to inner Paris neighborhoods to specific times, with a maximum number of deliveries capped for each area. Each of these deliveries would come with a surcharge. (CityLab)

 

Roundup of Battlegrounds

 

The Controversial SoHo/NoHo Rezoning Report is out.  Activists are still studying it.  You can read it here. 

Land use gurus stall Crown Heights Rezoning (Brooklyn Paper)

Op-Ed: Levin’s Commercial Rent Control Bill Too Weak to Address Crisis
CM Stephen Levin’s “commercial rent control bill” does not include the most basic right – the right to a lease renewal.  The bill only addresses the rent while ignoring the unfair commercial lease renewal process, the root cause forcing businesses to close.  The composition of the commercial RGB tells another story.  The chairperson is required to have a background in “finance or economics.”  Four of the board members also require a background in “finance, economics, real property management or community development.” City Hall translation: majority landlords and developers. (Kings County Politics)

CB3 votes against special hotel permits plan, second CB to do so this month
For the second time this month, a community board has rejected the city’s proposed plan to require special permits for hotel development just below Union Square.  The plan would require special permits for new hotels for most of the area between East Ninth to East 14th Streets, and Third Avenue to Fifth Avenue.  Part of the CB3 resolution read, “the city’s refusal thus far to recognize the historic significance of the current, albeit humble historic building stock that could be demolished as result of this action is disturbing.”  One building cited as an example was 88 East 10 St. “CB3 strongly disagrees with the DCP’s analysis that there would be no adverse impact on neighborhood character if 88 East 10th Street built in 1845 by Peter Stuyvesant were demolished,” the resolution reads (The Villager). 
 
Tensions Rise Amid Uncertain Timeline for Public Review of Bushwick RezoningThe de Blasio administration’s environmental impact statement (EIS) on its proposed Bushwick rezoning is due to be released in the coming months, according to the Department of City Planning–though there is no specific public release date.  Brooklyn’s Community Board 4 said they have reached out to DCP to have another meeting prior to the release of EIS. But DCP tells City Limits the agency declined to meet. This will be the 7th neighborhood rezoning under Mayor Bill de Blasio’s housing plan. (CityLimits)

 ‘Queens is not for sale’: Community activists protest EDC’s plan to Put New Mega-city on Top of Sunnyside YardsJustice for All Coalition, Stop Sunnyside Yards, Woodside on the Move, Take Back NYC, Humanscale NYC and several other community activists and leaders rallied on Monday on Skillman Avenue to demand that all public officials and city agencies — particularly the New York City Economic Development Corporation (EDC) and the Department of City Planning (DCP) — stop all plans to develop Sunnyside Yards. (QNS.com)

Union Theological Seminary students vandalize construction wall in protest of luxury condo high-rise project. (here)

High-rise proposal on former McDonald’s site sparks controversy among community members. (here)

 

Six Problems with the New Bill for Commercial Rent Control

 

None of the solutions proposed really attack the various causes of the retail apocalypse.

 

 

There has been a strangely orchestrated p.r. campaign that City Councilmember Levin launched over a new bill in the Council called “Commercial Rent Control”.  It is odd that the press reported on it before the bill was even released and before any journalist had looked at the bill. It is being touted as superior to the Small Business Jobs Survival Act. 

We decided to take a deep dive into both pieces of legislation. Before laying out the problems and differences, back up and think about why small business is struggling so much in New York City. The retail apocalypse appears to have five causes, some of which are outlined in Scott Stringer’s recent report here:

1.  Amazon has changed the way customers shop, anchoring its dominance on massive public subsidies that include, but are not limited to: not paying sales or federal taxes, not paying the environmental and social costs of their packaging and use of robots, not being called to heel by the Justice Department for monopolistic practices, and not paying the city for their use of the sidewalks and streets as distribution centers. Hey, even Christmas tree farmers rent sidewalk space for many thousands of dollars for just a few weeks! 

