Housing the Rich and the Poor in New York

Fifty protesters from ACORN crashed an open house at 85 Adams Street (nearing completion today at right) in DUMBO yesterday to protest the city’s 421(a) tax abatement program designed to encourage residential construction. That program was started in the 1970s at a time when nobody wanted to build in New York City, the population was plumetting and the Bronx was burning. But now, opponents say it is transferring wealth to already-rich developers who would build in the city anyway, and leading to the creation of a city inhabitable only by the wealthy. Curbed and Brownstoner had interesting debates on the protest. Many of the commenters seemed to disagree with ACORN, including Curbed’s 3rd, apostrophe-averse commenter, who wrote:

How come people dont protest the affordability of Beverly Hills or Malibu or Miami Beach or Nob Hill? I mean, I certainly dont like the fact that things are so expensive but at the same time, I dont feel that it is my right to live here. If I can afford it, fine but if i cant, then i look else where…. why do other people feel that this is a right and privildge rather than a sacrifice and financial decision. [Ellipsis in original]

Echoing that sentiment, the 18th commenter wrote:

It’s funny how some people want to live in a particular place (in this case, Brooklyn) but pay less than the market price. If they need affordable housing so bad, why not move to North Carolina or Florida or Texas or any other place in this fine country where one can buy a spacious inexpensive house for the price of a small condo in Dumbo?

My initial gut reaction is to agree with these thoughts. For all its riches, New York City, like American cities generally, bears more than its fare share of people who don’t earn a lot of money relative to the suburbs. This leads to a decline of city services, not the least of which is public education. Declining city services and attendant rise in local tax levels, lead people of means to flee the city for the suburbs, where they can fund their great schools and roads and live their lives in blissful ignorance that poor people exist. It is a self-perpetuating, vicious cycle.

Expensive apartment towers are merely a symptom of the problem. The real enemy of affordable housing is downzoning.

From that perspective, I would rather see housing advocates go out to Greenwich, Conn., or Scarsdale or Locust Valley and protest the suburban towns across the country that practice the type of exclusionary zoning that keeps building too expensive to allow for affordable housing. As a result of the Mount Laurel decisions, New Jersey is the only state in the nation that requires that each municipality take on its fair share of affordable housing, which helps to alleviate underclass ghettos in cities like Newark and Camden. That was an enormous victory for the affordable or inclusionary housing movement. Let’s not forget that Brooklyn is still home to East New York and Bushwick and NYCHA-owned housing projects from Williamsburg to Sheepshead Bay. That’s where you’re going to protest lack of affordable housing?

But on the other hand, I wouldn’t want to live here if everyone but the affluent moved to North Carolina or Florida or Texas. Beverly Hills and Nob Hill and Greenwich, despite their splendor, are pretty dull places to live. A place where everyone has the same income tends toward sterility and social alienation. Segregation by income, after all, is one of the top knocks against the suburbs. But the focus of housing advocates ought to be opening up the suburbs and exurbs to affordable housing, not on prohibiting cities from developing housing for the wealthy.

Income inequality is the scourge of capitalism and indeed if it gets wide enough, a threat to society. But as long as we must accept it as an unfortunate given, a city that embraces people at all levels will exert an energy and attraction not found elsewhere. There is a scene in Oliver Stone’s 1987 movie Wall Street where Master of the Universe Gordon Gekko and his protege Bud Fox are sharing a limo ride on Park Avenue. Gekko points through the rain-streaked window to a guy in a suit and a guy sifting through garbage (pictured), and asks what separates one from the other. The answer looks to be about four feet of sidewalk. That scene, two guys at opposite ends of the socioeconomic spectrum sharing the same space, could be set in this country just about nowhere except New York. The city remains such a magnet for people around the world in part because it is home to rich and poor alike, and in fiction and in reality, they rub shoulders on a daily basis. There is a kind of subtle creative energy that pulsates through the city because of that. It’s not just the rich and poor comingling here. Heightening that is the fact that people here tend to be from every race, ethnicity, national origin, religion and sexual orientation that exists. David Brooks thinks you can find that kind of diversity in exurbia. But you can’t, except perhaps in the most cursory, drive-by-and-gawk-at-the-immigrants-through-the-windshield kind of way.

