TAXING VACANCIES

“Almost half the apartments on a stretch of Park Avenue are empty most of the year.”

a TAX on EMPTY HOUSES
http://savingcommunities.org/issues/taxes/landvalue/
https://nypost.com/2018/03/30/de-blasio-eyes-vacancy-tax-for-greedy-landlords-seeking-top-dollar/
https://www.bloomberg.com/2018-05-03/nyc-renters-paid-extra-616-million-thanks-to-airbnb-study-says
https://citylimits.org/2017/09/29/is-housing-not-warehousing-next/
https://sf.curbed.com/2017/7/12/15961486/sf-tax-landlord-homes-apartments-vacant
https://www.nytimes.com/2016/01/14/us/us-will-track-secret-buyers-of-luxury-real-estate.html
https://www.nytimes.com/2015/02/08/nyregion/stream-of-foreign-wealth-flows-to-time-warner-condos.html
https://citylimits.org/2017/10/12/lessons-from-vancouver-for-nycs-debate-over-vacant-land/
Lessons from Vancouver for NYC’s Debate Over Taxing Vacant Land
by John Schneider / October 12, 2017

“While New York’s current housing crisis is severe, it is not unique. Major cities around the world are dealing with housing shortages, and some are resorting to a measure aimed at the problem: a tax on vacant homes. Vancouver recently instituted such a tax, Paris raised one, and London’s mayor recently called for the ability to raise such a tax. Even in San Francisco, a Supervisor asked the City Attorney’s Office to look into the legality of a similar idea. Concerns like this have spurred PTH’s push for the Housing Not Warehousing Act, which would force the City to make a count of vacant land and buildings, including both City and privately-owned lots, but this would only be a first step. The ultimate goal, according to PTH, is a tax or fine, similar to what cities like Paris, London, and Vancouver have all tried. Whether or not such a plan could work in New York City is up for debate. Aside from the political challenges, the legal and logistical obstacles are serious. Still, the idea of creating more affordable housing without having to offer concessions to private developers or push through unpopular rezoning plans is obviously attractive.

https://www.youtube.com/watch?v=DJuGIV2ZVvQ

While a vacancy tax would be a new idea in New York City, it bears some similarities to an idea that has been floated throughout the city’s history: a tax on pied-à-terres, or apartments kept as second homes by non-City residents. As opposed to a vacancy tax, which would be broadly aimed at vacant lots and buildings, as well as the unoccupied rental units in the luxury buildings Brisport identified, a pied-à-terre tax would be aimed at a narrow subset of vacant apartments. Often in very wealthy areas, and typically held by the rich, these apartments are often targets for politicians, who often propose pied-à-terre taxes, or taxes on foreign buyers, during election season. The political appeal of such a tax is clear, since it would be primarily aimed at nonresidents and the wealthy, but many see it as sound policy as well. Moses Gates of the RPA says the plan has several unique advantages—the biggest of which is it activates a new supply of housing while earning, rather than costing, the city money. “You don’t have a whole lot of revenue-positive ways of increasing the housing supply in New York,” he says. “You’re generally throwing a lot of taxpayer money into not only low-income housing, but to some extent even market-rate housing.”

In contrast, a pied-à-terre tax would only require the costs of implementation. Depending on how it’s implemented, it could raise money (in Vancouver, the Council has pledged that any money raised beyond what its tax costs to implement will go to additional affordable housing programs), and it could actually bring existing apartments into the rental market. In addition, the pied-à-terre tax does not require the time, land, and labor costs associated with new housing construction. Nor would it generate the community pushback that has often greeted de Blasio’s proposed rezonings. Residents in neighborhoods like Inwood are understandably concerned that new developments will lead to gentrification and, ultimately, displacement. But a pied-à-terre tax would mostly affect units that are already in wealthy areas…”

VACANT CITIES
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2922230
https://www.nytimes.com/2017/07/21/upshot/when-the-empty-apartment-next-door-is-owned-by-an-oligarch.html
https://www.newyorker.com/news/daily-comment/the-kleptocrat-in-apartment-b
http://nymag.com/news/features/foreigners-hiding-money-new-york-real-estate-2014-6/
http://www.nydailynews.com/opinion/247-977-stories-vacant-city-priced-reach-article-1.3892656
247,977 stories in the Vacant City, priced out of reach for most renters
by Robert Neuwirth / March 25, 2018

“There’s a hidden city in the five boroughs. Though its permanent population is zero, it is growing faster than any other neighborhood. Early numbers from the Census Bureau’s Housing and Vacancy Survey show the unoccupied city has ballooned by 65,406 apartments since 2014, an astonishing 35% jump in size in the three years since the last survey. Today, 247,977 units — equivalent to more than 11% of all rental apartments in New York City — sit either empty or scarcely occupied, even as many New Yorkers struggle to find an apartment they can afford.