2. Successful small businesses are usually booted out when their leases expire. At lease expiration, landlords raise rents dramatically as a means of evicting the small business in the speculative hope of landing a national chain store, real estate agency, bank, or “dumb money” who can afford higher rents. Small businesses are literally helpless at this moment in their business.

3. Many small businesses during their start-up periods face daunting odds anyway.  Inexperinece or poor business decisions can make them go belly up even before their leases expire, for a host of reasons not just linked to Amazon.

4. The rent landlords ask is very often just too damn high.  

5.  Many of the “rules of the game” are biased in favor of Chain stores over Mom and Pops.  These range from unfair taxation, regulatory compliance, zoning frontages, national management support, and access to cheap loans and low-cost supply chains for nationally sourced inputs. 

Aside:  related to all this is the fact that the City has a misguided official harassment policy for micro-businesses that don’t operate in storefronts.  For example, Mayor Laguardia got rid of pushcarts. The massive kiosk sprawl around all the original food markets like Washington Market was regulated out of existence, and even impoverished Senegalese street merchants are routinely harassed out of Canal Street and their goods confiscated on the nonsensical theory that fake plastic handbags flown in from China somehow do harm to Hermes. 

Since there is no credible research to show which of these five causes is more important than the other, the fair approach is to assume that they all have an equal effect on the retail apocalypse.

So how do the two bills in the City Council propose to deal with these five problems?  The Commercial Rent Control Bill takes a crack at dealing with Problem #4 (I’ll explain how in a minute).  The Small Business Job Survival Act proposes to solve problem #2 and #3 by setting up a binding arbitration process:  if landlord and small business cannot come to terms on their own upon the expiration of a lease, the small business owner can insist on a legally binding arbitration process, paid for by both parties, not the public.  The bill has plenty of outs for a landlord to kick out a bad apple small business, should that business fail to pay rent, wreck the property or engage in illegal activity. The selling point for the Act is that it doesn’t try to replace the market in setting rents, but instead equalizes the power imbalance between landlord and small business by providing a binding process of negotiation. It is about providing justice at a critical point in the life of a successful small business.

The Commerical Rent Control Bill, by contrast, tries to replace the market in setting rent increases with a human “Board” composed of 8 commercial landlords appointed by the Mayor and 1 small business representative, also appointed by the Mayor.  This board would set limits on annual rent increases, modeled on the toxic Rent Guidelines Board (where residential tenants and landlords face off every other year in a giant brawl).  The baseline rent would be existing rent levels across the city, kind of frozen in time at whatever level they are when and if the Bill passes.

Here are the promised seven problems with the Commercial Rent Control Bill.

  1. The rent guidelines board is hardly a good example of a regulatory body to imitate, copy, or use as a model.
  2. The Levin bill takes as the baseline rate the currently inflated (or deflated, depending on the neighborhood) market rents and sets them in stone as a baseline. Why do that?  It is the crudest kind of regulation that ignores the nuanced way markets work in varying rents through time and space.
  3. The composition of the proposed board is toxic on several levels:  it features excessive Mayoral domination of the board, it requires silly “expertise” requirements (training in finance and economics is irrelevant to what is a power dynamic problem).  Crazily, only 1 of 9 members is supposed to represent the small business sector, and the rest are all dominated by the commercial landlord class. 
  4. The problem of the power imbalance at the moment of lease renewals is of equal if not greater than the problem of high rents but is ignored in this bill.  You cannot fix rents without fixing the lease renewal process as an eviction method.
  5. The bill does nothing about Chain stores (other than attempt a definition). 
  6. The bill does not require the Mayor’s appointees to make an inquiry into the financial problems of small business (interest rates, labor costs, taxation, heating and cooling, etc, ) it only looks at the commercial landlord’s financial interests

On the other hand, what is nice about the bill is the attempt to limit its effect somehow to smaller businesses, although it does not do that very well.  The bill is supposed to apply to businesses of less than 10,000 square feet.   It isn’t clear that square footage is the right way to go. It might be much smarter to a measure of the annual revenue of the small business as the stronger way to limit the application of the law.  

