Bill de Blasio

Bill De Blasio's Affordable Housing Shakedown

The latest economic nonsense from the mayor of New York City.

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The price of getting a new private school building built in Manhattan these days apparently includes a payoff of $50 million for "affordable" housing.

And that $50 million number, reportedly reached after an extensive negotiation between Collegiate School and New York City's Department of Housing, Preservation, and Development, turns out to be just a starting point for an additional shakedown.

In a letter issued earlier this month, the Manhattan community board with jurisdiction over the construction site expressed "strong concerns" about the $50 million payoff.

In a sane world, those concerns would have had to do with the injustice of arbitrarily extorting, as a condition for building, a payment of any size for a cause totally unrelated to the school's educational mission.

Alas, this isn't a sane world; it's Mayor Bill de Blasio's New York City. And the "strong concerns" turned out to be…well, the board asked for even more money. "We would be amenable to the $50 million as a form of down payment to start this process," the board wrote. "However, the provision of this money is only a first step." If building 55 "units" of affordable housing costs more, "then Collegiate must be held responsible for providing the balance of the funding required." (Though if the housing comes in for less than $50 million, there's no refund to Collegiate.)

The longer it takes to build the "affordable" apartments, and the farther away they are from the site of the new school building, the more money, in addition to $50 million, that the community board—a city government body—demands.

Just to put this in context, the Collegiate School's entire endowment, according to its website, is $77 million. On a percentage of endowment basis, that's as if Columbia University came to the city asking to expand its campus, and the city asked the university for $6 billion to fund city courthouses, libraries, playgrounds, and prisons as "a first step."

Even as a percentage of the overall Collegiate building project, the $50 million affordable housing contribution is staggering. The school sold its old site for $97 million, and the new building, on West 62nd St., will cost about $118 million, according to a report in the Daily News.

Another way to look at it is that each of the Collegiate School's 653 students (or their parents) will now have to pay an affordable housing fee of $76,570 in addition to tuition. That's $50 million divided by 653. If the Community Board's warning that $50 million is just a "down payment" holds true, the Collegiate families could be on the hook for untold more.

It's not as if the independent school isn't already providing a service to the city. Its teachers and other employees pay taxes, as do its parents and alumni. By educating the students at private expense, Collegiate is relieving the city's public schools, and the taxpayers, of a cost of more than $10 million a year.

It's not that "affordable" housing isn't a worthy cause. But why not pursue it by some more logical means? Consider, say, eliminating the rent stabilization and control laws that keep elderly widows and widowers hanging on to cheap three-bedroom apartments. What about reviewing the landmark historic district laws that restrict new construction in vast swathes of the city? Or how about reconsidering obsolete building codes and comparable-wage laws that drive up the cost of construction? Holding up new projects with unreasonable demands on an ad hoc basis is no way to add affordable housing to the city, unless the point is to render New York so hostile to private institutions that anyone who cares about them, or about a rule of law, is driven elsewhere, making New York housing affordable in the style of contemporary Detroit.

If you think I am exaggerating, consider that the framework of "exit, voice and loyalty" outlined by the economist Albert Hirschman—and much in the news lately in the context of European Jewry—isn't exactly new to Collegiate, which was founded centuries ago by Dutch Protestants who left the Netherlands by ship for New Amsterdam, which became New York, and eventually part of a new country, the United States of America.

For $50 million, one could reprise the journey by endowing a high-speed water-ferry service to a Collegiate campus outside of Mayor de Blasio's jurisdiction. Collegiate is the sort of durable institution that makes people loyal to New York and deters them from taking the "exit" option of packing their bags and going somewhere else. But even loyalty has its limits, a point that city officials just might want to remember as they go about trying to wring ever more dollars from Collegiate and the backers of other institutions trying to build in New York.

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  1. Affordable housing initiatives such as these are such bullshit. The lack of affordable housing in a market is due to other factors — restrictive zoning and rent control ordinances — that make it extremely difficult to impossible to put new units on the market in a timely fashion, resulting in sky-high prices. But restrictive zoning and rent control are popular and untouchable in any meaningful way.

