Blog #28: Sandy, Housing, the Market, and the State’s Planning Response
The attempt by government to mix the public and private market response to disasters such as Sandy, or indeed to mix the two in dealing with the crisis in housing for lower-income households, will bear some strange fruit. The likely effect will be to increase segregation and inequality, based on experience with the workings of the private market in housing. Two examples illustrate the danger: Governor Cuomo’s plans to deal with units damaged by Sandy, and Mayor Bloomberg’s plans to deal with the underfunding of public housing.
The alternative in both cases seems clear, but raises tabooed issues. To take them one at a time:
THE PLAN FOR SANDY: Cuomo’s plan for housing damages by Sandy is to offer to buy up, at their prior damage value, any home whose owner wishes to sell and leave, and to offer those who wish to stay a grant to defray the costs of storm-proofing their residences.
The New York Times describes it succinctly as follows:
“The governor’s plan would pay the full pre-storm value of a house to owners who agreed to sell, with a 5 percent bonus to those who relocated in their home county. The plan would be voluntary; a homeowner could simply refuse to participate, and presumably elect to rebuild, despite higher insurance rates that doing so would entail.
The Cuomo administration estimates that 10,000 or so homes sit squarely in the danger zone, but, only a fraction — 10 percent to 15 percent — of these owners might actually participate in this program. The plan would not cover high-end properties like a wreck of a beachfront house in the Rockaways that is now on sale for $3 million “as is.” But the price tag could go as high as $300,000 per dwelling, assuming the Department of Housing and Urban Development approves the plan.
For those who chose to stay, the administration would offer another option: grants to help owners flood-proof their homes. That could include rebuilding a house on or near the beach on giant pylons at least 2 feet above the projected flood level, which could mean 15 feet or more above ground level — a costly prospect.”
What would be the likely market-induced result of the plan?
Owners with the resources to stay will grab the grants offered to help flood-proof their homes, add their own resources, and stay. Those without the resources, i.e. lower income households, will sell, and the government will take down their homes and convert their lots to some form of park or waterfront public use. The net result will be higher income owners have units on a less crowded waterfront, where no further building will take place on newly-added public open space, thus in fact increasing their property values after the deals are done. Lower-income households will have been removed from the areas, in any event back from the waterfront, since the required cost of storm-proofing is high, and be left to face the private market elsewhere.
So, net, a more exclusive enjoyment of the amenities of the waterfront for the well-to-do, a displacement of the less well-to-do from their desirable locations to the ordinary market in land. All government instigated and largely paid for. Hardly equitable.
THE PLAN FOR PUBLIC HOUSING: Mayor Bloomberg’s plan to deal with the very substantial short-fall in Federal funding for public housing, with the apparent approval of the chair of the New York City Housing Authority, is to lease for the long term available vacant land within and around existing public housing projects to private developers. In the words of the chair of the Housing Authority, it will be
“forming partnerships with real estate developers to create a mix of affordable and market rate housing on under-used NYCHA sites. Doing that can generate hundreds of millions of dollars – every penny of which will be re-invested in NYCHA and used to fix roofs, elevators, and building facades. And it will create thousands of units of new housing, of which a substantial portion will be affordable. Let me repeat that: it will create thousands of new market-rate and affordable homes.”
What does that mean? Apart from the obvious failure to specify the number of “affordable” units to be built, or even whether “affordable” means eligible for public housing or some more moderate set off income limits, and apart from the disruption caused in the lives of the residents of the developments in the middle of which these new and expected high-rise structures will be built, there is the further elimination of the open space surrounding the high-rise public housing buildings, mostly built with a minimum of such space to economize on land costs from the very beginning, and already offering only very limited breathing space for project residents for open air, relaxation, sports, outdoor activities, and necessary parking. The new privately built units, already informally called luxury housing, on the other hand, will have privately provided internally and for their own residents amenities not available to the residents of the existing units, such as health clubs private security, probably parking, and others.
“Internal documents obtained by the Daily News show the planned 4,330 apartments in eight developments are all in hot real estate neighborhoods, including the upper East and West Sides, the lower East Side and lower Manhattan. Developers will get a sweet deal: a 99-year lease with the lease payments to the authority frozen for the first 35 years. … the land to be leased includes playgrounds, parking lots, and community centers — basically necessary amenities for those who live in public housing. And in the place of a playground for their children, tenants will instead look out on luxury housing.”[2a]
Mixing in this way is more likely to create tensions among neighbors that the “diversity” so admired in the abstract in housing discourse. Those tensions will be aggravated because the developments being considered for surrender of their land to market-rate housing are those where land values, low when the projects where built, are now the highest, in Manhattan on the upper West Side and the middle and upper East Side. The minority status of low-income, and undoubtedly minority, households in these areas will only be accentuated.
THE ANSWER: What ought to be done is painfully obvious. If maintenance of public housing is inadequate, because of lack of funding, that funding ought to be provided, and provided by government, which after is created to secure access to the necessities of life for its citizens. And it should be provided by the federal government, which has access to the most equitable source of the necessary funds, a progressive income tax system. Further, it is ironic that the whole scheme proposed rests on the historic action of government to take undesired land of low market value for its projects. Now that that land has become valuable, the drive is to make more and more of its remaining limited available space available to the market. Should not the benefit of the improved conditions that have made their land so valuable today accrue to those who have been asked to live there when conditions were not as favorable?
The political problem here is also not abstruse. The answer suggested above strikes anyone using common sense, attuned to the realities of life, honestly facing the facts as they are, as totally impractical. Raising taxes to provide benefits skewed to the poor will never pass Congress today. It is not worth even discussing. And that is the problem: the real answers are not on the table, are not even argued in mainstream, by politicians, in the media, in electoral campaigns, in the halls of legislatures. The discourse of housing policy is one-dimensional, its language is itself one-dimensional, a dimension restricted by confinement to things as they are, surrender to the limited apparent possibilities of the status quo. An adequate public housing program is in an alternate dimension, that of the potential, the possible but not yet factual. It is simply not on the table. The next task for housing advocates is to get it back on the table.
2. Speech by NYCHA chairman John B. Rhea before Association for a better new york
MONDAY, SEPTEMBER 24, 2012, available at http://search1.nyc.gov/search?q=cache:OzTbkrGADyoJ:www.nyc.gov/html/nycha/downloads/pdf/ABNY-SPEECH-NYCHA-CHAIRMAN-JOHN-B-RHEA-9-24-12.pdf+nycha+plan+to+build+market+rate+vacant&access=p&output=xml_no_dtd&proxystylesheet=agency_frontend&client=agency_frontend&ie=UTF-8&site=default_collection&oe=UTF-8
 See “The One-Dimensional Language Of Collaborationist Analysis,” forthcoming