For these reasons we are skeptical about the Commercial Rent Control Bill.  What we really need is a mix of policies to be put into place. These might include:

a)  a version of the Good Cause Eviction bill for commercial tenants, with 3% over the rate of inflation as the standard.  It would solve both the high rents and the lease renewal problem at the same time and remove the issue from Mayoral power/control. At most you would need a small regulatory body to enforce the provisions of Good Cause.  Failing that, the Small Business Jobs Survival Act would be better second best solution since it deals with leases.

b) Aggressive taxation of Amazon’s packaging and use of the streets, as well as taxation of robot usage possibly even a higher tax on e-commerce sales in NYC for businesses not classified as “Mom and Pop.” This is justified because of the massive social costs and negative externalities that e-commerce has created as well as the positive social costs and externalities that Mom & Pops bring to the city.

c) A law limiting chain stores to a specific number of chains in each Borough.

d) Tax breaks for landlords that keep profitable, small, unique, non-chain, “legacy” businesses owned by NYC residents in place at low rents.

Let us know your ideas!

 

Lifting Height Limits in Manhattan

 

(photo is of Dubai in the Clouds, courtesy Bored Panda)

 

On Monday, December 1, the New York State Assembly Committee on Housing held a public hearing on the idea of lifting the “height cap” in Manhattan.  Humanscale NYC’s submitted testimony, which is reproduced below.  Excellent testimony against this silly idea was presented by City Councilmember Ben Kallos, the Municipal Art Society, urban planner George Janes, the Landmarks Conservancy, and Save Central Park.  You can listen to their testimony at this video link.  

Testimony Against Lifting the FAR Cap

Lynn Ellsworth Human-Scale NYC

Every year the Real Estate industry sends its lobbyists to Albany legislators demanding that the FAR cap be raised, usually trumpeting a vague list of dog-whistle words like “affordable housing,” “jobs,” or “global competitiveness.”  There is even a video on Facebook of City Planning staff –(those staff who are ideologically captured by the theory I am about to describe) – who declare their determination to return every year to Albany to lobby away the FAR cap.  And every year a host of well-informed non-profits and city planners not affiliated with the current administration explains why REBNY’s idea is a bad idea and why those dog-whistle words have nothing to do with the FAR cap.  I will be doing the same this year, as Chair of Human-scale NYC, a nonprofit that promotes a human-scale urbanism.
 
I’m an economist by background and will be using my own research on the matter to address the following points:
 

  1. The trickle-down supply-side theory and framework used to push this idea has just wrong on multiple levels. The real agenda here is chasing profits for extremely concentrated group of powerful real estate interests.

 

  1. The causal relationship between FAR caps, upzoning in general, and affordable housing is the opposite of what trickle-down theorists want.  The data shows that upzoning and MIH in general causes housing prices to rise because of a host of other market failures in the real estate industry.  Upzoning, alas, is a failed strategy if your goal is affordable housing.

 

  1. The underlying causes of the housing affordability issue in NYC are unique and need to be addressed by new policies directly, not by granting developers more FAR. 

 
On the first point about supply-side theorizing: trickle-down housing supply fundamentalism is a policy doctrine defined by its primary claim: those zoning regulations that supposedly limit what developers can do cause high housing prices. Other factors that might cause high housing prices are ignored, including the decreasing supply of land and many demand factors such as international investor a and REIT demand for real estate assets in a low interest rate macro-environment. 
 
Trickle-down fundamentalists argue that the most important policy priority is to eliminate regulatory constraints and “unfetter” real estate developers so they can remake cities with a flood of market-supplied luxury housing in the unfounded hope that housing costs for everyone in the city will eventually –  “in the long run” – go into a long term free fall (as opposed to a temporary dip). This has just not been proven to be true either theoretically or empirically outside suburban areas that have elastic supplies of land.
 
