Collusion between gov't, developers and tenant advocacy non profits

By using zoning to limit developable space, and allowing that space to be bought and sold, gov't created property literally out of thin air -- out of the words of the zoning text. By creating a market the raw resource of which was created by the gov't, gov't could exert influence, manipulate and extort from developers. If a developer wanted more space than was available in the zoning, he had to go beg it of gov't, and gov't could grant the additional space for a favor. This market was the beginning of the end of gov't directly building affordable housing and instead drawing the developer into building it for the public.

Housing projects were widely viewed as a failure. A new generation of planners followed Jane Jacobs' broad criticism of tower-in-the-park construction, which she viewed as anti-urban, generating wastelands of non commercial, semi-abandoned and dangerous, isolated space. The reality was more complex. After all Stuyvesant Town is a housing project but no one complains that it's a failure. If anything, it's become to successful, too attractive as its management tries to replace older tenants with tenants eager to pay much higher rents there. But Stuy Town was middle-income, well maintained, with residents who were also well served by gov't and the economy in many ways. The low-income housing projects relied on inadequate gov't funding streams and the community was consistently underserved whether by the education system for its children or the employment opportunities for its parents, health services, sanitation and the maintenance of the grounds. If it failed, it failed because of the lack of social and financial investment in the human capital of the community. But that failure could easily be dressed up instead as a failure of urban and architectural planning and design.

Zoning incentives replaced housing projects. Developers would be given additional space to develop in return for building a modest percent of affordable housing that would be managed by a non profit tenant advocacy group. This model brought together gov't, developers and affordable housing non profits: gov't offered bulk space incentives to the developers while giving the non profits funding to manage the affordable housing. The developers needed to cooperate with both gov't and the non profits. And critically, the tenant advocacy groups were now compelled to work with and for both gov't and developers. 

In order to obtain affordable housing, the tenant advocacy non profits had to sell upzonings to their community, otherwise the non profit wouldn't get the affordable housing or their funding from the gov't. Since the affordable housing brings with it market-rate development, the result is gentrification, investment, opportunity for more investment and a feeding frenzy of tenant harassment. At the end of the day, affordable housing through zoning nets a loss of affordable housing. And since the affordable housing is given to people who are not currently living in the neighborhood, to call this "community preservation" is Orwellian doublespeak. 

Those in the community who are aware of the consequences of the affordable cooptation of the non profits, are placed in the ugly position of having to protest affordable housing. The gov't has effectively driven a wedge between affordable housing advocates and anti-gentrificationists by this Sophie's choice dichotomy of affordable housing (+market-rate housing) or else no development (+no new affordable housing). 

If you go to a City Planning hearing you can see the wedge in living color. The state-funded affordable housing non profits arrive with their employees and clients -- the tenants they work with in their tenant advocacy -- all in bright orange or yellow T-shirts. They don't testify, since they are brought to the hearing to pad the audience. Their leaders testify in favor of the upzoning on the grounds that it will bring affordable housing to the community. The rest of the audience is comprised by ordinary residents dressed all diversely, unorganized and unfunded. They do testify, one by one. They testify against the upzoning, expressing their concern about gentrification and community displacement. The Planning Commission ignores them because the city wants development -- it's revenue for the city. The people lose, and the sham continues. 

Talking this Sunday at OWS Altbank (Alternative Banking) Group on zoning and displacement

I'll be giving a talk on zoning, its consequences and how it plays out in local politics. Here's a brief outline.

The Amenties Dilemma

I'll be starting with what I call the "amenities dilemma": whenever some amenity that improves the quality of life is brought into a low-income neighborhood or ethnic enclave, whether it's better plumbing or a nicer sidewalk, it raises real estate values and attracts investment. It's not just a quantity of money that flows into the neighborhood, but the color of money, which is not green. Money in America is white, and it has an affinity as well as a color: it's drawn to more whiteness. Any improvement in a low-income neighborhood tends to whiten it and drive out the color. It's called gentrification and its consequence, community displacement.

Why should money harass the color out of a neighborhood? Is it greedy maximization of profit?

I dislike the use of "greed" as an economic explanation. It implies that there are some defective people who are to blame for what's wrong in the world. That sort of psychological essentialism -- some people are greedy, others not -- leads to a misunderstanding of how economies and societies work, and leads away from any meaningful solutions to its problems. What we call greed may be less affective, personal or psychological than mere opportunity. If there is no opportunity to make money out of some place, thing or person, people are pretty chill about that person, place or thing. It's when there's some kind of opportunity to gain from a place, person or thing that the feeding frenzy begins.

When the Lower East Side was an abandoned slum, it took my landlord eight months to bother to try to evict me for non payment, because the rent was so low that getting the rent or replacing me with another low renter was hardly worth the trouble. Today if I am five days late with my rent, the landlord files eviction proceedings and assesses a late fine onto my rent. Where there's money to be made, the pressure becomes irresistible and fierce.

The amenities dilemma -- leaving the ghetto in poverty preserves the community but ensures their poverty, while improving the ghetto just shifts the community to a new place of poverty (the dilemma was observed way back by Friedrich Engels in his "The Housing Question")  -- is the big problem for zoning designed to create affordable housing. That's what the talk is mostly about. But first I want to look at how zoning came about, what its goals were and are, and how it works.

The origin of zoning

In 1915, Equitable Life built an office tower designed to be the largest such space in the world. Taking up a huge lot, the building rose straight up 38 stories, casting a shadow a quarter of a mile. This was a time before Wall Street was covered with skyscrapers. The buildings there were much more modest and natural light was still available. Commercial buildings were structured to use natural light. Cast iron, favored for commercial buildings, allowed maximal window coverage with minimal structural support. The Equitable Building's shadow instantly depressed real estate values all around it. Landlords and real estate speculators throughout the city were terrified and infuriated, not just over the building, but the possibility that other corporate giants would build near their lots. The real estate industry demanded that the city respond with a permanent fix so that this never happen again.

The very next year the city implemented its first zoning law. Note that the city responded immediately. The disastrous 1879 Tenement Housing Act that created dangerous and unsanitary conditions in the ghetto wasn't fixed for twenty-two years. Zoning took a matter of months. The difference? Money and investors vs immigrant labor. Note also that the housing need for the ghetto was dangerous and unsanitary structural designs inducing life-threatening diseases and fire; the needs of the real estate industry were investment.