The Vacant City — let’s call it that, with a tip of the hat to the 1948 movie and old TV series “Naked City” — has tripled in 30 years. A generation ago, there were just 72,051 apartments in the Vacant City. Back in 1987, when rents were cheap by today’s standards at a median $395 a month, the Vacant City made up less than 4% of rental apartments. Today, the median rent is $1,450, having risen twice as fast as inflation, even while the Vacant City tripled in size. The numbers just don’t add up the way conventional wisdom said they should. For years, development officials, the real estate industry and think tanks have told us that artificially low rents are holding the city back. Higher rents, the argument went, would free landlords to make a reasonable amount of money and serve as an incentive to increase the housing supply. The new Census gleanings finally put the lie to that reasoning.

We have higher prices for sure — but the only part of the city’s residential real estate that has grown is the Vacant City. More apartments are being held off the market than ever. Some remain vacant for legitimate reasons. Almost 28,000 of those unused units have been rented or sold but not yet occupied, or are awaiting a sale. Almost 80,000 are getting renovated, 9,600 tied up in court, and 12,700 vacant because the owner is ill or elderly or simply can’t be bothered. But that still leaves more than 100,000 units — 74,945 occupied temporarily or seasonally, and 27,009 held off the market for unexplained reasons. Oksana Mironova, a housing analyst with the Community Service Society, says that the growth of the Vacant City tends to confirm charges made by the organizing group Picture the Homeless and others that landlords are deliberately holding apartments off the market, perhaps in order to rent them out on services like Airbnb.

Additionally, many of the 75,000 temporary apartments are pied-à-terres, weekend or vacation crash pads for the rich, up from just 9,282 in 1987. Moses Gates of the Regional Plan Association offers an idea to get these units back on the market: Have the city slap a surcharge on temporary occupancy. “Either the person moves in full time, the person pays the charge, or the person gives it up,” he predicts. Such supply-side interventions are worthy. But they will not mend the city’s most significant housing deficit. Rewind again to 1987. The city, still recovering from decades of arson and abandonment, had 6,241 apartments that were vacant because they were too dilapidated to inhabit — down from nearly 23,000 in 1975. The median asking rent for someone looking for an apartment to move into that year was $450 — just 14% higher than median rent existing tenants paid. Given the apparent benefits of bringing busted-up apartments back into use, it was possible to argue that encouraging more renovation and construction would be good for the city.

In 2017, the Census Bureau couldn’t even locate enough dilapidated apartments to count — but did find a median asking rent of $1,875, 30% higher than what a typical existing tenant pays. What’s more, the vacancy rate for those expensive units is huge. Almost half the apartments available for rent in New York cost more than $2,000 a month — and the vacancy rate for them is above 7%. We’ve largely conquered dilapidation and abandonment. Statistically, there are no more slums in New York City. But we’ve achieved this through a supply-side fantasy that created an unaffordable and increasingly vacant city. More than 63,000 New Yorkers are living in homeless shelters (almost three times more than in 1987), and 30% of city households are shelling out more than half their income in rent. What they and all New Yorkers need is not simply the construction of more housing, but better means to keep rents within reach.”

DECOMMODIFIED HOUSING
https://nyccli.org/resources/clts-and-mhas-frequently-asked-questions/
https://citylimits.org/2018/01/08/the-nyc-community-land-trust-movement-wants-to-go-big/
https://shelterforce.org/2017/11/07/new-york-city-becomes-hotbed-community-land-trust-innovation/
https://urbanomnibus.net/2014/04/the-value-of-land-how-community-land-trusts-maintain-housing-affordability/
https://www.lincolninst.edu/publications/working-papers/community-land-trusts-low-income-multifamily-rental-housing
https://homesforall.org/wp-content/uploads/2018/03/Communities-Over-Commodities_Full-Report.pdf
https://www.thenation.com/article/a-new-housing-rights-movement-has-the-real-estate-industry-running-scared/
https://www.fastcodesign.com/3067317/can-this-radical-form-of-affordable-housing-development-make-cities-more-livable
https://nextcity.org/daily/entry/preserving-nyc-affordable-housing-habitat-cdfi-loan
https://www.fastcompany.com/40451229/can-connecting-rent-to-income-not-market-rates-change-the-affordability-of-cities
https://www.fastcompany.com/40487452/new-york-city-is-funding-a-community-land-trust-to-help-low-income-residents-buy-homes
https://www.fastcompany.com/40563973/permanently-affordable-housing-gets-its-own-accelerator-program
https://www.fastcompany.com/40547215/4-radical-real-estate-ideas-to-fix-our-broken-housing-system
4 Radical Real Estate Ideas To Fix Our Broken Housing System
by Eillie Anzilotti / 03.23.18

“At the core of the American housing system of today is the fundamental belief that housing should be a vehicle for private wealth creation. Privately owned housing on the market makes up 96.3% of the total housing stock in the U.S. Homeownership, once one of the surest ways for a family to accumulate wealth, has declined across the country; rates dropped to 63.4% in 2016, their lowest since 1967. Big banks and mortgage companies attach stringent criteria and high interest rates to loans that often lock lower-income people out of buying a home.

