80/20 buildings

We just moved into one this summer. Having moved from our condo to this 80/20 building, it was an ajustment. We pay market rent in what is considered a luxury building. There are no problems with trouble or noise but it does bother you when you consider that you are paying top dollar for what others in the building are getting for next to nothing. It also appears that some of these folks don't even work (my neighbors ).

I'm not sure what the "adjustment" would be for anyone other than getting used to seeing a more mixed demographic of neighbors. If you feel uncomfortable riding in the elevator to your apartment with minorities, the elderly, or the disabled, i would stay away from these building. If that's not a problem, then my experience (which is limited to my building now) is that i have the same interactions with my neighbors as i did at luxury rental building on the UES (with no 80/20).

But, as EAO clearly does, if you have a problem with people of a lower socieconomic class recieving government subsidies for any reason and would rather not be confronted with that each day, then stay away.

Rufus - just to tell you there is a big process you have to go to get approved for an 80/20 subsidy. There is a home visit as well and even if they won't say it the make sure you will fit in with the neighbors. We are trying to get into one now. We are currently paying full market and have fallen on hard times. You would never know it. To assume that your poorer neighbors will cause noise and trouble just shows what a little person you really are.

cccharley,

no need to get personal. i'm just asking because a lot of the new desirable rental buildings are 80/20, and i want to make sure i'm making the right choice before moving in. it just infuriates me that i'm busting my butt to live in a nice place, and the liberal government is subsidizing people to enjoy the same amenities that i enjoy, but at a much lower price. living in a luxury building in manhattan is a privilege, not a right.

rufus, that infuriation is a psychological problem, and not one for discussion here. Your personal happiness can be based on comparison with others', or just, well, your personal happiness. Your choice.

Or would you feel the same way about someone in the tract house next to yours who bought 7 years ago and have much lower mortgage payments than yours? And let's say they didn't even earn the money they're paying with.

alanhart, i've heard plenty of horror stories of subsidized people causing trouble in 80/20 buildings, which is why i bring this up. for example, there have been major incidents at buildings like archstone midtown west, chelsea centro, etc., where the subsidized folks would cause noise and disruption.

If you've already heard the horror stories, why are you bringing it up as an open-ended question? Just detail the [alleged] horror stories that you've [allegedly] heard, and recommend that people stay away from those buildings, if you care to. Or not.

Your story doesn't add up. Discuss it with your therapist.

Rufus- move into Windsor Court if you want to hear noise and disruptions - oh and you can have that privilege for just $3500 a month for a 1 br. which everyone is paying

I find it safe. There's one or two iffy people I see in the laundry room, and 2 years ago they caught someone prostituting in the building and kicked her out. You do definitely see the 20s but the vast majority of them are respectable, safe, normal folks. Like I said just one guy I can think of that makes me uncomfortable.

PS: I think Rufus has a valid question.

Rufus has a valid question but a nasty attitude. Go live in one of the fancy buildings, Rufus, with the other people who are on your exalted level.

LP1,

thanks for your helpful comment. i'm definitely not a snob; i just care about being in a safe, clean building. and yes, my friends in these buildings have told me stories of the subsidized people coming into the lobby totally drunk, throwing up on the sofas, causing a ruckus, or even getting into fights. and i know this is politically incorrect, but all these people were racial minorities who were being subsidized by taxpayer dollars. so forgive me if i offend your liberal sensibilities, just like rudy giuliani did (who rescued this city from destruction after 25 years of liberal mismanagement.)

furus, while SOME of your concerns about social policy may be legitimate questions to raise, you are being attacked here because of your dogmatic views. For example, "poor people drink, they are loud, and they're messy." "I don't want 'minorities' around me." "Poor people are decidedly minorities." Your statements are thus designed to upset others.

I am in Midtown and have consistently found Japanese families in my building to be the quietest, cleanest, most courteous, and most considerate. Would you have problems with them because they are, after all, "minorities?"