The zoning had two new requirements. One was a restriction on types of uses so that factories couldn't be built along residences. Factories bring noise and stench and worse, laborers, who are also noisy and smelly that destroy the real estate value of a residential neighborhood. The city came up with the idea of creating residential zones where commerce was allowed but not manufacturing. There'd also be commercial zones where some residences were allowed, and manufacturing zones where manufacturing and some commercial buildings but not residential buildings could be built.

The second idea was a design innovation. Any tall building had to attenuate -- as it grew higher, it had to be more slender. The idea was to prevent the skyscraper from blocking out all the sunlight, while still allowing developers to build big to cash in on rental space. This requirement of attenuation is easily visible in the most familiar and identifiable NYC skyscrapers. The Empire State Building took its design not from any fashion, but from the strictures of the law. In fact, the real estate industry hired an architectural draftsman, Hugh Ferriss, to interpret the legalese to the architects.

These gradual attenuations are called setbacks.

Both of these innovations were specifically designed to protect the interests of real estate industry -- landowners and developers.

Next up, tower-in-the-park zoning, modernism -- design with a social conscience and unintended consequences -- and developmental rights or how gov't creates property and value for the landowner out of thin air.

De Blasio's difference

For the last decade, the progressive left has been begging for a mandatory inclusionary housing program in New York City requiring that all new residential buildings include a quantity of affordable housing. The mayor has proposed exactly such a plan. The community boards and the progressive left have rejected it. Why?

First, compare the mayor's plan with the Bloomberg model of inclusionary zoning. Bloomberg rezoned 120 neighborhoods in the city. Each one contained significant upzonings -- greater allowances for larger buildings, a give-away to developers. In addition to the upzoning give-away, Bloomberg offered developers the option to build even more space if a portion included affordable housing. Usually the bonus -- the added market-rate housing that the developer could build above the affordable component -- wasn't enough for the developer to bother with, so they didn't.

However, affordable housing non profits, which manage the affordable housing component and get their funding for doing it, and whose mission is to create or promote the creation of affordable housing, were the advocates for the inclusionary program. So you'd see the irony of progressive community-based non profits selling development and upzoning to the communities with the promise that the affordable housing would benefit the community. Carefully not mentioned was that the development would raise real estate values, the market rate housing attract more money, and landlords, seeing an opportunity to cash in on the upscaling of the neighborhood, would harass tenants in a thousand ways, and the result would be community displacement and a net loss of affordable housing, particularly steep if the developers didn't even bother with the inclusionary bonus.

Of course, the affordable housing wasn't for the community in the first place. The housing was delegated by raffle, and the housing wasn't often affordable to the locals anyway. So this model of community stabilization or preservation was what I call the Invasion of the Body Snatchers model of community preservation. The community is replaced with other individuals who purport to be just like them with respect to income. But they are not the community. And since the housing isn't affordable to the prior community, it's not even Body Snatchers, it's just wholesale snatching.

Mandatory IZ doesn't solve this conflict between the creation of affordable housing through development and gentrification/displacement. That's one reason why the community boards haven't cottoned to it. But you'd think that the progressive non profits would still be advocating for it. And here's a big difference in the structure of the mayor's proposal. Instead of rezoning neighborhoods one by one, his proposal changes the zoning law itself, so the city would be upzoned automatically without any further process. Community boards would have little say and the non profits would be left out as well.

Under Bloomberg, it was possible for the communities to ask for additional perks in the form of funding for the non profits -- legal services to help evicted tenants, for example. Under de Blasio's proposal, there's no opportunity for the community to leverage such additional funding.

More important, the de Blasio proposal doesn't kick in until there's an upzoning, so in effect, his proposal is just as voluntary as the Bloomberg model. With a little difference: since developers, prior to any upzoning can develop now without including affordable housing, we should expect them to lose interest in upzonings. It has been well observed that mandatory inclusionary housing has this kind of dampening effect on development. We should expect to see the non profits still advocate for upzonings, and less upzoning advocacy from the developers.

The Bloomberg model placed the developer in the drivers' seat, drawing the non profits onto the developers' bus for the sake of the affordable housing and their legal services funding, while they all throw the community under the very bus they're driving. De Blasio's model takes the developer out of the driver's seat, leaving the non profits on a bus going nowhere.

The irony is even more stark -- we should expect to find that the only people advocating for upzoning, gentrification and displacement would be the progressive non profits under the new model.

Cooptation of the Left and the permanent shadow government at the local level

Underneath the community boards' rejection of de Blasio's zoning proposals lies a practical and familiar issue: money. Bloomberg's 120 rezonings each went through the arduous public process in which community boards -- and crucially its members -- played an important role. De Blasio's proposals bypass the community level by writing the upzoning directly into the zoning law (called "the zoning text"). The Blaz's proposals eliminate any local leverage for funds that local community non profits might obtain. 

Affordable housing built by developers to meet zoning requirements must be managed by a non profit community-based organization (CBO). It's part of their mission and they get funding for it. As a result, CBO's are often the most vigorous proponents of development at the local level. Without the market rate development, no affordable housing -- the market-rate housing "subsidises" the "affordable" housing (a deceptive expression -- the housing is often beyond the means of local residents). That's the Inclusionary Zoning/Inclusionary Housing model -- 80% market rate, 20% "affordable." The non profit becomes complicit with gentrification and displacement. 

Displacement is difficult to quantify. Unless a tenant died, the reason for vacating an apartment is anyone's guess, since it's not recorded. Affordable housing is eminently quantifiable, which is one reason why politicians romance it and parade it. Same with CBO's. If  the market-rate housing raises real estate values and landlords evict tenants wholesale, as long as the affordable units are built and occupied, no one will be the wiser even though the net affordable housing in the neighborhood has declined. 

CBO's have a long life in the neighborhood. Their members often sit on the community board. There they often create a consensus of what is "right" for the neighborhood, which too often means colluding with developers to obtain the "affordable" housing the CBO's will manage. 

The political opportunists that cohabit the community boards recognize the going game, and, being political opportunists, play their game. The community board, and underneath the CBO's, are the permanent gov't at the local level. Given that the CBO's are receiving funds to implement the policies that the community boards vote on, the CBO's can also be described as the shadow gov't at the local level.