“In 2011, Picture the Homeless partnered with Hunter College to execute a count of vacant buildings and lots in 20 of NYC’s 59 community boards.”

So instead, they’re forced into the rental market. As wages have stagnated and property costs have continued to rise, an astonishing number of Americans struggle to afford monthly payments. Almost half of all renters spend more than 30% of their income on rent, which is the ratio the federal government deems affordable. One in four renters shell out half their income to hold onto a place to live. Homeowners aren’t any better off: Around 41% are struggling to make mortgage payments, and risking foreclosure as a result. Across market-based housing, people of color, gender nonconforming people, and those with a criminal record routinely face barriers to securing housing. Scattered throughout this mess is the remaining 3.7% of the American housing stock.

These homes fall under the category of “social housing” which includes government-owned housing, and nonprofit-financed, community-based models. Investment in the former has fallen precipitously; Chicago’s demolition of the Cabrini-Green Homes, completed in 2011, perhaps best encapsulates the nation’s move away from public housing and increasing dependence on the market to provide housing for low-income people. Permanently affordable, inclusive housing models like community land trusts (CLTs)–represent a tiny portion of the housing stock, but if it could go mainstream, they could give people the affordable options they need and the market can’t provide.

“A homeless shelter will soon be located at the Park Savoy Hotel on West 58th Street.”

That’s the crux of a new report from the Right to the City Alliance, a nonprofit focused on creating equitable urban areas, and its Homes for All Campaign, which advocates for affordable, dignified housing for all. “Communities Over Commodities: People-Driven Alternatives To An Unjust Housing System” details four models of “decommodified housing” (in other words, housing that is a place to live, not an investment vehicle) that have proven, in other countries, to provide stability to families struggling to afford a place to live. “It’s extremely timely because of the sheer scale of the crisis and suffering, and the failure in general of elected officials and policymakers in general to acknowledge the crisis, or to come up with anything other than quick fixes that don’t address the root causes of the problem,” says Tony Romano, director of organizing and strategic partnerships for the Right to the City Alliance, in a recent webinar.

The four models follow the organizations’ Just Housing principles, which both Right to the City and Homes for All believe are necessary for creating truly affordable and dignified housing: community control, affordability, permanence, inclusivity, and health and sustainability. “We see community control as the linchpin upon which all the other principles are made possible,” the report notes. Essentially a model that puts the community first is the reverse of market-oriented housing–and that’s why organizers are optimistic about its potential to effect real change. Political will behind these models is scant. The idea of houses as an appreciating asset has become a key part of American economic policy and an important part of many people’s financial planning. But the system does not work to house all people: We need something different. “These examples dispel myths that alternative models can never reach scale, that there are no feasible financing mechanisms and that they stagnate the economy,” the report reads. Right to the City hopes that its work can translate into policy recommendations for cities and communities struggling with housing affordability.

“A low-income limited equity cooperative on West 139th Street, Manhattan.”

LIMITED EQUITY COOPERATIVES
In this model, member-residents jointly and democratically own and reside in their building, which they secure through a combination of collective purchasing and a low-interest mortgage, often with the assistance of a nonprofit. Households–which generally have to fall below a certain income level to be eligible–purchase shares in a corporation or nonprofit that owns the limited equity cooperative (LEC), and in addition to paying for that share, they pay monthly fees to cover property taxes and operating costs, which the LEC manages. By purchasing a share, households are given a unit to live in under a lease that protects tenants from unjust eviction and typically lasts 99 years–essentially, for a lifetime. But if a member-resident chooses to leave, they are not permitted to sell the unit for profit; the LEC members collectively determine a cap on resale values to keep units affordable. The resale price cannot exceed the sum of the original cost of the unit plus the cost of any upgrades to the property throughout the time of the first tenancy.

LECs have a long history in the U.S., dating back to when the Amalgamated Clothing Workers Union set up this housing structure and financing mechanism for their workers. Unlike market-based housing, LECs are “not a vehicle for real-estate investment or profit,” according to the New York State Division of Housing and Community Renewal. They aim instead to give low-income people–those who are particularly struggling in the current market–an affordable place to live and perhaps most importantly, put down roots for long enough to build a life.

“CLTs calculate prices by taking one-third of the local median wage, multiplying it by the standard 25-year mortgage rate, and adding a deposit rate of 10%.”