Anyhow, yes, we all want to live in nice buildings. I am not even going to try to pretend otherwise. However, the causal attribution you are making is what offends us. It's not about being liberal or conservative.

And, yes, it may be that mixed-income buildings tend to be less quiet, less clean, and LESS WHITE. Living in NYC, however, one should be well aware that SUPER WEALTHY White kids in their 20s are extremely loud, drunk/high, messy, and they pee and barf all over the place. You should therefore avoid buildings with such people as well.

Rufus - how do you know that those in your story were in fact receiving subsidies? Across the country what is the racial/ethnic breakdown of those who receive govt. assistance?

I was a '20' in a building in Manhattan. The notion that poorer people are necessarily disruptive or troublesome is an example of extreme idiocy.

In order to qualify to be a '20', you MUST have a job, have very good credit, and have very little debt. The only criterion that separates the '20's from the '80's is that to qualify as a '20', your income has to fall within certain parameters (varies based on family size, neighborhood and year, but the figure is typically between $20K and $35K for an individual). Welfare recipients and other non-workers are NOT eligible to be a '20'; the 80/20 program is not intended for the really impoverished and destitute. It's intended to give the 'working poor' - emphasis on the WORKING - an opportunity to live in the same neighborhood and environment that others born with a silver spoon in their mouths enjoy.

One more thing: '20' tenants are not 'subsidized' by the government. They don't receive rent grants (like Section 8 tenants do) - they are fully, 100% responsible for paying their own rent out of their own pockets. The sum that they have to pay is significantly lower than that paid by the '80s', but not because of government subsidies. Instead, the government offers significant tax breaks to developers in prime Manhattan neighborhoods in exchange for allocating 20% of the units to rent paying, employed, lower income people. Those breaks are so significant that the vast majority of developers of luxury buildings take those incentives (though they are under no obligation to do so), even though it means that they might collect only 25 - 33% of the rent that they'd otherwise collect on particular apartments for the duration of time that the building is in 80/20 (usually 20 years.)

Despite having benefited from the system, as a free market conservative, I happen to believe that for the government to create artificial systems in which tax dollars are sacrificed so that poorer people are able to effectively live beyond their means is inherently unethical. The government has a responsibility to ensure that its citizens have decent housing, yes, but poorer people have no more 'right' to live in a luxury building in Manhattan they can't afford than they do to get a government issued BMWs. I think the government abuses its tax power in this case, but nonetheless wholeheartedly disagree with the absurd notion that living in an 80/20 building (virtually every luxury rental building in NYC) poses any kind of health, life or serenity risk to our highly sensitive original poster.

re Someonewhoknows:

Someone, I think the big point of 80/20 is to make the transition of gentrification in NY less dislocating for original residents. (I assume the process of gentrification via new construction is ongoing, and it looks like Manhattan will have a higher median income 10 yrs ago than it does now, and higher at 20 years than at 10, even in inflation adjusted terms.) I was new to the city when moved into new construction that was an 80/20 building, though I hadn't heard of the program at the time.

The 80/20 program, in its effect on the community, means that you have people who are in lower-wage jobs and professions who live locally. I mean, like the bodega manager, or nurse's aide, or similar jobs. Without 80/20, it would mean that all those people would by necessity live in the far outer boroughs. As such they would have less connection to the neighborhood that they serve in their jobs. It really makes a positive difference for the fabric of a neighborhood to have a sense that we live near each other, and work near each other. Several people in my building work in one of the two neighborhood hospitals near me, I think.

I'm in my second 80/20 building now, and it's definitely positive that there's this sense of us all being "at home" in the neighborhood.

I guess what I'm trying to say is that it really helps breaks down that sense of a division between what (in some people's eyes) could otherwise feel like "the exploited" serving "the exploiter." When you have that strict stratification, defined just by who can afford to pay sharply rising rents, I think it creates resentment in the surrounding areas, and makes it easier for a mentality of "f*ck it -- these people are displacing the old ("rightful") residents, so I'll just see these newcomers as prey."

