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I love this article (disclosure: written by friend of friend) and 421a is ludicrous. However, primary occupancy in the major properties under discussion here (

I love this article (disclosure: written by friend of friend) and 421a is ludicrous. However, primary occupancy in the major properties under discussion here (the three along 57th plus the Time Warner center and a few others) is incredibly low, and basically speaks to high-end real estate bubble. These are high-visibility properties that people think of as good investments, whether because they can be re-sold later for similar valuations or because they're hedges against russians or chinese having to leave their own countries for a variety of reasons. In that regard, it's totally worth noting that NYC does a much better job than most cities at permitting the construction of new luxury units that keep billionaires from pricing everyone else out of the market while extracting concessions like low- and moderate-income housing or the building of new parks. Imagine if each of the 104 billionaires who bought at 432 park ave had bought their own greenwich village townhouse instead. Supply would be as short as it is in san francisco. That said, we can extract a lot more from builders and billionaires along the way, and we should. NYC still needs more housing -- the small proportion of rent regulated housing that accompanies these buildings remains insufficient to build the quantity of housing needed to avoid pricing actual new yorkers out, and to keep offering the services the city deserves.

bradleyjg 11y ago
A few points. First, I agree 421a is ludicrous, which is why I don't see why you credit NYC for "extracting concessions like low and moderate-income housing". 421a and similar programs trade billions of dollars in tax revenue that could be spent on everyone for hundreds of thousands of dollars in rental subsidies handed out to a few lucky lottery winners. That is terrible public policy. A park or subway station improvement is a little closer call, but cash ought to be the gold standard. Second, I'm not sure I care whether billionaires buy castle in the sky in midtown or townhouses in Greenwich Village. I wasn't going to be able to afford the townhouses anyway. It seems like the people most concerned about billionaires bidding up property are the centimillionaires being priced out. 100 units, even extremely large units, are a drop in the bucket for NYC. The knock-on effects are just not that large out in the places where the middle and lower classes live. Finally, in terms of extracting more, I think the in-kind programs are both inefficient and a massive opportunity for corruption. I'd much rather see all the special deals -- parks, affordable housing, etc. eliminated and property taxes that reflect reality imposed, with perhaps a small pied-à-terre differential. The billions of dollars of missing tax revenue would be a lot more valuable to NYC than a few more housing lotteries or a small park, if for no other reason than you can subsidize rentals with cash but you can't fix potholes with subsidized rentals.
- allworknoplay 11y ago
  Right, but a rich person with lots of money to throw around would buy three a three unit townhouse and price out three families just to keep it empty 80% of the time -- This is the value of midtown luxury building construction -- it draws a remarkable amount of the money away from pricing out actual new yorkers. I agree that we don't do enough -- that's why I said that twice. I was simply adding that there is some value to construction of luxury property buildings, and perhaps insinuating that if we went so far on taxes that none of these got built, we would be worse off. I don't know where the actual trade off is -- again, we're well beyond it with 421a.
  - minot 11y ago
    > Right, but a rich person with lots of money to throw around would buy three a three unit townhouse and price out three families just to keep it empty 80% of the time Sorry but what's wrong with that? We have land tax for exactly the same reason. If someone is willing to own the expensive apartments (and the expensive land that they build upon) and pay the taxes, why is that a problem? I guess I don't see how gentrification is a problem at all. If Manhattan is expensive, people should move out. This is a genuine question. Why should they live there if they can't afford to live there? Is it a good use of public resources (policy makers' time, potential tax income etc)? Honest question.
