The Crisis: The overwhelming election of Bill de Blasio reflects the frustration of New Yorkers with the rising inequality and unmet needs in the City. As a City, we need to take advantage of that opportunity to permanently create the base for long-term gains for working families and for addressing the climate change crisis. However, beyond many of the admirable policies promoted in his campaign, New York City needs even more ambitious and far-ranging changes in direction to reverse the yawning gap between the elite and struggling working families in the rest of the City.
Superstorm Sandy also brought home that climate change is a basic existential threat to the long-term survival of New York City. A coastal city whose economic center is close to sea level could be wiped out by extreme weather if temperatures are allowed to rise significantly in coming decades. And not only did the city have to suffer the frustration of partisan opposition to basic recovery help after Sandy, its residents know that national ideological gridlock on the issue means little dramatic action on climate change is likely at the federal level.
The challenge for New York City residents is that, even as billionaire-penthouses get built, New York City faces rising housing costs that are destroying its working and middle class neighborhoods year-by-year. One result is that workers trekking in to clean the buildings and cook the food for those who can still afford the City are often forced to live in suburban sprawl and now face the longest average commutes of any city in the country. These rising housing costs reinforce a skewed employment market, with many employers in middle-income job categories reporting that they would not expand in New York City because they would not be able to attract employees because of those housing costs and commuting times.
And while New York City is home to some of the wealthiest people on the planet, basic human services, transit and infrastructure remain underfunded. Part of this is the inequality in the tax code that effects states across the country, but the fact that hundreds of thousands of commuters work in the City without paying city income or sales taxes is another key reason for the ongoing budget crises faced by NYC.
The Solution: Build an Alliance of Environmentalists, Labor, Affordable Housing Advocates and Other Community Groups to Add Millions of Housing Units to the City
The potential for addressing these challenges exists in tapping the social wealth embedded in the empty parts of the skyline of Manhattan—economic wealth to fund broad social needs like affordable housing, job wealth that can employ the City’s unemployed, and clean energy wealth that can be tapped as well to significantly address the threat of global climate change. A program to massively expand housing and move large numbers of people from energy wasteful suburbs can create a path to progressive change.
While there are a wide range of tools that can help effectively expand housing, a key tool to ensure that housing will be affordable is inclusionary zoning. Communities around the country have promoted affordable housing through allowing greater density in certain locations in exchange for building affordable housing on-site or paying an inclusionary zoning (IZ) fee. New York City has a limited IZ program but an expanded one centered on Manhattan requiring an IZ fee of 30% of the sale price for all new luxury construction would yield massive funds to provide not only affordable housing in northern Manhattan and the outer boroughs but support the funding for the transit, educational, and medical infrastructure needed for a growing NYC population.
For example, in a scenario of adding 100,000 units in lower Manhattan under a 30% IZ fee, this would yield roughly $43 billion in revenue given current average prices for new units in lower Manhattan. Assuming 60% of that is dedicated to affordable housing, that would yield $26 billion for affordable housing and $17 billion for educational, medical and transit infrastructure needs. Combined with other reforms to make residential housing more affordable, the City could build affordable units housing millions of people from low-income and moderate-income families.
- A Massive Boon to Affordable Housing in New York City: By assessing fees on astronomically expensive lower Manhattan real estate and leveraging purchases in far less expensive upper Manhattan and outer borough areas, this program would yield extraordinary returns in affordable housing. By leveraging matching federal funds and private capital match, the result would be something on the order of five to twelve units of affordable housing built for every luxury unit built. Even a relatively conservative estimate of would lead to affordable housing for nearly a million people.
- A Jobs Bonanza for Working People in New York City: Construction of all these units would drive a large range of employment in the City. Under conservative estimates, this includes an estimated 988,000 short-term job years in construction , support services and the jobs induced by the spending of all those involved in its construction, as well as permanent jobs created to provide property services for the new residents and that is induced locally by the new residents’ spending. Additionally, lower housing costs would encourage a broader range of industries and businesses to locate in the City, knowing their potential workforce could actually afford to live there.
- A Significant Tool for Fighting Climate Change: Because the average New York city resident is responsible for just thirty percent of greenhouse gas emissions of the average American, bringing people from the suburbs to live in the City is one of the single most effective ways to dramatically cut per capita energy and climate change impacts. Under conservative assumptions of this proposal, the NYC population expansion would lead to a net 14.9 million metric ton drop in greenhouse gas emissions—equivalent to shutting down 15.5 coal plants.
- A Large Fiscal Boost for City Coffers: Along with the initial upfront revenue for medical, transit and educational infrastructure raised by IZ fees, by bringing non-residents (some of them commuters now not paying city income taxes) into the City, this program would permanently increase the tax base of the City. Including property taxes paid by new lower Manhattan residents (the following numbers assume no property taxes from the affordable housing units), as well as income taxes and sales taxes paid by all new residents of NYC, the gain for city treasury would be at least $5 billion per year. That number could be significantly larger if high-end condos were paying their fair share of property taxes, rather than the ridiculously inequitable amounts luxury condos pay under the City’s current tax code.
- A Strengthening of Progressive Politics Locally, Nationally and Globally: To achieve this policy, an enduring alliance of labor, affordable housing advocates, environmentalists and other community advocates will have to be built. In turn, the multi-decade returns from the policy would continue to strengthen and deepen that alliance, which would support a broad range of other progressive priorities as a consequence. And by shifting more of the national population growth of the nation to New York City, this will add voting power in progressive precincts, rather than in conservative “oil belt” districts like Texas and North Dakota, which currently account for a disproportionate portion of population growth. And by acting as a model for growth that helps reduce inequality and climate change emissions at the same time, New York will be a progressive model for movements in other cities nationally and around the global.
The Workplan: This post is part of launching an organizational project, MORE NYC (the Metropolitan Organization for the Real Expansion of New York City), which is working to build public and organizational support for this plan. Its new website is launching today at:
MORE NYC will be promoting research outlining the core plan, documenting its data and calculations, while making the case for how such a large expansion of residential housing is both doable and a broad-based gain for the City. It will also be working to build the alliance of labor, environment, community and other groups that can support the effort and benefit from its implementation, since building a five-borough alliance with a stake in change will be critical to overcoming expected NIMBY opposition to any growth and the real estate industry’s resistance to sharing such a large portion of the proceeds of development. A critical step in making this program a reality is educating the broad range of New Yorkers that they will collectively benefit from what will seem like dramatic changes in the City.
The best initial way to make the public case for MORE NYC is to intervene in existing policy debates to raise key issue points, whether pushing debates on inclusionary zoning to include more expansive provisions and broader upzoning, as well as conducting “audits” of zoning decisions to highlight the environmental and jobs benefits of upzonings—and the job, fiscal and environmental costs of downzoning and other limits on building. Once the core alliance is in place and public opinion has been engaged effectively, MORE NYC can begin working to enact the broad points of its policy program through the City Council and, as necessary, through the state government. The alliance built over time will be used to mobilize public opinion and move policy through the City Council and state legislature as needed.