Lack of something like an 80/20 program is one reason I think gentrification is so much nastier and tense a process in other cities. I've lived in quite a few of those areas in other cities over the years, and the sense of a neighborhood fearing that its old residents will be totally displaced, right off the face of the neighborhood (which of course doesn't happen entirely, and certainly wouldn't happen except over years and years) really brings out the worst in people. In NY, for those who are willing to go through the high hurdles to get into the buildings, it gives original residents some stake in the new buildings.

Regarding the supposed "bad behavior" of the 20% - - that's hogwash, in my experience. You have a much greater risk of party-hearty, fresh-out-of-college residents who pay market value, perhaps cramming two into a one-bedroom, being disruptive.

I think setting aside 20% of the rentals helps keep more diversity, and that's a good thing. (Realize, after all, that it's only temporary, lasting 20 years, I believe. It's a transitional program.) New York wouldn't work as a series of gated communities, after all. (Though you could argue high-rises with doormen are close enough, but that's another whole discussion.)

You make a valid point Another; there is certainly a value to intermingling, insofar as in a community with a mix of people who have 'made it' and others who haven't, the haves are more likely to influence and inspire the have-nots than the other way around. Conversely, communities (or buildings, or schools) that are populated wholly by the poor and financially unsuccessful don't have local, living models to aspire to and generally deteriorate. See, for example, the difference between the quality of Mitchell-Lama buildings (comprised of both middle and low-income tenants) and which are generally very clean, very safe, and very home-y) vs. housing projects (comprised exclusively of the poor) which are generally cesspools of perpetual poverty, violence and crime from which few emerge unscathed. I'm sure this reality is part of the impetus for busing, whose goal is not simply to integrate people of disparate racial backgrounds for the sake of ethnic harmony, but also to mix people specifically from different socio-economic backgrounds. Regular interaction and exposure with people from a higher economic class undoubtedly has an inspiring effect on the lower economic classes to excel.

Even acknowledging those benefits, I still can't justify programs like 80/20. The backbone of the capitalist ideology is that you reap what you sow; succeed, and you get to enjoy the fruits of your labor; fail, and you don't get to enjoy what others get. True, this is not, nor should it be, an absolute survival of the fittest society; government has a responsibility to ensure that those who don't keep up with the rat-race (including even those who choose to be lazy and/or unproductive, to say nothing of those who simply CANNOT do it because of illness, handicap, or some other mitigating circumstance) are still afforded the basic staples of food, housing, etc. But there is not, nor should there ever be, government funded provision of LUXURY staples that go above and beyond a person's basic needs, particularly when it comes at the expense of those who do work hard. Thus, for those too poor to afford it, the government must be responsible to provide decent means of transportation - but to provide free rides on limousines to and from people's homes to their place of work is wasteful and wrong. For those too poor to afford it, the government must be responsible to provide decent food - but to provide vouchers for free meals at the Four Seasons is overdoing it. Similarly, for those to poor to afford it, the government must provide housing - but to grant luxury housing in prime neighborhoods (and at taxpayer expense!) is absurd, and absolutely unjustifiable, no matter the social benefit.

The way I look at it that NYC would be pretty boring if it were made up of only people in finance - and that's about the only people who can afford these new bldgs = and lawyers of course - oh but this may be changing due to the crunch on WS right now. Hey maybe rents will come down

i agree 100% with someonewhoknows. It's absurd for the government to allocate 20% of luxury units to the working poor, thereby driving up rent for everyone else. Living in a luxury doorman building in prime manhattan is NOT a right, although liberals may disagree. From my understanding, Chicago does NOT have 80/20, and they have cheaper rent AND higher-quality luxury buildings.