    - rtpg 11y ago
      Well the big thing is that most people can't just move if they want to. They have their jobs, and (especially if they're older) it might be really hard for them to get an equivalent job elsewhere. So moving will already cost them money. The second part of this is that it costs a lot of money for these people to move/be without income. So for some, they might just be too poor to move, and suffer with diminishing disposable income as the price of everything else around them rises. I think the core of the argument is that it's not like these rich people came into a barren land and built giant apartments. There are many people in NYC that simply live there, and why let these billionaires come in and make everything more expensive? I think that's the crux of the counter-argument. I think that a combination of proper tax brackets, loose zoning regulation allowing for high-density housing + commercial mixes, and primary-residence rules can solve the problem. I think the central moral argument is that having giant empty houses in the middle of a city with a community trying to do otherwise isn't exactly useful for society as a whole (see Detroit) , so we should disincentive it as much as possible.
cynicalkane 11y ago
I agree with most of this, but "concessions for low-income housing" don't actually achieve the goal of making housing more affordable, because they penalize developers for developing. The effect is to redistribute a small quantity of housing to the lucky poor--and I mean "lucky" because the waiting list for affordable housing in NYC is years long--without voters really feeling like their wealth is being redistributed. But I live here and $3000 is redistributed from my bank account every month; unfortunately, it is redistributed to a rich landlord rather than the deserving.
- LordKano 11y ago
  The reality of NYC housing, real estate and taxation are vastly different from what I have experienced. As someone living in Pittsburgh, $3000 a month in rent strikes me as ridiculous. For that kind of money, one could have a McMansion in an upscale suburb 20-30 minutes away from downtown.
  - allworknoplay 11y ago
    The unfortunate reality is that NYC was not as expensive until fairly recently, and lots of long-time residents have been utterly priced out of their long-time home.
    - CPLX 11y ago
      When I moved to NYC sixteen years ago I heard people say that same exact thing a lot. I am pretty sure sixteen years before that people were also saying it.
      - wwweston 11y ago
        And it may well have been true at each point; wage stagnation goes back 50 years...
  - cddotdotslash 11y ago
    Every single time rent in NYC or San Francisco is brought up, everyone makes comments like "I only pay $500 a month for my ten-bedroom house in Kansas!" And the reason that rent in NYC is higher than rent in Kansas or Pittsburgh, etc. is simply because more people want to live there. It's simple supply and demand.
AnimalMuppet 11y ago
> However, primary occupancy in the major properties under discussion here (the three along 57th plus the Time Warner center and a few others) is incredibly low, and basically speaks to high-end real estate bubble. So? I don't care if you bought it to live in, to invest in, or to farm pigs in. It should be taxed according to the actual market value, which pretty much means taxed based on the price you paid for it (at least in the year you bought it).
armsmasher 11y ago
Author here (thanks!), and yes, you're right, the alternative to ultra-luxe construction is more frightening, and we know that because of San Francisco. That's worth keeping in mind.
ceras 11y ago
> it's totally worth noting that NYC does a much better job than most cities at permitting the construction of new luxury units NYC builds fewer units per resident than any city in the US except probably SF. It just looks impressive because each new building adds a mark to the most visible part of the skyline, but when you consider the volume of units across NYC it's really, really low. Prices aren't at SF level, but they are still getting unreasonably high.
usaphp 11y ago
Not many Russians in New York, mostly Ukrainians.