    It’s also popular (or at least difficult to mobilize against) to institute affordable housing requirements on new construction that does manage to make it through the zoning commission gauntlet.

    1. Rent control stinks but its impact on the market is not as great as people think. Zoning is the bigger culprit here, and yes you will never get rid of it because the folks who control it are the same folks that benefit from living in those cute townhouses in the Village that are forever protected.

      1. Rent control stinks but its impact on the market is not as great as people think.

        Probably true. But, it does result in some of the more visibly insane outcomes of the modern regulatory state. It’s why people with, really, no visible means of supporting themselves (and little practical reason to make Manhattan their home) can live in Manhattan while middle class workers working 12-hour days are forced to deal with hour-and-a-half-long commutes.

        1. Ha, an hour and a half is nothing. Mine is almost that (Bay Ridge, Brooklyn to Jersey City) and I have it relatively easy.

          1. Used to live in Bay Ridge, myself. The commute to Manhattan (midtown) is where I pulled the 1.5 hour figure.

            1. At least I get a lot of reading done.

      2. Eh, I think it depends on the jurisdiction. I think in Manhattan and SF, the short-term impact is rather huge. There is so little vacancy in those cities and demand is so high, that even a few dozen units not going on the market every month could make an enormous impact.

        In non-hyper competitive markets, zoning is probably the bigger problem and, longer-term, it’s bigger overall.

      3. Rhywun|3.16.15 @ 4:48PM|#
        “Rent control stinks but its impact on the market is not as great as people think”

        There are, by actual count, 19 former rental units (from studios to 2BRs) which have been removed from the rental market in the one square block (enclosed by 4 streets) where I live in San Francisco. That represents roughly 2/3 of the total.
        I’d say that’s a pretty great impact.

        1. As in taken off the market via Ellis Act and sold overpaid SV engineers for $1000/sf?

          1. *sold TO overpaid…

          2. bassjoe|3.16.15 @ 8:06PM|#
            “As in taken off the market via Ellis Act and sold overpaid SV engineers for $1000/sf?”

            Both, but most Ellised; converted to condos/TICs or simply returned to single-family houses. The later is interesting in that four of them were rented by, shall we say, people who make no secret of their lefty sympathies, but somehow found it preferable to avoid dealing with renters regardless of the loss in income.
            And the income from rentals is nothing to sneeze at in SF.

    2. Supply and demand are a bitch too (in regards to affordable housing).

  2. I’m confused. Community Boards have no power – they are unelected busybodies whose main function is NIMBYism and, yes, leftist agitation – but they are not supposed to have this power over private land deals. I’m not seeing city-owned land here, which is supposed to trigger the review by the Community Board.

    1. I work in the restaurant business in NYC. Trust me, they have plenty of power.

      1. Can you go more in depth? I know the food truck regs are insane, but I thought NYC had generous zoning.

        Zoning is the most important issue for libertarians, the second being occupational licensing. They are class warfare against the poor. They also generate suburban sprawl,which generates long, carbon emitting commutes to the city.

        1. “They also generate suburban sprawl,which generates long, carbon emitting commutes to the city.”

          Not seeing a problem here.

        2. One of many but here’s a current one…

          The owner of the place I manage has another spot in Staten Island. They’re only allowed to be serving booze until 12 on weeknights and 2 on Friday and Saturday. They’re a Mexican/American-ish restaurant, not a bar. But they do have a bar that gets going on the weekends. Currently you can (potentially) serve until 4am. So not only are they not allowing that place to make money, they are losing potential tax revenue, which I’m sure they are too stupid to realize.

          Community Boards also get to say if you can even OPEN a bar or restaurant. They have the say on outdoor seating, etc. They also, stupidly, use the address of a place to determine if it can open. So if there used to be a problem bar at a certain location you’re screwed if you want to open a new one there. They don’t look at who the new owners are, who’s on the liquor license, none of it.

          1. Yeah, I’ve heard of them vetoing bars left and right. In theory they are supposed to have only an “advisory” role. Unfortunately in practice they seem to function as the council’s eyes and ears looking for shit to mess with.