I have lived in two 80/20 building and they were both terrific. Personally, I loved having all different types of people around me. I have to admit, there was one time it did kinda' suck - and it had nothing to do with people....when I needed to move into a 3 bedroom (due to expanding family) and couldn't afford it, it was a little irksome that others, making far less than I and working far fewer hours, could. But really, I see that as my problem not theirs.

I would MUCH rather live in an economically and racially diverse building than near recent college grads, and I'm not that old myself.

grunty, i'm glad you enjoy the "diversity" of being around different types of people. but most people, including myself, could care less about that liberal hogwash, and we're upset that this program is driving up rent for everyone else, who busts their butt off to live in a nice building.

Chicago has cheaper rent than NYC because it is Chicago, not NYC. Any more observations?

80/20 does not drive up rents.

Rufus, in another thread I already explained why 80/20 buildings don't drive up rents (and, if anything, lower them). Like most reactionary conservatives, you seem to think just repeating the same lie over and over again will make it true.

I live in an 80/20 building, and the main difference that I can discern is that there are slightly more families in the "20" part of the building, and the people don't wear as many designer clothes. I'm tempted to say they're more polite, too, but I just recalled a recent very pleasant encounter with a guy from the top floor of the building, so I suppose both rich people and the working poor can be polite.

jordyn,

i'm really sorry that you don't understand basic economics. the primary reason why nyc rent is so high is due to regulations and programs like 80/20, which limit the supply of good-quality apartments. in terms of pure percentages, the vast majority of apartments in the city, even manhattan, are really low-quality. so the demand for nice buildings is really high, and since there aren't that many of them, rent is astronomically high.

visit Chicago if you want to see the polar opposite. they don't have liberal regulations and 80/20, so the city is full of luxury high-rise buildings. from the south loop all the way north along the lake to lakeview, all you see are nice high-rise buildings that are better than what nyc offers. and since there are so many of them, the rents are a lot cheaper. for example, you can live in a 1-bedroom next to lake michigan for 1500/month. that amount will get you a rat-infested shithole in manhattan.

Jordyn -

How could you possibly argue that 80/20s (and rent stabilization in general) don't raise rents for everyone not lucky enough to be in them?

ANY program that puts an artificial, non-market-condition-created cap on rents unfairly limits supply, and thus, creates a more-likely-to-be-unmet demand from people willing to pay market rents. The diminished inventory for people who are willing to pay market prices by definition raises the threshold of those market prices.

This is a capitalistic country, not a socialist one. While SOME degree of government intervention in the marketplace is important, necessary, and morally justified - including ensuring that people who otherwise couldn't afford it have a habitable home to live in (as well as ensuring the accessibility of basic staples, so that the cost of milk is kept affordable, water is clean, police and basic services are available to all, etc.) - it is LUDICROUS for government to provide an EXCEEDINGLY HIGH, LUXURY quality of product to those who can't afford it. It's exactly analagous to food stamps paying for gourmet meals at restaurants or welfare checks being paid in the form of gift certificates to Bergdoff Goodman. Government MUST feed and clothe and house those who can't do those things for themselves, but it's ridiculous for the government to provide anything more than the most basic basic level of these basic services to freeloaders.

I say all this while acknowledging the benefits of these programs, as a former '20' tenant myself and as someone who grew up in a Mitchell-Lama building on the Upper West Side, a neighborhood my parents would otherwise never have been able to afford. This country is built on the premise of reward for hard work, and the open opportunities and possibilities for anyone who wants it badly enough to succeed. Shortcuts around that system erode the very motivation that makes the American system work.

Okay, just to recap:

The 80/20 program is VOLUNTARY. Landlords opt in by electing to take low/no-interest financing for their buildings; in exchange, they agree to various things including providing 20% of the units to lower income tenants.

If the landlords thought they would earn more money without the cheap financing, they'd just build their buildings outside of the 80/20 program and charge whatever rents the market would bear for all of the units. The fact that they opt into the 80/20 program means that they think they can make more money with the cheap financing and providing 20% of the units at a loss than otherwise.