The city needs the rich and the poor if it is to continue as a unique place in America, and it needs housing for them all — rich and poor and everyone in between. Startsandfits.com supports every effort to build housing (and create jobs) for anybody and everybody in New York City. If the developers are going to build in the city anyway, the 421a program should be scrapped and the money saved spent on improved city services, better education and low-income housing. But if there are marginal projects where developers decide to build only because of the tax abatement, maybe it should be kept. In any event the real problem is income inequality that creates a class of super-rich who can parachute in anywhere and price-out everyone else no matter what the supply of housing looks like. Housing advocates would do better to support whatever public policy stimulates housing construction at every level, bringing down the prices for everyone. The most effective way to do this in New York City is to rally against the downzonings that are cementing low-density development patterns in neighborhoods across the outer boroughs.

Curbed’s 16th commenter summarized a lot of my thoughts nicely:

People forget that less than 10 years ago, nobody was building any market rate housing in Dumbo, Williamsburg, or anywhere in Brooklyn, really. These tax abatements last about 10 years. That isn’t terribly long. Why kill the goose that’s laying golden eggs? Brooklyn is, in the long term, being helped by all this new housing. … the solution to that is to actually build MORE housing, not to stifle it, by removing tax breaks, extreme downzoning, NIMBY-ism etc. [Ellipsis added.]

Postscript: I admit that when I went to Downtown Brooklyn last month and got all excited about the vitality and new building going on there, one of the construction images I had in my mind was the above-pictured 85 Adams. Upon visiting DUMBO this afternoon I was excited to see other new construction. A block away is this building rising at Jay and York Streets.

And beyond that, a rooftop addition is being built atop some older urban fabric.

How cool.

- 85 Adams Makes Everyone’s Brains Explode [Curbed]
- ACORN Protesters Storm The Beacon Tower [Brownstoner]
- Activists: ‘We can’t live in New York City’ [Metro]
- Report says luxury developers benefit from tax program [Downtown Express]
- Cooperative and Condominium Abatement [NYC.gov]
- ACORN
- Mount Laurel Doctrine [Wikipedia]
- REVIEW: David Brooks, On Paradise Drive: How We Live Now (And Always Have) in the Future Tense [TNAC]
- Downtown Brooklyn’s Pedestrian-Only Corner [S&F]

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8 Responses to Housing the Rich and the Poor in New York

  1. peakguy says:

    Jane Jacobs discusses this cycle of deterioration and renewal in The Life and Death of Great cities. This promotes diversity of all kinds, keeping the city interesting and vibrant. We often forget that we are at the height of one of the greatest upswings in real estate values, preventing even wealthy professionals from buying apartment in Manhattan. But all the building now may in a few years seem like a glut if the economy slides down. Only the strong communities survive in this high value market. COmmunities that have strong institutional organizations, a strong feeling of identity, good at assimilating new comers to the neighborhood, people willing and able to buy real estate and invest in their community and children willing stay and start their own families will survive and retain their character. Those communities that fail at these activities will always be susceptible to deterioration in bad times and gentrification in good times.

    As opposed to incentives to build, I think there should be incentives for community residents to buy in their own neighborhood.

  2. futurebird says:

    Maybe you’ll start to understand my facination with graffiti after all.

  3. AD says:

    Yeah, to avoid displacement, one must own. Unless one over-reaches for a mortgage, defaults, and is then displaced.

  4. Mitch says:

    If ACORN was completely opposed to the 421(a) tax abatement program, I would agree that they were being unreasonable. But they’re not opposed to tax abatements; they just argue that the price of such an abatement should be some affordable housing, mixed in with the luxury apartments.

    I think this demand is perfectly reasonable (though I supposed you could quibble about the specifics — a 30% might be a little high), and it would be good for the vitality of the city.