            1. That’s literally what they are. Also, they’re appointed by the Borough President(s). So you know it’s a whole lot of back scratching and palm greasing.

              1. It’s amazing that NYC even half-functions as it does. Imagine the possibilities….

              2. Not only that, but the credibility of the board as an advisory body is maintained by their keeping their recommend’ns within the same range as that of the policies the elected officials with formal power pursue. You get on a board by going along to get along, and the BP also goes along w what the board wants, to stay popular.

      2. If I were going to open a restaurant or bar in NY, I would make sure to have a couple of thugs on payroll to ‘persuade’ these assholes to do what I want. That seems to be a time honored tradition in NY.

    2. In Chicago community boards are the unofficial eyes, ears and voice of the alderman. To get approvals for most developments ( which is happening more due to as of right property all being gone in good neighborhoods) you have to present to the community and hear their ignorant rants. Then the alderman will tell you you will get his endorsement if you do that stupid thing “x” that they wanted you to do, Because he has to be reelected and if you give these morons pizza and let them feel important they will help you get reelected.

    3. The community [planning] boards are appointed advisory bodies, but their advice is frequently taken. A seat on a community board can be a stepping stone higher into politics, enough so that a board’s members are often taken seriously as up-&-comers, community leaders, & hence to be placated. Jimmy Vacca is an example of a city council member who was known for many years as a big wheel on a community board in the Bronx.

      The fact that review by a CB is not mandated in a case such as this doesn’t mean the board doesn’t get involved & noticed.

  3. Wasn’t just earlier today that some dipshit progs stated that the free market wasn’t able to produce efficient outcomes or properly price things? I guess gubmint is so much better at it.

  4. And people wonder why some areas fall into disrepair people quit cooperating with fools and take their money somewhere else.

    1. They don’t wonder. They know it’s racism.

      1. your right how silly of me

  5. If these board members are oh-so concerned about not having enough poor people around to gawk at, the school should build them some rich-people housing in East New York or Brownsville and tell them it’s theirs.

  6. It really does cheer me up how blatant the Government Shakedown rackup has become.

    1. “It’s not that “affordable” housing isn’t a worthy cause. But why not pursue it by some more logical means? ”

      You see, now that I’ve accepted the Government Shakedown, my mind is no longer troubled by such questions.

      Why not? Because the Shakedown is the Cause, not affordable housing. There’s no mystery here at all.

      “Power is not a means; it is an end. One does not establish a dictatorship in order to safeguard a revolution; one makes the revolution in order to establish the dictatorship. The object of persecution is persecution. The object of torture is torture. The object of power is power.”

      ? George Orwell, 1984

    2. It’s so blatant at this point. They don’t even really pretend otherwise.

  7. 55 units of affordable housing shouldn’t cost $50m to begin with. Those residences are going to be nicer than what people who actually work hard for a living can afford.

    There are so many things progressives never have to answer for from the rank and file up to the ideologues and politicians. There’s about 4 I can count in this article alone.

    1. Those residences are going to be nicer than what people who actually work hard for a living can afford.

      Of course they are, because they’re new. Rich people are expected to move into newer, more expensive housing to make room for less-rich people in their older housing, and so on. That is the “mixture” that Jane Jacobs advocated more than 50 years ago – and these idiots will likely claim to be fans while not understanding anything she said.

    2. Union labor to build. Union labor to maintain. As it has always been. Kickbacks aplenty. Nobody gives a fuck about affordable housing. It’s a racket. Pols learned it from the mob then got rid of the competition.

      1. Lots of ^this. It must cost $31 per square foot with 500sqft per person, or we’re just living in squalor like Africans and their mud huts. But it must also rent for 30c per sqft, because affordable housing is a right.

        What? These beliefs are completely compatible.

    3. 55 units of affordable housing shouldn’t cost $50m to begin with. Those residences are going to be nicer than what people who actually work hard for a living can afford.

      Only if the $1mil is used for materials and labor to build the house, instead of lining political pockets.