It's reasonable to argue that this is an expensive way of providing low-interest housing, and some of Someonewhoknow's argument touches on this. But since landlords are rational actors in the market and they choose the 80/20 program, they're signaling that it's *more profitable* to opt into the program than to stay outside. Or, that in order to generate the same profits, they'd have to charge even higher rents. So, the worst case scenario is that the 80/20 program has no effect on market rents; since most developers opt in, it seems likely that it actually decreases market rents.

Rent stabilization in general may have the effect of raising rents, and I'm not at all opposed to means-testing rent stabilized apartments more aggressively. But much of the rent stabilization framework was applied involuntarily in the past, whereas the 80/20 program was chosen by smart, profit-seeking developers so the only argument that it increases rents is that you somehow have a better grip on the economics of running a rental building than the landlords who opt into the program.

Finally, the argument that Chicago is cheaper than Manhattan is ludicrous. Of course it's cheaper. It's not on an island, the overall cost of living is lower, and (as far as I can tell) it's very few people's first choice for a place to live. You need to learn about the difference between correlation or causation, although it may not matter for very long because due to the rapidly shrinking population of pirates the world will overheat and kill us all in the very near future: http://www.seanbonner.com/blog/archives/001857.php .

jordyn,

upon what basis do you think chicago is very few people's first choice? have you even been there or know people who live there? i have plenty of friends who live in chicago, and they prefer it to NYC by a long shot.

Jordyn -

The fact that landlords CHOOSE to opt-in to the 80/20 program rather than being compelled to do so is immaterial to the question of whether or not such programs actually increase the average rent for non-stabilized apartments. All it means is that the tax benefits the government grants to developers who opt-in are so extensive (and come out of yours and my pockets) that it's worth it for the landlord to forego some 65 - 75% of the rent he would otherwise collect in 20% of his apartments over the course of 20 YEARS in exchange for the tax breaks. All so that people who would otherwise have to (GASP!) live in non-doorman buildings in the outer-boros have a shorter commute to work. That's some kind of system the rest of us are financing. It's really sick, in my view, and runs completely counter to the traditional American way of rewarding success.

Of course, 80/20 is not nearly as corrosive and deleterious as rent-stabilization or rent-control. Rent-control, perhaps the most abused and communistic of all housing regulations, allows people to rent prime apartments for a pittance of their actual market value, and, what's worse PASS ALONG THOSE RIGHTS to generation after generation ad nauseum. There is NO correlation between a tenant's income/ability to pay and his rent, and the rent can NEVER go up by more than a small, government mandated percentage, regardless of a landlord's costs in maintaining the apartment. Landlords are forced to pay tax on and maintain units regardless of cost and have ZERO right to access the apartments they own, utilize them for their own purposes, or evict the tenants for any reason other than non-payment. In what other aspect of life in this country can you own something, be obligated to maintain it, and not have the right to use it at all? It's a noble idea (whose genesis was in guaranteeing that GIs returning from WWII had affordable places to live) whose time has more than since expired, but continues to be abused to this day.

Rufus--you seem to be missing the point. Maybe you should go try to get more people to become pirates before New York is flooded by rising sea levels.

SomeonewhoKnows--your first sentence contradicts your second one. It's precisely because the tax benefits the government grants developers are so big that it covers the delta between the rent charged to low income tenants and market rents that a) the developers agree to opt into the program in the first place and b) there's no effect on market rents.

Here's two additional ways to think about this. First, an analogy. Imagine you ran a lemonade stand. You buy paper cups for 5 cents each and lemonade mix for 10 cents a cup. You charge 25 cents per cup of lemonade and make a tidy $5.00 profit after selling a day's supply of 50 cups of lemonade. Now, it turns out some poor people live nearby and the government comes to you and says "we'll give you free paper cups for all of your lemonade if you sell 10 poor people lemonade for only 10 cents each". You're a clever guy, so you do the math. And you realize that in exchange for giving up $1.50 in revenue you are getting $2.50 in cost savings. By going along with the government's plan, you actually make $6.00 instead of $5.00. In fact, you could lower your market-rate lemonade to 23 cents per cup and still make as much money as you did before.