I'm preparing a talk for Occupy Wall Street Altbank Group about zoning and how gov't coopts the Left through community-based non profits. I want to present this in the context of the amenity dilemma: every material improvement made in a low-income neighborhood attracts wealth and its whiteness, raises real estate values, increases pressure from landlords to evict and yields displacement. Maybe the only solution to the amenity dilemma -- remain in poverty or be displaced to poverty elsewhere; all things accrue to the top -- is protection. So the talk will include a defense of rent regulations, the defense I've made here and elsewhere many times. 

Money laundering and affordable housing

The Treasury's decision to investigate money laundering through NYC real estate might actually save New York from wholesale gentrification.

Constructing a lot of new housing can keep rents low by adding supply. Because it's expensive to build, developers prefer constructing luxury housing to get the quickest and highest rate of return. If the wealthy move out of older housing stock or locations further from the city center into these new luxury units, they free up housing for the less wealthy, who decamp from their older and further locations in turn freeing up housing for the even less wealthy and so on down the line. This is the one good reason for de Blasio's Zoning for Quality and Affordability (ZQA) -- allow new units to have higher ceilings to attract the wealthy out of less appealing older models.

But if the luxury housing is being bought by foreign speculators or money launderers who have no intention of living in the apartments, new construction does no good for the housing market. It turns the city's real estate into a non housing market crowding out the housing market. It's a disaster for the resident citizen, especially the low-income and immigrants.

(You might think, well if we eliminated rent regulations, the market would be flooded with vacant apartments, but this is both empirically and theoretically wrong. Most people who would be pushed out of deregulated apartments don't -- and often can't -- leave the local rental pool. They just move to a lower income neighborhood where they create a tighter market and push out lower income tenants who in turn move to lower income neighborhoods evicting people there, again, all the way down the line until at the bottom immigrants huddle up in substandard housing crowded together in dangerous conditions. At the top, landlords renovate the vacated luxury units and hike the rents there. Iow, deregulation doesn't free up the market, it's just a game of musical chairs, destabilizing everyone and raising rents everywhere. This happened in Boston when rents were deregulated, so we know that it's not just a theoretical speculation-- it's reality.)

The alternative to constructing luxury apartments to ease the housing market is constructing affordable housing. But if the monied are still coming to the city and searching for apartments, the pressure on gentrification in outer boroughs will be greater than the creation of affordable housing can accommodate.

It's easy to show that the current model of affordable housing creation is necessarily inadequate. De Blasio's Mandatory Inclusionary Zoning, for example, would require one affordable apartment for every four luxury unit. But as we know from Occupy and presidential campaigns and memes everywhere, the ratio of the wealthy to the struggling is not four rich folks to each struggler, but more like 1:99, and that's actually generous. 1:999 would be closer to reality. So the current model is beyond inadequate -- it's preposterously inadequate.

So again, the affordable housing model can only work if the luxury housing doesn't become a place for billionaires to park their money. It's got to be housing, not speculation, otherwise the entire geography of the city will be distorted into empty speculation at its center without even a tax base.

Suits and betrayal in Chinatown

"It's so hurtful, it's just wrong!" said a Chinatown community "leader" to another Chinatown non profit director. They exchange mutual gestures of dismay.

Were they deploring restaurant management stealing hard-working waiters' tips? Complaining about a landlord allowing illegal conditions in his building so he could call the Dept of Buildings and evict all the renters overnight without any due process? Or the proposed legislation to exact punishing fines on street vendors for setting up in an illegal space instead of merely having the police ask them to move?

None of those moral crimes. They were deploring a labor organization calling a councilmember "racist." That's what upsets the suits in Chinatown.

White collar crime doesn't receive this kind of shock and dismay. A restaurant manager, donning a suit of clean and pristine pride for a photo op, stands next to a councilmember also in a suit, endorsed by the legitimacy of politics, governance and "leadership." They each lend the other its public display of respectability, shaking hands. Owning and controlling, they have nothing to complain or howl about, nothing ugly to say, nothing to taint the picture, nothing but smiles. And all the suits around are pleased.

But stealing tips -- stealing from low-wage workers who have no alternatives -- is nothing to smile about. It's vastly worse than calling a councilmember "racist."

The suit, like the semiotic neighborhood, is all about selling itself and selling out. It prides itself on its success at whoring itself, as if this were the only game worth playing.

There is no recognition among the respectable that labor stands at the bottom of the social scale, with little support, funding or clout. They have their voices and their unity, and that's just about all. To be heard, they've got to be more than loud in quantity of decibells. They've got to be loud in quality -- shocking, offensive, disturbing and disruptive, otherwise they are invisible. The cry of "racist!" whether true or not, is an honest, sincere, genuine and authentic cry about true management abuses and real living needs.

Forgive me for ranting on this, but I'm disgusted -- and I want those leaders to know that I'm disgusted -- by such displays of shock and dismay over labor tactics. In your comfortable easy chair, imagine yourself lying on the third level of a bunk bed, your only living room. Then imagine who respects your voice. Then, when you next hear "racist" yelled by labor, maybe, true or not, you'll cheer them for simply being heard.

Suits purport to be smart; suits purport to be educated. Then suits should know well the deep disparities of this world and should expect labor tactics to be loud and ugly. Here's how the game is played, and everyone knows it: power, in its echo chamber, will not listen to the disempowered unless the disempowered offend them. Then power deplores the disempowered for being offensive. I have no respect for anyone who deplores labor tactics.

I don't practice labor tactics -- I don't have the courage for it. But I recognize that, truthful or not, it gets justice. There would never have been a Chinatown Working Group were it not for the protests of Chinatown labor which included a lot of name-calling.

It's a shame, though no surprise, that in this upside-down and morally corrupt world, justice should have to be pitted against truth. But truth is merely information; justice is lived. Justice first, then truth will arrive in time. Without justice, truth will remain dressed in suits.

