Tag: Manhattan

Doubling Down on the Worst Possible Public Policy (“Affordable Housing” In Manhattan)

You may think it would be impossible to come up with any public policy that is worse than that one of a forced energy system transformation. And yet, the Manhattan Contrarian designee for “worst possible public policy” has gone to something else. That something else is the building of what they call “affordable housing” on some of the world’s most expensive real estate here in Manhattan.

Rendering of the proposed Hudson Mosaic affordable housing development at 388 Hudson Street in Manhattan, featuring green spaces, modern architecture, and busy pedestrian and vehicle traffic.

From The Manhattan Contrarian

By Francis Menton

I often write about the folly of attempting, through a myriad of government mandates and subsidies, to compel the replacement of our electricity system with one powered by the wind and sun. You may think it would be impossible to come up with any public policy that is worse than that one of a forced energy system transformation. And yet, the Manhattan Contrarian designee for “worst possible public policy” has gone to something else. That something else is the building of what they call “affordable housing” on some of the world’s most expensive real estate here in Manhattan.

The term “affordable housing” as used by housing advocates is a euphemistic term of art that means something different from what you would think. What it really means is subsidized and income restricted.

The policies of forced energy transition and of building “affordable housing” in Manhattan share some notable characteristics. One is that a few simple observations are sufficient to demonstrate that the policy wastes vasts amounts of taxpayer resources while accomplishing essentially nothing and indeed being destructive. Another is that there is near total consensus among the Manhattan cognoscenti that the policy is a not only good idea but indeed a moral imperative.

If you want to read about the disaster of a government-forced energy transition to generation of power from wind and sun, I can refer you to some hundreds of my prior posts, for example here, here and here. For today, I will discuss the ongoing disaster of pretending to build “affordable housing” in Manhattan.

The occasion for today’s post is the recent announcement of a major new all-”affordable” development to be built in my own neighborhood of Greenwich Village. The address is 388 Hudson Street, where there is currently a large vacant lot of approximately half the block, about 2/3 of an acre in total. This could well be the most valuable vacant site in Manhattan today on a per square foot basis. The proposal is to use about half the site to put up a new building with some 280 apartments, which will be allocated to people of low to middle-income by means of a lottery. The remainder of the site will then become “public open space.” Once selected for an apartment, the beneficiaries will get the right to continue to live in the apartments for the rest of their lives, and even on death to pass the right to occupy the apartments to their heirs under limited circumstances. However, they will have no ability to sell the right to occupy, and if they leave voluntarily they give up all future rights to occupy.

So why has the building of “affordable” housing in Manhattan been designated by this site as “the worst possible public policy”? There are too many reasons to cover fully here, but the main ones are (1) enormous cost per beneficiary if the costs are properly accounted for, (2) many of the beneficiaries are not even poor, (3) the benefit is not counted as income to the beneficiary, and thus the “poor” beneficiaries remain poor even though they get a benefit that could be costing the taxpayers hundreds of thousands of dollars per year each, (4) the beneficiaries become essentially trapped, with a tremendous incentive not to move even if their life circumstances change such that their apartment is no longer appropriate to their circumstances, and (5) the properties inevitably deteriorate and require increasing subsidies and bailouts as the years pass.

The new project is being given the name “Hudson Mosaic.” On December 18, the City announced the “award” of the project to a group of designated developers. On December 22, a piece about the project, along with newly released renderings, appeared on the website New York YIMBY. Here is one of the renderings:

A rendered image of the 'Hudson Mosaic' building in Manhattan showing a tall, modern red brick structure with numerous windows and a landscaped base, surrounded by other buildings and greenery.

Some history of this area: The site is about 400 feet from the location of a colonial-era mansion that was known as Richmond Hill. Richmond Hill was used as, among other things: (1) one of the buildings that George Washington occupied as a headquarters during his 1776 battles and retreats across Manhattan as the British took over the City; (2) the Vice Presidential residence of Vice President John Adams when the federal government was first established in 1789 and until the capital moved to Philadelphia in late 1790; and (3) as a home of Aaron Burr, including at the time he shot Alexander Hamilton in 1804. Richmond Hill overlooked the Hudson River, but subsequent landfills have moved the waterfront close to 1000 feet to the West. By the mid-twentieth century, this micro-neighborhood had become known as the “printing house” district, mainly occupied by industrial loft buildings that were the home of the financial printers that produced the hard-copy prospectuses and annual reports that Wall Street then required. Those loft buildings today are a combination of offices and residences. Google has recently established a campus of multiple of these buildings just across the street from the site of Hudson Mosaic. The industrial loft building visible on the left side of the rendering above is used today as an office building, one of the tenants being the headquarters of the Squarespace company that is the host of this website. Disney has just built two new headquarters-type buildings a few blocks to the South.