Housing supply fundamentalism also has a plotline like this: an imaginary NIMBY population of white single-family homeowners and “blue-haired” [sic] apartment owners and “villain” [sic] preservationists are squatting on the historic centers of high-growth cities, specifically in buildings that, according to Edward Glaeser, the originator of this theory, ought to be torn down and replaced with skyscrapers (Glaeser, Gyourko, and Saks 2003; Jenkins 2015).  These homeowners are supposedly manipulating enthralled politicians and the zoning codes to prevent new construction, all with the presumed aim of increasing their personal property values. No evidence is given for any of this. It is all just a plotline borrowed from a different story, the one having to do with those suburbs that prohibited apartment buildings in suburban Main Streets.  Understand as well that that same conservative economist who came up with all this has also written that towerizing the city should be done to attract rich taxpayers without children because he thinks their upward mobility and childlessness would be “a fiscal boon” to the city and that they would be “an unqualified improvement” to our city’s demographic mix (Glaeser, Gyourko, and Saks 2003)
 
Adherents to what amounts to an anti-regulatory, conservative school of thought also theorize that unemployed rust-belt workers ought to be moving en masse to New York City – ignoring their attachments, histories and lives in order to behave like mere factors of production for the booming tech and financial industries.[1]  This same group of anti-regulatory economists also argue that high housing prices in Manhattan could be preventing college graduates from serving as innovators for those same industries.  In one panicky “simulation” model produced by this school of thought, “the misallocation” of Rustbelt labor bizarrely “stuck in Detroit” and other “loser” cities (whose jobs were lost to China or the union-free South) is the cause of trillions of dollars of imaginary lost GDP growth (Hsieh and Moretti 2018).  This is all fantasy.
 
 
It is obviously easy to pick apart this theorizing. It is based on lots of absurd assumptions such as the existence of a perfectly competitive real estate industry that has not a hint of oligopoly or monopoly within, land available elastically, homogeneous consumers, the irrelevance of demand factors on housing prices, all while assuming away and trivializing the social costs and negative externalities of their shock and awe strategy to demolish and rebuild a world like Dubai.  Maybe because it is so easy to pick apart, trickle-down theorists have resorted to inflated demographic projections for NY, which are used to bully and terrorize politicians into the notion that towerizing the city is not a choice made to benefit big developes and is somehow essential to accommodate this presumed population growth. Alas, the demographic growth has not materialized and even if it was coming, as former Chair of City Planning points out, the 1961 zoning code has enough FAR to accommodate 11 million inhabitants, a good deal more than our current population.
 
But instead of getting into all theoretical issues, let me illustrate the real profit motives behind lifting the FAR cap:  Page 195 of the Financial Feasibility Study for the MIH program reports that developers were getting a 94% return on costs – an astonishing measure of profitability – for high-rise development in the “hot” luxury condo market of Manhattan and downtown Brooklyn (BAE Urban Economics Inc. 215AD).  This is a shocking large figure and explains several phenomenon.  First, it shows why international and REIT capital perceives the existing Manhattan skydome as a gold rush opportunity that exists nowhere else in the world. Because of this, their profit figure actually makes the case for more regulation, not less.
 
The reality is that our zoning code is already providing real estate capital with multiple perverse incentives to misallocate and waste capital on unneeded luxury high-rise towers. With the potential of a 94% return on costs, why would any of the big-time developer’s bother with a. 4% rate of return on a six-story walk-up in Williamsburg that is filled with low-income Section 8 tenants?  Second, because profits increase dramatically if you can capture unencumbered views fast enough – (before they get wrecked by another developer) – we’ve been witness to an unregulated race to the top with developers churning the properties as fast as possible so as not to be the last sucker holding the asset when the music stops.  
 