bradleyjg 11y ago

A few points. First, I agree 421a is ludicrous, which is why I don't see why you credit NYC for "extracting concessions like low and moderate-income housing". 421a and similar programs trade billions of dollars in tax revenue that could be spent on everyone for hundreds of thousands of dollars in rental subsidies handed out to a few lucky lottery winners. That is terrible public policy. A park or subway station improvement is a little closer call, but cash ought to be the gold standard. Second, I'm not sure I care whether billionaires buy castle in the sky in midtown or townhouses in Greenwich Village. I wasn't going to be able to afford the townhouses anyway. It seems like the people most concerned about billionaires bidding up property are the centimillionaires being priced out. 100 units, even extremely large units, are a drop in the bucket for NYC. The knock-on effects are just not that large out in the places where the middle and lower classes live. Finally, in terms of extracting more, I think the in-kind programs are both inefficient and a massive opportunity for corruption. I'd much rather see all the special deals -- parks, affordable housing, etc. eliminated and property taxes that reflect reality imposed, with perhaps a small pied-à-terre differential. The billions of dollars of missing tax revenue would be a lot more valuable to NYC than a few more housing lotteries or a small park, if for no other reason than you can subsidize rentals with cash but you can't fix potholes with subsidized rentals.

allworknoplay 11y ago
Right, but a rich person with lots of money to throw around would buy three a three unit townhouse and price out three families just to keep it empty 80% of the time -- This is the value of midtown luxury building construction -- it draws a remarkable amount of the money away from pricing out actual new yorkers. I agree that we don't do enough -- that's why I said that twice. I was simply adding that there is some value to construction of luxury property buildings, and perhaps insinuating that if we went so far on taxes that none of these got built, we would be worse off. I don't know where the actual trade off is -- again, we're well beyond it with 421a.
- minot 11y ago
  > Right, but a rich person with lots of money to throw around would buy three a three unit townhouse and price out three families just to keep it empty 80% of the time Sorry but what's wrong with that? We have land tax for exactly the same reason. If someone is willing to own the expensive apartments (and the expensive land that they build upon) and pay the taxes, why is that a problem? I guess I don't see how gentrification is a problem at all. If Manhattan is expensive, people should move out. This is a genuine question. Why should they live there if they can't afford to live there? Is it a good use of public resources (policy makers' time, potential tax income etc)? Honest question.
  - rtpg 11y ago
    Well the big thing is that most people can't just move if they want to. They have their jobs, and (especially if they're older) it might be really hard for them to get an equivalent job elsewhere. So moving will already cost them money. The second part of this is that it costs a lot of money for these people to move/be without income. So for some, they might just be too poor to move, and suffer with diminishing disposable income as the price of everything else around them rises. I think the core of the argument is that it's not like these rich people came into a barren land and built giant apartments. There are many people in NYC that simply live there, and why let these billionaires come in and make everything more expensive? I think that's the crux of the counter-argument. I think that a combination of proper tax brackets, loose zoning regulation allowing for high-density housing + commercial mixes, and primary-residence rules can solve the problem. I think the central moral argument is that having giant empty houses in the middle of a city with a community trying to do otherwise isn't exactly useful for society as a whole (see Detroit) , so we should disincentive it as much as possible.

cynicalkane 11y ago

I agree with most of this, but "concessions for low-income housing" don't actually achieve the goal of making housing more affordable, because they penalize developers for developing. The effect is to redistribute a small quantity of housing to the lucky poor--and I mean "lucky" because the waiting list for affordable housing in NYC is years long--without voters really feeling like their wealth is being redistributed. But I live here and $3000 is redistributed from my bank account every month; unfortunately, it is redistributed to a rich landlord rather than the deserving.

LordKano 11y ago
The reality of NYC housing, real estate and taxation are vastly different from what I have experienced. As someone living in Pittsburgh, $3000 a month in rent strikes me as ridiculous. For that kind of money, one could have a McMansion in an upscale suburb 20-30 minutes away from downtown.
- allworknoplay 11y ago
  The unfortunate reality is that NYC was not as expensive until fairly recently, and lots of long-time residents have been utterly priced out of their long-time home.
  - CPLX 11y ago
    When I moved to NYC sixteen years ago I heard people say that same exact thing a lot. I am pretty sure sixteen years before that people were also saying it.
    - wwweston 11y ago
      And it may well have been true at each point; wage stagnation goes back 50 years...
- cddotdotslash 11y ago
  Every single time rent in NYC or San Francisco is brought up, everyone makes comments like "I only pay $500 a month for my ten-bedroom house in Kansas!" And the reason that rent in NYC is higher than rent in Kansas or Pittsburgh, etc. is simply because more people want to live there. It's simple supply and demand.

AnimalMuppet 11y ago

> However, primary occupancy in the major properties under discussion here (the three along 57th plus the Time Warner center and a few others) is incredibly low, and basically speaks to high-end real estate bubble. So? I don't care if you bought it to live in, to invest in, or to farm pigs in. It should be taxed according to the actual market value, which pretty much means taxed based on the price you paid for it (at least in the year you bought it).

armsmasher 11y ago

Author here (thanks!), and yes, you're right, the alternative to ultra-luxe construction is more frightening, and we know that because of San Francisco. That's worth keeping in mind.

ceras 11y ago

> it's totally worth noting that NYC does a much better job than most cities at permitting the construction of new luxury units NYC builds fewer units per resident than any city in the US except probably SF. It just looks impressive because each new building adds a mark to the most visible part of the skyline, but when you consider the volume of units across NYC it's really, really low. Prices aren't at SF level, but they are still getting unreasonably high.

usaphp 11y ago

Not many Russians in New York, mostly Ukrainians.