See also in this series:
Semiotic neighborhoods vs the authentic and anti-fragile: prestige and its deceptions and betrayals
Prestige and distortion in Chinatown
The Mobility Dilemma and the Clearinghouse Effect
Authenticity in the East Village

Prestige and distortion within Chinatown

The Asian American Federation, a social services and research non profit highly regarded within Chinatown, published a study of Chinatown in 2008 in which they found that East Broadway, the center of recent Fujianese immigration and a low-income area, was one of the most resilient, vibrant and successful parts of Chinatown, while much of the rest of the neighborhood was ailing commercially. Yet the study's recommendations completely disregard its findings of fact. Their recommendations all favor tourism with no recommendations that support the ethnic community.

Most telling are the recommendation that waiters learn more English (useless for local-serving restaurants), and the absence of any recommendation that managers stop stealing waiters' tips, a wide-spread practice among restaurant owners in Chinatown. Stealing tips removes the most easily available incentive reward for waiters to improve services like learning English. Without tips for improved service, AAF's recommendation burdens the waiter entirely. The bias in favor of management is evident: compel the waiter to learn English but still take his tips. There isn't even a recommendation for free or supported English lessons.

The power of prestige and respectability is pervasive. Growth is viewed as outward-looking towards an upscale mainstream culture, not expanding and supporting the base. So, for example, here are their findings of fact:

A number of changes in the mix of residents in Chinatown also has altered the customer base for Chinatown businesses. Over the past 20 years, growth of the Fujianese population in Chinatown, due to new immigration patterns, has generated demand for businesses supporting their food, entertainment and service preferences. Newer Fujianese-owned businesses have sprung up along East Broadway.... A lack of nightlife in Chinatown also makes it difficult for restaurants to attract evening business, and garment-industry job losses and relocations have reduced restaurants’ traditional customer base. However, restaurants catering to Chinatown’s growing Fujianese population report brisk business.... The decline in the garment industry has decreased measurably the daytime population in Chinatown, a key component of the traditional customer base.  As this traditional customer base shrinks, the growth in Chinatown’s Fujianese population and the influx of non-Chinese and some returning Chinese immigrants and retirees have created a demand for products and services catering to these markets. 

 And their conclusions:

A general lack of customer service reduces the appeal of shopping and dining in Chinatown. Limited English capabilities of staff make it challenging for people who do not speak Chinese to patronize Chinatown businesses. Gruff service from a few businesses hurts the image of all Chinatown establishments. Many stores and restaurants operate on a cash basis, which discourages those customers

 The customers mentioned are tourists with credit cards, not local recent immigrants. And "image" is a problem looking to outsiders, not to locals. The sole source for this claim of gruff service and bad image comes from the Zagat Guide -- a restaurant guide published in English for English-speaking customers. There is no Mandarin, Fujianese or  Cantonese Zagat for New York. If you look through all their recommendations, you'll see that they are equally outward, not inward, looking. And this is characteristic of many such studies of Chinatown. Whether they are positioning Chinatown non profits to obtain government funding for development or attracting private sector investment, they ignore the economic base and their recommendations threaten them with unstable, fragile commercial gentrification.

Image and money are tied together. Semiotic neighborhoods pretend with an image for sale, much as a suit allows its wearer to pretend to an image of respectability. The base of the economy is disregarded, dismissed and invisible.

Next: semiotics and deception among the suits in Chinatown, and the struggle up from the bottom.

See also in this series:
Semiotic neighborhoods vs the authentic and anti-fragile: prestige and its deceptions and betrayals
Suits and betrayal in Chinatown
The Mobility Dilemma and the Clearinghouse Effect
Authenticity in the East Village

Semiotic neighborhoods vs the authentic and antifragile: prestige and its deceptions and betrayals

(These remarks elaborate an informal presentation I gave as guest speaker at a Columbia University Urban Planning Master's Program class last year. I was asked to discuss Chinatown and the East Village as semiotic neighborhoods. The basic idea is that in ethnic enclaves, the commerce that serves local residents is more resilient than touristy commerce. 

Representations designed to broadcast identity for outsiders betray the people and culture that it purports to represent, so there's a correlation between broadcasting outside and economic fragility, as well as deception and betrayal. Authentic commerce, by contrast, doesn't represent and is antifragile -- it grows stronger in a crisis because the locals have more needs in a crisis, and the local commerce serve them. 

Nevertheless, prestige and respectability are measured in mainstream cultural standards, far from ethnicity and authenticity, and are by nature hypocritical -- invested in presenting and maintaining themselves as prestigious, respectable and mainstream, regardless of the real ethical and moral defects of the apparently respectable -- so authority, including many city planners, administrators, financiers, developers and local community opportunists, scorns and ignores the authentic stability of the enclave's economy, endangering the future of the enclave. Although an ethnic enclave can thrive and grow despite outside catastrophes like terrorist attacks, hurricanes and recessions, it is vulnerable and threatened by internal and external authorities seeking to gentrify it. Already gentrified neighborhoods seek representations of authenticity that betray the authentic roots of the neighborhood. They are stabilized by luxury commerce dependent on upscale trends.)

What is a semiotic neighborhood? Simply put, a neighborhood full of signs. Any commercial street will be lined with signs that draw to its consumers. Delancey Street signs draw to the low-income residents nearby. Times Square draws to an international tourism consumer, advertising the entire city -- that's why the signs are so large, so bright, on-the-pulse and sexy. The signs can be read as an indicator of the character of the consumer.

But semiotics of a neighborhood is not just commercial signage. There are no commercial signs on Park Avenue north of 59th Street, but the stone and stately architecture, the spareness and cleanliness of the streetscape, the absence of commerce, all send a message that this is both a residential neighborhood and a wealthy, exclusive one.

Semiotic neighborhoods can be divided among those that broadcast their signs outside the neighborhood, and those that look inward. Broadcasting neighborhoods use their signs to create an identity for outsiders, an identity they can easily read. It can be a bit of a contradiction: an ethnic neighborhood can broadcast an identity that belongs to the outsiders -- self-stereotyping -- instead of being authentically ethnic. The purpose of the identity after all is not to be authentic, but to draw customers. So notice that it's money that leads to the fakery and the fakery is a betrayal of its own.

Inward-looking neighborhoods have no such need to create such an identity. They are not pretending with a show of what they are. The commerce there simply serves the local community that already understands it for what it is -- theirs. Inward-looking neighborhoods are characterized by authenticity.