Former City Planning Chair Joseph Rose spoke eloquently of this problem. In his words, the code has unleashed incentives that do “violence to the urban fabric” and that  “each new building tries to achieve better views by being taller than the last. The consequence has been a powerful inducement to break away vertically as far as possible from the neighborhood pack. While there is nothing wrong with nice views, it is not necessary to have a city shaped by a desperate grab for them.”  Rose then argued that “height limits were clearly needed” and that they needed to be imposed before there was more “degradation of valuable neighborhoods” and before there was more “manipulation of the code by those indifferent to the general consequences of their actions.”  Needless to say, his reform ideas were all killed off by the real estate industry.  But I hope it is obvious now that the request to lift the FAR cap is clearly one of those “manipulations by those indifferent to the general consequence of their actions” (Joseph B. Rose 1999).
 
On my second point:  there is no causal relationship between FAR and affordable housing.  Even the Furman Center, which is deeply allied to Edward Glaeser’s conservative, anti-regulatory school of thought, has written that “there is little empirical evidence about the net effects new market rate housing on the prices and rents of nearby homes.”  But yet, strangely we do have evidence.  Tom Angotti’s book cites plenty of data about displacement in his case studies of East Harlem, Williamsburg, and Chinatown (Angotti et al. 2016). Economist Donovan Rkpkema studied the racial make-up of Upper East Side census tracts over a ten-year period in which those tracts saw the construction of 18 residential skyscrapers. He reports a massive reduction in low and moderate income black and white residents and their replacement by the wealthiest household group who were classified as “other” a racial category best interpreted as international investors (Rypkema 2016, 16).  Lastly, industry analyst and insider Nancy Packes reports that during the recent 2018 supply glut of luxury new constructed apartments, prices of the luxury rental units nonetheless kept rising, not falling (Packes 2018).  While the Furman Center likes to point to a study by Mast that claims to show that upzoning can lead to a reduction in housing prices, that is just a simulation model and simulation models very much suffer from a garbage in, garbage out problem, especially if they are coming from people in the anti-regulatory, trickle-down school (Mast 2019).  Studying a real place, economist without a dog in the fight Yonah Freemark found that upzoning in Chicago led to higher housing prices, not lower prices (Freemark 2019).
 
The mystery of why this can happen leads me to the third point:  the cause of high housing prices in NYC is not due to regulatory constraints or the FAR cap as REBNY and trickle-down theorists would have you believe.  I’ll talk about three variables.
 
The first is the tsunami of international capital and REIT money that has been sweeping over NYC for years, crowding out local demand and raising prices, in a price climb widely “fueled by speculation and exuberance” (Martin 2019; 2016).  The effects are clear. The Real Deal reported that according to the latest U.S. Census Bureau data, 60 percent of residences in a 14-block tract of Midtown East between 49th and 56th streets were “seasonally vacant” between 2013 and 2017 (Solomont and Sun 2019). This has long been happening in NYC, and described frequently in the real estate press (Solomont and Sun 2019). There are many other indications of the scale of this investment. For example, real estate financier Robert Knakal recently pointed out that foreign investors have of late accounted for  “42% of capital deployed” in the city’s real estate market and since 2018 their investments amount to about $6.23 billion, and he hasn’t even added in the mountain of REIT money (Knakal 2019). 
 
The second variable has to do with trying to fill a bucket that is filled with giant holes. The shortage of “affordable” housing in New York City is also due to the systematic destruction of affordable housing by multiple Mayoral administrations over an 80-year period.  To benefit the real estate industry, New York politicians destroyed over a million affordable housing units, effectively creating a crisis at the low-end of the housing market.
 
Last, the issue that nobody seems willing to discuss is that about a third of our city’s landmass is untouchable and has been shrink wrapped into single family R1 and R2 zoning, the economic impact of which is to force real estate capital into the densest county in the country, Manhattan.  There seems to be no plan to add density where land is cheap on the periphery of the city in places like Richmond Hill, Bay Ridge, and Douglaston.  Rypkema notes that according to REBNY’s own calculations, low-density residential zoning is nearly 20 times the problem as are any regulatory constraints in Manhattan (Rypkema 2016, 7).  The issue is really where to put new, incremental, growth, not building skyscrapers and mega-projects.  The current City Planning team is not capable of thinking this way.
 