    I agree that concentrations of poor people are not good for a city’s vitality, but too many rich people in one place can create a very dull neighborhood. Working and middle-class people — and especially working and middle-class families — are the ones who actually live in a neighborhood, who use its amenities and fight the kinds of development that destroy livability. I think cities, in their own interests, need to find ways to minimize class segregation.

    Comments about Beverly Hills or Malibu are valid, but beside the point. They have very few poor households, and that is an issue that should be addressed. But what’s happening in Brooklyn is different: the City is subsidizing construction that will raise housing prices and drive out people with modest incomes. That’s the sort of issue that attracts ACORN’s attention, and rightly so.

    The comments about Texas and North Carolina (“if you don’t like New York rents, move somewhere cheaper”) also miss the point. If New York City’s population consists mostly of lawyers and investment bankers, it won’t be New York City any more. Do you really want to have to drive to North Carolina (or wherever) to find an interesting ethnic restaurant?

  5. AD says:

    Mitch,

    Thats a great point. A city of all rich people is no more desirable than all poor people. So we need a diversity of incomes. No question about that.

    Some of the Curbed commenters were probably just venting without understanding the entire details of ACORN’s message. I certainly overlooked some of the finer points as well.

    So what they’re requesting is that in exchange for the 421-a tax abatement, developers commit to making 30% of the units affordable?

    In the interest of full disclosure, I should tell you that I am the public relations guy for the New York City Housing Development Corp., which finances construction of 80/20 and 50/30/20 buildings, some of which get the 421-a tax abatement and some of which not.

    Developers who receive the 421-a tax abatement are free to apply for HDC mixed-income financing, but it’s not mandatory. HDC makes its 80/20 and 50/30/20 programs as desirable as possible for developers, but if a developer is willing to forego that pool of financing in favor of taking the risk of building an entirely market-rate building, he or she is free to do that.

    If ACORN is saying the 421-a abatement should be linked to something like the 80/20 program, or the 50/30/20 program we’re not talking about a revolution, but an incremental step toward greater affordability at the cost of less flexibility for developers. Now I get it! (I think.)

    Mayor Bloomberg called together a 421-a task force to study the policy. Greater minds than mine will be tackling some tough questions. As I see it, the questions they will address will be: 1) Does mandatory linkage of the 421-a program with mixed-income set-asides lead to more housing production than a voluntary linkage? 2) Which approach leads to a greater diversity of incomes in the city? and 3) If 1) and 2) give you a different answer, which goal is more important?

  6. jlo says:

    Wonderfully thoughtful commentary and analysis AND excellent writing. Even trying to read critically, I found very little to disagree with.

    If I had to take exception to one thing, though, it would be that a very large segment of the population is missing from the majority of the discussion. You note “the city needs the rich and the poor if it is to continue as a unique place in America, and it needs housing for them all — rich and poor and everyone in between.” For me, it’s the “everyone in between”, in other words, the middle class, that is often an afterthought.

    Even in the scene you captured from Wall Street, if you’ll notice, there are two less prominent pedestrians hurrying along in the background. For me their inclusion and relegation to the periphery is a fitting metaphor for our understanding of the middle class in the life of the city. The rich and the poor occupy the front and center of our collective imagination about what New York is and what it ought to be, while the middle class, tucked away out of sight, continue to pay their taxes and go about the business of making the city work.

    So when you suggest that the answer is to oppose all downzoning and build as much housing as possible, I cringe slightly. It seems to me this is an easy form of advocacy that might neglect a very important component of the city’s population. As you know, the primary advocates of downzoning lower-density places have been the residents of those neighborhoods themselves, supported by politicians and an administration eager to win votes among high turnout populations.

    Before simply saying that we should oppose all downzoning; better, I think would be to understand why there is such strong sentiment for downzoning these lower-density places. In my mind, the discourse surrounding this phenomenon has assigned three probable causes for the current downzoning sentiment:

    1. Failure of city services to handle existing populations
    2. Opposition to the aesthetics of densification
    3. Opposition to neighborhood change and the other.