In the literature of semiotic neighborhoods, inwardly looking neighborhoods are not even considered as semiotic -- they don't try to speak to the general public or communicate using the broader language of the culture, the recognized stereotypes; the motivation of their signs are restricted to the needs of locals, with no thought of trying to impress anyone with an enhanced identity. Ironically, they have authentic identity -- because they're not trying.

Local-serving commerce has low costs, since the customers don't have to be enticed and brought to the door. The locals are a bit of a captive market. As long as the prices don't drive the locals to seek a better deal, the local commerce can rely on having its customer. When there's a crisis, even a catastrophe like 9-11 or Hurricane Sandy, the local commerce actually thrives. The local residents have more needs in a crisis, not fewer, and the residents are even more captive without transport. They must find their needs served locally.

While the authentic neighborhood tends to keep prices reasonably affordable (the customer is not entirely captive) broadcasting a neighborhood tends to raise prices. The intent of broadcasting is to surpass the profits available locally, otherwise it would stay local and not bother broadcasting at all, since broadcasting incurs advertising and presentation costs. And advertisement and image-creation must be ongoing to keep up with outside trends.

In a crisis, a semiotic neighborhood can be devastated.This happened in parts of Chinatown after 9-11. Mott Street, which had been outward-looking with antique stores and Chinese souvenir shops, lost many stores, and has only recently recovered.

East Broadway, the center of the recent immigration and lined with local-serving stores, has not been devastated in the wake of 9-11 or even the Great Recession. It's been crowded and bustling, the commerce vital and thriving.

To be continued...
See also in this series:
Prestige and distortion in Chinatown
Suits and betrayal in Chinatown
The Mobility Dilemma and the Clearinghouse Effect
Authenticity in the East Village

Should be interesting:

A rare opportunity to learn the labor perspective in Chinatown. And Peter Kwong is an authority on Chinatown. Sunday, Jan. 10, 3pm, 345 Grand Street at Chinese Staff and Workers Association.

The consequences of unaccountability

The Parks Department closed the basketball court all summer to resurface it even though there were no complaints about the old court and there was no community need for a resurfaced court. The Community Board did not request a resurfacing. Calling it a "repair," the Department proceeded without consultation, consent, or process.

The Department also renovated the nearest basketball court on Avenue D at the same time, closing out basketball to the community youth for nearly the entire summer.

The placement of ping pong tables in the park was also done without process beyond finding a space. The installation of a police surveillance station: also without process or consultation. Both of these targeted the homeless in Tompkins Square Park who've been part of the park community for decades.

The police station was installed after an article appeared in which a new young white person complained about the homeless in the park. The article appeared in the New York Observer, owned by Donald Trump's son-in-law Jared Kushner, who owns at least 36 buildings in the neighborhood. The homeless are clearly an obstacle to financial appreciation of his holdings and his vision for the neighborhood, one that is cleansed of anything but wealth and whiteness.

The park is the center of the Alphabet City neighborhood and community. It is being transformed without any accountability. I often hear the simplistic analysis that gentrification is the inevitable the result of global capital accumulation seeking a place to develop new markets. But gentrification doesn't happen without government complicity. Parks, development, real estate taxes, zoning restrictions, housing availability and regulation, services -- all these are within government purview. Gentrification is as much a policy choice as a pressure from capital.

The government in a democracy purports to be us. But when a government agency -- whether it's Parks and Recreation or the NYPD -- or the mayor himself changes the landscape without process, that's where gentrification gets in the door.

Division

[Cross-posted at http://chinatownforchinatown.wordpress.com/]

There are two sides debating in the Chinatown Working Group. Some want to see more tourists in Chinatown to support business. Developers, financiers, some business owners, the Business Improvement District, for example, sit on this side and arts purveyors as well. On the other side stand the labor and tenant adovocates who want business to serve the local residents. You might ask, why not have both, local services and toursim?

If only the sustainable market forces were balanced. But they’re not. Gentrification is an opportunistic tide that, once it gains an entry, will flood the locality resistlessly. To use urban planning to help the juggernaut of monopolistic market forces is unnecessary. The empowered need no help.

In any economy, there are vulnerable sectors even among the most sustainable. Local services are actually highly sustainable since local residents have consistent, reliable purchasing needs. You see those needs reflected in the streets of Chinatown. As long as the community remains, the local services will be sustainable.

Although they are highly sustainable, local services are also highly vulnerable to attack from giant outside capital which has more resources, government connections and mobility. Ironically, the least vulnerable — giant capital, developers, big businesses, chain stores — are also the least reliable because they are mobile and least tied to the locality. Like a corporation that protects itself in bad times by laying off labor, giant corporations are most capable of protecting themselves at the expense of the locality, whereas small local servers depend on the locals.

Tourism is closely tied to development and big capital — high prices and upscale values that can be marketed to upscale spending. Local services, especially in Chinatown, depend on low prices and high volume. If giant capital gains a foothold, commercial rents will rise, replacing local services, and  gentrification will displace the community, killing the viability of any remaining local services. It’s a snowball effect.

This is not to say there shouldn’t be tourism in Chinatown. There’s always been tourism in Chinatown back all the way to the 19th century. But here’s the paradox of tourism: people come to Chinatown not to see a spectacle staged for them but to experience Chinatown as it is, a lively working community, culturally distinct from the rest of New York because it serves its own. Cater too much to the tourist, and you lose the Chinatown that tourists come for. You’d then have to market Chinatown as a brand, constantly hoping that that brand doesn’t go out of fashion. Chinatown business becomes the slave of an outside community that it has no control over, and it turns a community with businesses in it into a business with no community in it.

In planning, as everywhere, there are empowered sectors that need no help, and disempowered groups that need support. Were it not for the 1% predators, the 99% disempowered would be fully sustainable. That’s why planning should always keep as its goal protecting the disempowered and avoiding giving ground to giant capital.

Margaret Chin, the developer's candidate

Margaret Chin is taking money from the Real Estate Board of New York's Political Action Committee. You'd want to ask, why would the founder of Asian Americans for Equality welcome large campaign support from real estate?

Affordable housing is built in NYC through incentives given to developers. So if you want to get any affordable housing here, you've got to welcome a market-rate developer, otherwise you get nothing.