COMMUNITY LAND TRUSTS
If LECs manage buildings, who controls the land upon which they build? In places like Oakland, where exorbitant land costs have hampered affordable housing (developers feel pressured to charge enough to tenants to recuperate the costs of land), land management is a crucial part of the affordable housing picture that’s often left out. Community land trusts can work in tandem with long-term affordable housing structures like LECs to keep both land and units affordable. CLTs, using a combination of public and private funds, buy up parcels of land–either vacant lots or existing properties–and place them into community ownership through a nonprofit. Anyone who develops property on the land owned by the CLT has to adhere to cost guidelines set by the community, pegged to the median incomes of people within the CLT–not to market rates.

If, say, a developer wants to build an apartment building on the CLT, they have to set the cost of units by taking one-third of the local median wage, multiplying it by the standard 25-year mortgage rate, and adding a deposit rate of 10%. If the owner of a unit wishes to sell, they must follow the same formula. A similar formula, set by the CLT, applies to individual homes and businesses. CLTs are able to regulate costs in this way because they own the land and, as such, determine its value. And because CLTs are motivated by providing community benefit, not creating profits, they keep the value of land steady, rather than subjecting it to market speculation and raising its price. CLT members also follow a democratic process in determining what gets built on the land.

“Diagram of the Cooper Square CLT”

New York City, one of the flashpoints of the American housing affordability crisis, last year moved to establish its first CLT on parcels of land across the city, with the support of a coalition of nonprofits and stakeholders, who helped finance the initial land purchase. While this is a win for the city, it’s frustrating in light of the fact that Mayor Bill de Blasio has, in his four-year tenure, sold 202 parcels of land to developers for $1 to spur housing creation, but just one of those developments is permanently affordable. Those parcels could instead have been fed into a land trust, and it’s a mark of the lack of political will for the model–despite its benefits–that they were not.

TENEMENT SYNDICATES
While the U.S. has a handful of LECs and CLTs, the Tenement Syndicate model originated in Germany, and is confined to Europe. This model defines itself as a “solidarity network” and its key feature is a dual ownership model, in which member buildings are managed by two entities: the tenants organized by individual housing projects, and an overall syndicate, which provides organizational support and supervision, and is comprised of members of each house project as well as legal support and counsel, often provided by associated nonprofits. Tenants decide issues like setting the cost of rent and what building renovations are necessary, and the syndicate manages loans for projects, and advises the individual buildings within the network on operational matters.

Unlike LECs or CLTs, which may be eligible for public funding to get started, each new building that comes into a syndicate structure is paid for via a conventional mortgage loan that requires a down payment of around 20%. The building residents collectively finance the down payment and often tap resources like alternative lenders to do so. And a particularly compelling feature of this model is that tenants of existing buildings in the syndicate pay a small amount each month into a “solidarity fund,” which then goes toward bringing new projects into the syndicate. The idea behind tenement syndicates is that no one is in this alone–and that the larger syndicate structure exists to support buildings in which people reside according to this ethos.

MUTUAL AID HOUSING COOPERATIVES
Like tenement syndicates, mutual aid housing cooperatives (MHACs) are a foreign concept in the U.S., but quite popular in several countries in Latin America, where they were first established in the 1960s. What sets it apart from the previous three models is that the residents of a MAHC work together to both maintain and build their own housing. A group of families band together and decide to form a MAHC. They then seek out land on which to build, which they secure either via a grant or a purchase. If the latter, the families go in on a collective loan with which to purchase the land, which minimizes risk. The whole family participates in the building and management process–MAHCs make a special point give women and people with disabilities responsibility–and the work contribution saves an estimated 15% to 20% of labor costs.

Federación Uruguaya de Cooperativas de Vivienda por Ayuda Mutua (FUCVAM), based in Uruguay, is the largest and oldest federation of MAHCs in the world, and to date, it comprises more than 500 housing developments for 25,000 families; its success has spurred the expansion of the model to 17 countries. Not only does the collective organizing and building structure create a community support system for individual families, it also equips young people in the MAHC with construction and organizing skills.

As housing becomes less and less affordable, rates of homelessness have spiked in the country, and numerous previous studies have shown that it’s much less expensive to house people decently than it is to manage their needs–from shelter to health–without a stable home. If we’re going to try to truly tackle the affordability crisis in the U.S., the report contends, we can’t just continue to work within the current system. While the report’s authors acknowledge that establishing community-based systems is radical, what choice, exactly, do we have? “The current U.S. housing system, rooted in the commodification of land and housing and speculation, is not our only option,” Romano says. “There are alternatives, and these alternatives do work and are guided by a vision of housing as a human right and undergirded by principles including community control.”

PREVIOUSLY

“Many windows at the Plaza remain dark. One broker estimates that only 10% of its roughly 150 condominium apartments have full-time residents.”