    Depending on who is arguing the case for or against downzoning largely determines the reasons given. In my neighborhood of Riverdale, where a downzoning was recently passed, the rhetoric of the residents themselves almost always made reference to overcrowded schools, a dwindling number of parking spaces, and the inadequacy of existing transportation services. To a lesser degree there was a smattering of concern about out-of-context development, lost sightlines, and imposing building heights, in other words, aesthetic opposition. Finally, a few who opposed the downzoning suggested more nefarious reasons, that existing residents were fearful of neighborhood change, whether it be in the form of an increasing number of Orthodox Jewish families, or whether it be in the form of an increasing number of Hispanic residents.

    While all of these reasons are associated with nimbyism at its finest, the last being particularly odious, they all also reflect the fact that in high home ownership neighborhoods there is an economic resistance to change and uncertainty reflecting the fact that for many residents their home is their lifeline to a comfortable middle class existence AND their major retirement asset. As homeownership rates continue to nudge upward, it seems to me that we should expect even more of these sentiments.

    I have little sympathy for aesthetic opposition, because as you and your very astute commenters have so aptly noted, change in the built environment is integral to urban life and creates vibrant, multi-layered neighborhoods. And as many urban dwellers do, I abhor the thought of resistance to change as an exclusionary tactic, something all to common in suburban places. I do, however, have sympathy for residents that fear a continuing decline of services due to the inability of the city to keep up with demand. For all the talk of making our schools better, it sure feels to me like very little has been accomplished in the past five years. And when is the last time we even thought about building new transit infrastructure in the boroughs, burying existing elevated lines, or creating new transit connections between the boroughs? It’s not even on the table.

    So while I am more critical than supportive of these downzonings, I do think a more nuanced policy prescription is in order. Brad Lander at PICCED has been a strong voice in saying that we need to focus on the provision of services just as vociferously as we focus on adding new housing. If one comes without the other, we will risk losing the valuable hoards of net tax paying middle class households that exist in the boroughs. Meanwhile, the North Carolina’s of the world will all too happily welcome them with open arms. The trick we have to master is to continue to add new housing while not decreasing the quality of life for existing residents as much as possible.

  7. AD says:

    I think zoning policy should logically be tied to the provision of city services. So that if a neighborhood wants to downzone, it should accept a lessening of city services as well. Is this happening?

    The reason why the communities themselves are the ones who are in favor of downzoning is that the current occupants of the houses in the downzoned areas are the ones who stand to gain the most financially by the action. When you downzone an area, you decrease the supply of housing. Therefore, the cost of housing (i.e., property values) goes up. It goes up across the whole city a little bit, but it goes up in the neighborhood that is downzoned. So it is entirely logical and expected that neighorhood residents speak up in favor of downzonings. But I don’t think that automatically makes it right.

  8. jlo says:

    Yes, prices go up when housing is restricted, but it’s a double edged sword because the value of the underlying land decreases. For homeowners with zero intention of ever selling, it matters little, but for their estates and those who bought with the thought of assemblage, or building up, they’re financially hurt by downzoning and do not have an interest.
    Regarding decreasing services, it wouldn’t really be possible since downzoning doesn’t decrease the existing population, it only limits the future population growth. In defense of the administation, the bulk of the rezoning actions have been more akin to contexual rezonings rather than actual downzonings.
    We’re agreed that just because residents want it doesn’t make it right. The best way to arbitrate here would seem to be at the citywide level. Looking from that perspective, there are probably some neighborhoods that have been correctly downzoned because service are not logically connected, while there are others that have been unnecessarily so in the name of the reasons I listed (which all lead back to price increases). At the same time, my larger point is that from a citywide perspective, how much do we want to risk alienating those middle class net tax paying households at the expense of future residents that aren’t even here? If middle class families percieve that potential equity gains are not worth the hassle of buying, they’ll go to Rockland County to buy, or worse to NC. So all I’m saying is that I think it would be counterproductive to simply pave the way for as much new housing as possible. Doing so would risk exaserbating the extremes of income inequality that already exist in the city and jeopardize its long term fiscal health.