Does that explain why Margaret voted for the NYU development (albeit curtailed)? Maybe. Does it explain why she voted for the Chinatown BID against widespread opposition within Chinatown? Maybe. Why she voted to help First American International Bank, the promoter of the BID, demolish and redevelop 135 Bowery?

The BID benefits larger property owners, larger businesses and developers and banks. But the small property owners and the small businesses are the anchor of Chinatown. At what point does a commitment to building new affordable housing sacrifice community entirely?

The city has shoved a wedge between affordable housing and community, turning affordable housing into a tool of gentrification and displacement. Look at Williamsburg. Chinatown next? The BID is a step towards the new Downtown Hotel District (DoHo?) formerly known as Chinatown.

From Crain's http://www.crainsnewyork.com/article/20130729/BLOGS04/130729878 about REBNY's funding of Chin's campaign

From City Council Watch, Seth Barron (writer for City & State) "Margaret Chin Progressively Awful"

Sean Sweeney in The Villager "The billionaires back Margaret Chin for City Council"

WNYC covers rent regulations

Adam Davidson, appearing on WNYC's morning "Brian Lehrer Show" discussion program, gave his strongest argument for rent deregulation without any analysis at all. Instead, he appeals to authority: economists on all sides agree that rent regulations are bad for the housing market and harm the middle class. 

True, economists agree on across-the-board rent regulations, but that's not New York's model. New units in NYC are not required to be regulated, so rent regulations here incentivize new construction. Deregulation would remove that incentive since raising rents and evicting tenants are cheaper and easier than construction. The New York model is actually healthy for the market.

Davidson refers to one economist, Christopher Mayer, but Mayer completely forgets that deregulated tenants don't simply disappear from the rental pool. If they have to vacate, they move from upscale neighborhoods into middle class neighborhoods and create a tighter market, raising rents there. So deregulation will hurt the middle class especially. In aggregate: 

deregulation = same # of units, same # of renters, just more wages going into rent, a windfall for landlords and no incentive to construct or ever ease the market. 

A land tax would help, tagged to upzonings in selected neighborhoods that can withstand increased development. 

The Times at it again

Rent regs in the Times again. Amazing to me that they can print baldfaced lies. 

This was empirically studied in Boston:  when rents were deregulated, all rents rose. 

Mayer's key assumption is false. When the deregulated renters vacate, they don't disappear -- they have jobs and family in the city. They move to cheaper neighborhoods where their numbers create a much tighter market in those lower-income neighborhoods, raising rents, displacing more renters who in turn move down the ladder creating a tighter market down the line.

So deregulation would raise rents steeply for the middle class and those below. The highest renters alone might get a break. Deregulation is a win for landlords and maybe the wealthiest renters, a lose for everyone else. 

Building new units will increase supply and ease market rates. Since new units are not required to be regulated in New York, our rent regulations incentivize new unit construction. Deregulation would end that incentive: raising rents and evicting tenants are cheaper than building new housing. Deregulation will likely raise rents steeply across the board while tightening the market even more, driving the middle class out to the further reaches of the metro area. Deregulation is a gift to landlords at the expense of nearly everyone else.

NYC's rent regulations are healthy for its housing market except it's deeply unfair for new arrivals. The state should really get back into housing of all kinds -- upscale to low -- using the upscale housing to finance the rest.

Rent regulations

Thinking about the construction boom and the Rent Guidelines Board rent hike, I went back to a piece I did for Met Council refuting the claim that rent regulations artificially raise market rate rents. The key insights were two: 1) in New York, newly constructed apartments are not required to be regulated, so regulation doesn't add to the tight housing market (in fact, rent regs are one of the few incentives to construct in NYC); 2) deregulation doesn't flood the market with new apartments since evicted tenants don't leave the local pool of renters, and wherever they go they tighten the housing market there, displacing lower-income renters. 

Looking back, I'd want to explain explicitly why it is that displacement always shifts downward, and not just a musical chairs of apartments among renters. Deregulation eviction implies that the tenant can no longer meet the high market-rate rent. In a tight housing market, if they go to a lower-income neighborhood, they will find an apartment by displacing someone who was renting at a lower rate. The displaced renter does the same in the next lower-income neighborhood and so on.

[Update: on second thought I think I was right in the original, not as in the paragraph immediately above. Obviously deregulation evictions out of prime locations also allow high renters to move upward -- upward displacement. That displacement doesn't ease market rates: the evicted have created a tighter market down the line. On the other hand, if new upscale renters are entering the market from outside the pool, they would increase downward displacement pressure.]

Some of those deregulation-evicted tenants can pay higher rents than they'd been paying under regulation, just not quite as high as the market rent where they'd been. No one will seek a cheaper apartment -- if there was something cheaper suitable to them they'd have decamped long before deregulation. But some will seek apartments somewhat more expensive than what they'd been paying under regulation. So the only change in the economic equilibrium is the added funds available for rent among the deregulated. 

At the end of the day, deregulation increases the aggregate funds available for rents taken from whatever else the regulated tenants had been spending on in the economy. All of that increase goes to the landlords. Deregulation is just a pointless shift from the non real estate economy to landlords and a downward spiral of displacement, while more upscale renters flow into the city to raise the luxury rates. With more funds flowing into the real estate market, developers construct to meet those upscale renters, who then recreate the commercial economy in their own image, buying upscale items. 

So rent regulation is just a restriction on upscale real estate speculation and upscale commerce. It doesn't raise market rate rents, but actually dampens them. And it's good for non upscale commerce.

So here's the article. The point about the rent pool seems to have grown legs -- I've heard it repeated by lawyers as well New Yorkers on the street. 

Why Rent Regulations Don't Raise Market Rents 

By: 

Rob Hollander

Published: 

June 2011

"If rent decontrol would mean a fairer, less insane market, then it is a just cause," the libertarian-conservative Cato Institute argues.

In every debate over rent regulations, someone—often an angry tenant paying outrageous rent—argues that regulations are responsible for pushing market-rate rents way up. If those regulated rents were brought into the free market, the market would level down, allowing a fair rent for all.

This argument has had wide currency among conservatives in their effort to undermine rent regulation and promote developers and landlords, the market suppliers in the real-estate industry. It appeals directly to people who, bitter over their heavy rent burden, welcome a convenient scapegoat: their own neighbors. And the authority, the landlord, is conveniently exculpated.
This argument is false. It is based on these premises:
1) Rent regulation discourages housing construction, restricting housing availability;
2) landlords make up their losses on regulated rents by gouging market-rate renters; and
3) deregulation would level the playing field, lowering high rents

Its conclusions have been demonstrated to be empirically, factually untrue. It is time to put this claim to rest.