  8. At a cost of ~$1 million a unit, there is some serious graft going on.

  9. BTW, the claim is there is a lack of affordable housing in San Francisco, so we get the same ‘fees’ on any new construction.
    Well, there is no lack of affordable housing. Every residence which has come up for sale over the last year has sold, so by definition, it must be affordable.
    What the proggies mean is that they want free shit to hand out; those votes won’t buy themselves!

  10. This must be a glimpse of what I miss not living “where it’s at”. Mine is 600 acres, mostly wooded, some densely wooded, with water where I can raise show cattle, some horses and an adopted burrow in bumfuck Michigan. And drive a whole 6 miles to work dodging deer, coyotes, turkeys and the occasional moose.

    Jaysus peeps….move.

    1. To each his own. I would bang my head against a wall in that environment.

      1. You’d have to search hard & long for a wall to bang. Probably build one just for head banging.

    2. “Jaysus peeps….move.”
      If that was @Sevo, your deal would drive me nuts. No thanks!

      1. And yours, me.

        Old indian was right. “Everybody like me, everybody want my squaw”.

        Enjoy your cement and all those nice people.

  11. This kind of shakedown is not exclusive to NYC. Here in south Florida, where the population is largely NYC ex-pats, we have similar shakedowns.

    I had occasion to talk with a paving contractor about the permitting process down here (as I was being shaken down over a small paving project). He was doing a job putting in a warehouse parking lot for a large shipping company. The city set the permit price at a quarter million. Roughly equal to the price of the job. Yikes! They also had to pay for some arbitrary improvements to the area, like plantings along the roads.

    At the peak of the housing boom, I was told that my plan to remodel and enlarge my house would require the payment of a $45,000 “impact fee”. Since this was roughly equal to 1/3 of the cost of the actual construction, I was a little incensed. I asked what the fee that was going to make my project economically infeasible was for and I was told that it was to offset the cost of additional water, sewage and traffic. This despite the fact that we were taking a 3br/2ba and turning it into a somewhat larger and more modern 3br/2ba. With the exact same people living in it. After a little more pushing it was apparent that the real answer was that the government was tired of watching people make big paydays by flipping houses, and they wanted to skim as much of that profit as possible.

    1. “After a little more pushing it was apparent that the real answer was that the government was tired of watching people make big paydays by flipping houses, and they wanted to skim as much of that profit as possible.”

      I do not doubt that is true. However, in large cities, the rake-off is used to provide services to those who simply do not work or have a place to live.
      They do, however, vote. And those arranging the rake-offs make sure those who vote know from whence the free shit comes.
      The money is not collected under some mercantile desire; it is put to use making sure assholish politicos never have to work for a living.

  12. Anyone that willingly resides in NYC is the epitome of a human slug.

    If the islamics hit you again, I’m not really sure why I should care.

    1. Say what you will, NYC is a nice place to live in if you can afford it, or near if you cannot. But all it takes is 51% of the vote to run it into the ground. NYC is a successful center for commerce in spite of itself, not because of itself.

  13. Very interesting link to Albert Hirschman who I was not familiar with at all. But at core I disagree with him on exit v voice. There are MASSIVE structural ‘subsidies’ in modern America to remaining in place – from mortgage tax deductions to the fixed size of Congress to regulations and welfare payments and subsidies that are based on high-cost (and well-represented) NY/CA rather than low-cost (and depopulated) Kansas. And because of those, incompetent jurisdictions have also created tons of ways to essentially nullify ‘voice’. Yes, one can see people exercising their voice all freaking day in many of those places but it never amounts to anything.

    In that sort of environment, only exit can really work. And in the case of NY, ‘exit’ probably means leaving the entire tri-state region. Maybe if the playing field were more level between ‘exit’ and ‘voice’ (as it was in the late 19th and early 20th century), then ‘voice’ could also be effective.

  14. $50 million for 55 units of affordable housing. Maybe. So that is at the minimum a cost of 1.1 million per unit. Sounds very affordable. I wonder which group of poor downtrodden people are living in these units?

  15. my neighbor’s mother makes $86 /hour on the internet . She has been fired from work for 8 months but last month her check was $12427 just working on the internet for a few hours. see it here…………..

    ????? http://www.netjob70.com

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