 
For all these reasons, we oppose any lifting of the FAR cap.
 
Bibliography
 
 
Angotti, Tom, Sylvia Morse, Philip DePaolo, Peter Marcuse, and Samuel Stein. 2016. Zoned Out! Race, Displacement, and City Planning in New York City. 1st edition. New York City: Terreform.
BAE Urban Economics Inc. 215AD. “Market & Financial Study.”
Duflo, Esther, and Abhijit Banerjee. 2019. “Opinion | Economic Incentives Don’t Always Do What We Want Them To.” The New York Times, October 26, 2019, sec. Opinion. https://www.nytimes.com/2019/10/26/opinion/sunday/duflo-banerjee-economic-incentives.html.
Freemark, Yonah. 2019. “Upzoning Chicago: Impacts of a Zoning Reform on Property Values and Housing Construction.” Urban Affairs Review, January, 1078087418824672. https://doi.org/10.1177/1078087418824672.
Glaeser, Edward, Joseph Gyourko, and Raven Saks. 2003. “Why Is Manhattan So Expensive? Regulation and the Rise in House Prices.” Working Paper 10124. National Bureau of Economic Research. https://doi.org/10.3386/w10124.
Hsieh, Chang-Tai, and Enrico Moretti. 2018. “Housing Constraints and Spatial Misallocation.” SSRN Scholarly Paper ID 3184219. Rochester, NY: Social Science Research Network. https://papers.ssrn.com/abstract=3184219.
Jenkins, Simon. 2015. “What Are Cities Doing so Right – and so Wrong? Edward Glaeser Talks to Simon Jenkins.” The Guardian, May 21, 2015, sec. Cities. https://www.theguardian.com/cities/2015/may/21/what-are-cities-doing-so-right-and-so-wrong-the-experts-go-head-to-head.
Joseph B. Rose. 1999. “Reforming the New York City Zoning Resolution.” http://www.tenant.net/land/zoning/unifiedbulk/reforming.html.
Knakal, Robert. 2019. “Foreign Investment: Down but Not Out.” Commercial Observer (blog). March 20, 2019. https://commercialobserver.com/2019/03/foreign-investment-down-but-not-out/.
Martin, Will. 2016. “‘You Can Concrete over the Entire Length and Breadth of the UK and House Prices Would Still Rise.’” Business Insider. April 23, 2016. https://www.businessinsider.com/societe-generales-albert-edwards-on-the-uk-housing-market-2016-4.
———. 2019. “The Key Driver of Britain’s Wildly Inflated Property Market Might Not Be What We Think It Is.” Business Insider. October 29, 2019. https://www.businessinsider.com/britains-housing-market-is-not-being-driven-by-a-supply-and-demand-imbalance-2017-4.
Mast, Evan. 2019. “The Effect of New Market-Rate Housing Construction on the Low-Income Housing Market.” W.E. Upjohn Institute. https://doi.org/10.17848/pb2019-13.
Narefsky, Karen. 2014. “What Ed Glaeser Can’t Grasp: Trickle-Down Gentrification Is a Myth!” Salon, January 4, 2014. https://www.salon.com/2014/01/04/what_ed_glaeser_ignores_and_the_myth_of_trickle_down_gentrification_partner/.
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[1] This story ignores the facts on the ground as to how unemployed Rustbelt workers behave when they lose their jobs.  As Nobel Prize winning economist Ester Duplo quips, affected workers juggle complex trade-offs between the need to be in proximity to long-established family and neighborhood connections, their age, the possibility of actually capturing a fleeting opportunity if one moves, and a host of life-cycle variables.  Sometimes, instead of moving, such workers “were substantially more likely to die in the years immediately after” the job loss, as a study in Pennsylvania found (Duflo and Banerjee 2019).

 

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