Let's start with the basics. Not only conservative think tanks like the Cato Institute, but the consensus of economists, even the liberal Paul Krugman, accuse rent regulation of discouraging new housing construction. Without new apartment units, the supply can't keep up with demand, and fierce competition for the few remaining units pushes market rates up.

Their observations are true where rents for new construction are regulated. But in New York, it isn't.

New construction is exempt from rent regulation in New York. Building new affordable housing is entirely voluntary in New York, and developers only provide it where the city gives them special incentives, such as allowing construction beyond the zoning restrictions or giving tax breaks. In fact, rent regulation encourages new construction, as the Citizens Budget Commission has pointed out, since new units can garner far higher rents than older regulated units. If landlords can't cash in on regulated units, the only other means to make money is to build new, unregulated units. Rent regulation is an incentive for construction.

The difficulty of building in the city has many causes—the cost of land and construction, restrictive zoning laws, building codes, permits and bids, and, not least, the private and political graft involved. Nevertheless, New York continues to see housing construction. Even during the recession year of 2008, the city issued 33,911 permits for new housing, the greatest number since 1972. In a city of obstacles to construction, rent regulation is one of the few encouragements to build.

The second premise contends that if landlords can't raise regulated rents, they will raise rents on unregulated units to make up for the lost revenue. Unfortunately for the landlords, the free market doesn't work that way.
Market rates depend on renters' willingness to pay, not on owners' costs or losses. Rents can't rise above what renters are willing and able to pay, and the nature of the profit motive ensures that market-rate rents will rise exactly to that level of renter willingness, regardless of what other renters are paying.
In a city where construction lags behind demand, it may be legitimate to ask whether deregulation would free up apartments and ease the market down—the third false premise. Quite aside from the consequences of displacing individuals or even whole communities, the answer is a surprising no.

Rent deregulation, believe it or not, raises market-rate rents. The conservative Manhattan Institute, in its 2003 study of deregulation in Cambridge, Massachusetts, found that, following deregulation, landlords invested in improvements to attract the highest possible market-rate renters. The result of the 1994 deregulation in Massachusetts has been better-quality housing, but higher market rents across the board.

That shouldn't be surprising. A tight housing market implies that many renters can't find apartments in their preferred locations. That's the meaning of a housing crunch. Renters can't find the spaces they want, and the ones they have to live in become overpriced. But when vacancies appear, those renters are willing to pay exorbitant rents for the locations they prefer, and landlords will meet their willingness.

The market value depends on three general factors: demand, supply, and the aggregate available funds for rents. If regulated renters are paying less than their available rent funds (the excess of which presumably goes into the goods and services economy), when they are forced to pay more, it will increase the aggregate funds going to landlords as rents, since most of those renters are tied to the metropolitan area by work, family, or preference. If their rents are deregulated, these people will force rents up wherever they go in the metropolitan area.

That's a recipe for disaster. When renters can't afford their location as a result of deregulation, they move to lower-rent neighborhoods, where they create a tighter rent market, raising the rents there and even gentrifying the area. Some of the longtime renters in those neighborhoods will be priced out and move to even lower-income neighborhoods, tightening those locations in turn.

More affluent longtime renters will see their rent increases as an opportunity to move to a more desirable location. But wherever they go, landlords will raise their rents as high as they are willing to pay. If the market is tight and people are not leaving the metropolitan area, the market rates will remain high.

Market rates only go down if demand goes down—if people leave the city entirely or excess housing is built. But New York's population is increasing, not decreasing, and construction is costly and difficult. Deregulation here will not ease the market any more than it did in the Boston area.

It's not even certain that in a tight market like New York, landlords would invest widely in improvements, as they did in Boston and Cambridge. Unregulated renters have few rights, so if they complain to the city about lack of services or repairs, the landlord can retaliate by refusing to renew their lease when it expires. Regulated renters can compel repairs without that fear. So it is possible that deregulation in a tight market would result in lowered quality of housing and a degrading of services, as well as higher market rents. That's exactly what happened in New York when vacancy decontrol was imposed in 1971.

Regulated rents actually help to depress market rates. Renters who pay exorbitant rents may think it's unfair that regulated tenants pay so much less than they do, but the source of exorbitant rents is not regulation. It is landlords' profit motive and New Yorkers' desire to live here. We are the market that sustains high rents.

So what is the effect of deregulation? It provides a cheaper means of placing money into landlords' hands than construction does. The chief effect of deregulation is an increase in the aggregate funds available for rents. It doesn't ease the market, it won't improve the quality of housing in New York, and it won't create more housing. It will give more money to landlords, it will raise rents all over the city, and it will wreak havoc on communities as markets are tightened even in low-income neighborhoods, causing a spike in gentrification and displacement.

Rent regulation does create an unfairness—the lucky get to spend their money on the local economy, not just on rent, while their market-rate neighbors have to suffer. But forcing everyone to suffer doesn't solve the suffering of the overpriced. It just makes life worse for everyone. Two wrongs don't make a right. Deregulation is a lose-lose. 

Boomtown

Matt Yglesias comments on US cities leading in construction spending. New York is not only way ahead, it's an outrider way ahead (though not quite at a Pareto distribution -- construction is expensive here, so that may be why there's no Pareto), and it's not correlated (pace Yglesias) with population; LA is next most populous, Chicago, then Houston, all on a Pareto distribution, but LA is low on construction; Dallas is constructing more than Houston even though Dallas doesn't have much more than half Houston's population size. In fact Dallas is about one seventh the size of NYC, but it's constructing at the absolute rate of 60% of NYC's.

In any case, NYC is booming. Given the high cost of construction in NYC, this boom means developers see huge money in development. How much of that do you think is affordable housing?

It also means that developers are not worried about diluting the luxury market. Why? Do they expect high-renters/owners to abandon older housing stock to move into new? Or locations further from the center into closer? Either of those would be good news for low-income neighborhoods -- less displacement pressure on them. But if developers simply expect more high-paying population in the city, then no one benefits but the developers.