The particular site at 388 Hudson Street was purchased by the City and vacated decades ago to be used for staging of construction of a new water tunnel to augment the City’s supply of drinking water. That endless project is still ongoing (projected to be complete some time in the 2030s), but construction in this area wrapped up in 2013. The City could have sold off this site for big money — multiple hundreds of millions of dollars — but instead chose to keep it vacant until now.

Rather than selling the vacant site to the highest bidder, the City is following a procedure they call “Request for Proposals.” In this procedure the City indicates that it will essentially give the land away to whoever makes the best proposal for the favored use, here “affordable” housing. The consequence is enormous cost to the taxpayers, all of which is opaque. As far as I can tell, the developers are getting the land for free, versus an auction price that the City could have achieved in the range of hundreds of millions of dollars. There is also some sort of City-subsidized financing, although I am unable to find details. The City will also make a grant of tens of millions of dollars to the project, mostly to build a new public athletic facility on the lower floors (but undoubtedly also useful to reduce construction costs for the developer). There will also be a ten year abatement from real estate taxes, with taxes then phasing in gradually thereafter.

Other than the grant for the athletic facility, none of this will appear on the City’s budget. But how much will be the real subsidy to the lucky lottery winners? It could easily be a million dollars or more each. (If the foregone sales price for the land is $300 million, and lost real estate taxes over 20 years are $120 million — which are reasonable if rough estimates — then the subsidy would be in the range of $1.5 million per beneficiary family.). To get an idea how crazy this is, the City could have given $500,000 each to 280 lucky lottery winners — plenty to buy a house outright in a nice middle class area — and have $300 million to spare for other City priorities. If the other priority were “affordable housing,” they could have tripled the number of beneficiaries by auctioning this site and using the money in more modestly priced areas.

Meanwhile, as this new “affordable” project moves forward — along with dozens of others around the City, in areas of all income levels — how are things going with the existing stock of such housing? The answer is, badly. The tightening of rent regulations that took place in 2019, combined with the high inflation of the Biden years, have put much of New York’s rent regulated/income restricted housing into financial distress. In November something called the New York Housing Conference produced a Report titled “Policy Reforms Required to Avoid Defaults in Distressed Affordable Housing.” The Report states that a large percentage of the existing so-called “affordable” (i.e., subsidized and income restricted) developments in the City are in financial distress, failing to cover their costs and debt service. Essentially, the Report then becomes a plea for increased City subsidies to keep the projects from either going broke or deteriorating badly or both:

Recent data shows that a significant number of affordable housing buildings in New York City are experiencing operating deficits, where rents are not covering expenses. Policy interventions to increase revenue and decrease expenses are required to prevent these buildings from defaulting on their loans with private banks and the City of New York. When operating costs and debt service exceeds rental income, building owners don’t have the necessary funds to make repairs but even more consequential is that financial instability threatens the financing making these buildings affordable, putting their tenants at risk.

“Policy interventions” are “required.” In other words, give us more money! But there is never enough money. And yet we continue to double down.

Remarkably, new Mayor Zohran Mamdani and his team will shortly come into office promising to raise taxes on the “rich.” But here are the rich volunteering to pay big money into the City’s coffers without need for additional taxes, but just to buy land to build on, and then pay the property taxes at existing levels. Somehow this form of taking money from the rich doesn’t seem morally acceptable to them. I don’t understand the logic, but maybe they do.

The Climate Cult Takes On “Resiliency” In Manhattan

Here in New York City, in the grip of the hysterical climate cult, we are undertaking a massive transformation of our energy system without anyone in authority having done the simple arithmetic to check whether the plans have any chance of succeeding. A big theme of this blog has been pointing out the obvious problems that mean that these “net zero” schemes can never work. But maybe it’s not really important whether they will ever work or not. Maybe the real point is just to spend a lot of (somebody else’s) money to show that you, somehow, “care.”