AALDEF publishes new data on Chinatown land use

From AALDEF (Asian American Legal Defense and Education Fund): 

[scroll down for the pdf of the study]

June 21, 2013 – The Asian American Legal Defense and Education Fund (AALDEF) is releasing land use data on New York City’s Chinatown, as a preview of its forthcoming three-city study of Chinatowns and surrounding areas in Boston, New York, and Philadelphia.

"We have assembled data on the make-up of small businesses and properties in Chinatown that will enable us to document the effects of gentrification on Asian immigrants, who have been fighting for their community for decades,” said Bethany Li, staff attorney at AALDEF.

AALDEF, in collaboration with community partners, academic institutions, and hundreds of volunteers, spent a year recording block by block and lot by lot the existing land uses in Boston, New York, and Philadelphia Chinatowns and surrounding immigrant areas. Today’s initial release of land use data, combined with detailed analysis of Census data from the 1980s, provides a snapshot of the existing uses of New York’s Chinatown and describes its startling transformation in the past three decades.

New York’s Chinatown has served as the gateway for thousands of immigrants from Asia and is home to a thriving network of low-income residents and small businesses. However, property values in Lower Manhattan have increased substantially, and gentrification is threatening the neighborhoods’ historical and cultural significance. According to Census data, the overall population in New York’s Chinatown decreased 7% between 1990 and 2010 (from 125,574 to 116,722 people) due largely to the increase of non-family households and a decrease in family households -- a significant indicator of gentrification. As a result, many Asian immigrants face the prospect of displacement.

For example, AALDEF's study indicates that an overwhelming majority of commercial use in New York’s Chinatown consists of small businesses (94%), approximately 12% of which is classified as “high-end.” However, our survey shows that the most significant cluster of “high-end” businesses is in the area between Houston and Delancey Streets, where students and young professionals have displaced immigrant families in the past decade. "High-end" stores also dot the landscape along Allen and Orchard Streets heading towards more traditional parts of Chinatown.

“Gentrification threatens to transform these previously neglected neighborhoods into tourist centers and destroy the places where Asian immigrants have lived and worked for decades,” said Li. “We hope this data can be used to support organizing and planning efforts that help retain resources for New York’s Chinatown for current and future immigrants.”

This data was collected with the assistance of AALDEF’s community partners including Chinese Progressive Association and Boston Chinatown Neighborhood Center in Boston, Chinese Staff & Workers’ Association in New York, and Asian Americans United in Philadelphia. The University of Pennsylvania’s City and Urban Studies Department provided technical assistance on mapping and data analysis.

Download Chinatown: Then and Now >

Contact:

Ujala Sehgal
212.966.5932 x.217
usehgal@aaldef.org

Bethany Li
212.966.5932 x.213
bli@aaldef.org

Sustainability

Even if restaurants do provide many more jobs than a 7-Eleven, are restaurants as sustainable as 7-Elevens? That's exactly the question that leads right to the heart, goal and purpose of NO711.

Because they can get higher rents from chain stores, banks and bars, landlords raise their commercial rents on small businesses as soon as their leases come due and drive out those small local-serving businesses in order to open up space for higher-renting bars, banks and chains.

As the highest rent-payer, chains take the highest-density foot traffic locations, clustering to increase that foot traffic. Increasingly, chains are invading less dense neighborhoods. As long as there's no regulatory restriction on chain stores, there's no reason to believe this trend will not continue. Landords in less dense neighborhoods speculate on that trend by raising rents even leaving stores vacant until a chain takes it, as the Pratt Center has observed.

Small storefronts increased rents by as much as 600% in 2006 to make way for bars and chain stores in the EV. Commercial rent increases and upscaling are not static levels. They respond to speculations on itself -- a recursive function that spirals upwards to the highest bidder creating a context in which only the highest bidder can survive. CBGB's was lost to Varvatos, a chain store. Veselka, an independent restaurant, opened on the Bowery after Varvatos opened and has already failed. This is no coincidence.

(As it happens, the restaurant I mentioned a couple of posts back has been around for decades. It has a full liquor license as most successful restaurants have. It is also nowhere near any chain stores.)

Impending change in Chinatown

Grieve posted the news yesterday that 11 buildings on the Bowery from Canal Street to Houston Street (83-5, 88, 103-5, 219-21, 262, 276-82-84) have just been bought by the owner of Dr. Jays, hip-hop clothing stores. With the exception of 276-84 at the corner of Houston, most of these parcels are not ideal candidates for demolition and redevelopment but the likely replacement of Chinese local-serving retail in 83, 85, 88, 103 and 105 — many of the leases are coming due – will carve out a piece of the Chinatown community.

If new commerce succeeds, it spreads. That's bad news for Chinatown, even though this portfolio was never Chinese-owned. Those four buildings are also residential, so watch out for evictions. The current hotel residents in 88 may be threatened as well. The building is overbuilt, so it's unlikely to be demolished, but it could be renovated and turned into an upscale hotel like the St. Mark's for those seeking the "authentic New York experience."

The Chinatown Working Group, Chinatown's community planning initiative, with over 50 lcoal tenant, labor and social service orgainzations participating, has been meeting on the future of Chinatown, hiring Pratt as their planning consultant. This troubling real estate/retail transaction should be right at the top of the discussion: here's the future, what can Chinatown planning do about it? 

Face the new EV

EV Grieve has been following the piecemeal clearance of all the commerce on 14th Street for some yet unknown development. Locals expect a huge high rise like the ones we saw south of Houston (The Ludlow, Blue, THOR, SVA), so I thought I'd show what is allowed there --

Photo: DCP

except maybe all glass and steel and ground floor storefronts. You can imagine which stores.

The strip from Avenue A to 1st Avenue is zoned for mixed use commercial and residential space with an 80 ft height cap and a maximum floor area ratio of 4, about the size of an Old Law 6-story tenement. It's similar to the EV/LES 2008 rezoning but without any affordable housing provision (beyond the 421a tax incentive which keeps it affordable only for about 25 years).

Will the developer get a variance to build higher? The Board of Standards and Appeals doesn't give out variances like candy -- the developer has to show some rationale. Otherwise the city wouldn't have spent millions on rezoning 120 neighbrohoods under Bloomberg.