The Statue of Liberty standing amid a flooded New York City skyline, with lightning in the sky and derelict boats in the water.

From The Manhattan Contrarian

 By Francis Menton

Here in New York City, in the grip of the hysterical climate cult, we are undertaking a massive transformation of our energy system without anyone in authority having done the simple arithmetic to check whether the plans have any chance of succeeding. A big theme of this blog has been pointing out the obvious problems that mean that these “net zero” schemes can never work. But maybe it’s not really important whether they will ever work or not. Maybe the real point is just to spend a lot of (somebody else’s) money to show that you, somehow, “care.”

A very similar scenario is now playing out in the closely related category they are calling climate “resiliency.” The word means getting ready for the impending climate armaggedon. The armaggedon isn’t coming, of course, but we will anyway spend vast sums supposedly to show we are “doing something” about the problem. Whether the scheme in question might actually work is beside the point.

And thus a couple of days ago there debuted at the southern tip of Manhattan a completely remade Wagner Park. Wagner Park, originally opened in 1996 as part of the Battery Park City development, was previously just a pleasant waterfront lawn of about 3.5 acres. Then the eco-zealots came into the picture, and advocated that the park was at grave risk of inundation from the sea level rise attendant to anthropogenic global warming. The park needed to be raised up to save both itself and the larger inland areas of our fragile island.

About two years ago they began a massive earth-moving project to raise this park up about ten feet to stave off the sea. Now that the newly renovated space has just re-opened, Steve Cuozzo at the New York Post has a piece reporting on the results, headline: “Wagner Park’s disastrous $300M eco-zealot makeover is an insult to downtown New York City.” Here is a picture from the Post of what the new space looks like:

A renovated Wagner Park in Manhattan featuring landscaped paths, greenery, and the skyline of New Jersey in the background.

You can see that the previous lawn has been mostly replaced by a series of terraces rising steeply from the waterfront. Cuozzo has nothing but harsh criticism for the aesthetics of the project:

The “new” Wagner Park in Battery Park City opened this week after a two-year closure and a nearly $300 million redesign. . . . Mature London plane trees were uprooted. The park’s central area was elevated 10 feet in order to conceal a buried flood wall. Much of the lawn was sliced and diced into a ziggurat of paver-surfaced ramps and stairs that have no clear entry points. The park’s once-level, river-facing side swelled into a stepped cliff of wooden, bleacher-like seats where I saw precious few users on two sunny afternoons this week.

And exactly why did they build this huge project to revamp a perfectly nice little park? Cuozzo:

Besides enriching a legion of architects, engineers and landscape designers, the mutant “park” is supposed to protect against a theoretical, worse-than-worst case, one-day-or-someday “100-year” flood caused by rising sea levels. In fact, no such catastrophe has ever occurred. The  original park was so securely engineered that Wagner Park suffered no damage whatsoever when superstorm Sandy caused the city’s highest sea level rise ever recorded.

Cuozzo correctly belittles the idea that sea level rise caused by global warming is going to inundate Manhattan any time soon. But even if it were, this project would still be ridiculous. That’s because if the sea were to rise up, it would rise up everywhere, not just along this tiny stretch of downtown Manhattan.

The part of Manhattan south of Central Park, from 59th Street on the West Side to 59th Street on the East Side, is quite flat, with little elevation gain in the areas near the waterfront. (Above 59th Street the terrain is much hillier.). This southern part of Manhattan has about 10 miles of shoreline along the Hudson and East Rivers, all of it equally subject to flooding if the sea level were to rise. This Wagner Park project deals with only about 400 feet of this shoreline, or less than one percent. Here is a map of southern Manhattan showing the location and scope of this project:

Map of southern Manhattan highlighting the location of Wagner Park with a red arrow pointing to the southern tip of Manhattan.

The red arrow has been inserted to be sure that you can find the tiny red mark that indicates the portion of the shoreline represented by Wagner Park. So if the sea level were to rise up, how is that 400 feet of raised land going to prevent the water from coming inland along the rest of the 10 or so miles of waterfront?

So they have spent $300 million for a project that will inevitably fail at its stated mission, while ruining what was previously a perfectly nice park. This is not really much different from spending hundreds of billions of dollars on an energy transition that can’t possibly work. Or, for that matter, from spending a trillion or so dollars per year on the project to cure poverty, without ever putting a dent into the poverty rate.