The only possible reason that you'd raise your prices would be if 50 people still wanted market rate lemonade and you only had 40 cups (or, that because of the 80/20 program, the supply of market rate housing is somehow decreased). There are two reasons this isn't the case: first, there's nothing stopping you from making more lemonade/apartment buildings if it's still profitable to do so. Second, since landlords are opting into the program, it's possible that some projects wouldn't be profitable *without* the subsidized financing. Especially in tight credit markets, having subsidized financing available undoubtedly makes many projects viable that otherwise would not be, so the net effect of the program should be to increase the availability of market rate units.

As to the rest of your rant, I'm making no claims about the efficiency of the program or the benefits of rent stabilization here. I'm just pointing out that the only possible effect of the 80/20 program on market rents is to decrease them, although I suspect it's basically neutral with regards to market rental prices.

To my mind, when you have a huge disparity in wealth across a single metropolitan area, your choices (re: housing) either are: 1) attempt to integrate different economic groups, or 2) create a big enclave of the rich -- which are by definition a big, fat target for the disenfranchised to pray on.

Now, in cities where land is not a premium, sure, you can create gated communities. But unless you want Manhattan to be like a police state, where you're showing ID just to cross an avenue or something, you have to deal with the mix of people.

For those of you who work in big office buildings in Manhattan (or especially if you're in sales and go from building to building in a day), think how much less convenient and obtrustive (and inefficient) to have to do the 5-10 minute ritual, per building, when you're just going about your daily business.

With a big economic barrier, totally separating the less-enfranchised/displaced from those who can pay (ever-increasing) market rents, do you really want to live with more security checkpoints in your daily life?

With Manhattan's population density, you just can't be a magnet for wealth, and have the baseline social stability you need, without either dealing with those who are climbing the ladder at a slower rate than the rich, or without putting a big fence around everything.

Uh, Jordyn, you can't just "make more lemonade." There isn't enough room in the coveted parts of this island to do so. With vacancy rates for residential rental apartments below 1%, it's clear that the demand outstrips the supply. If all of the stabilized units were suddenly freed of their artificial price caps tomorrow and all of the stabilized tenants who couldn't afford the new rent suddenly moved out, the market would be flooded with units in coveted neighborhoods. The tables would be reversed. Landlords would be eager to fill their empty space, people of means who are looking for housing would suddenly have innumerable new options open to them, and prices would inevitably come down.

Stabilization and other such inane programs make Manhattan even smaller than it is. They effectively take tax dollars from the wealthy to subsidize the poor, and then cause a further expenditure of wealth by artificially forcing would-be non-stabilized tenants to pay more.

Your argument about the availability of subsidized housing actually increasing the number of available units MAY turn out to be true if credit continues to be tight. But that's a prospective argument. Looking back at the past few years, the existence of stabilization has undoubtedly contributed to the skyrocketing cost of rent.

Someonewhoknows--What? Rufus was just telling us that Manhattan was more expensive than Chicago solely because we didn't kick all the poor people out, and now you're saying there's other factors like the availability of land involved? I'm pleased that your arguments at least make some sense.

Seriously, though: you can't have it both ways. You can't argue that without the 80/20 program landlords would be forced to lower their rents significantly, *and* that they would continue to build new inventory at the same pace (regardless of whether or not credit is available--now we're talking about the profitability of projects) if their profits were significantly reduced. Some projects just wouldn't be profitable if there really was a "flood" of new inventory forcing rents down, and so supply would be reduced until we arrived at the right balance again.

The bottom line is that the 80/20 program effectively increases demand by making low-income tenants have an effective purchasing power similar to market tenants. It does this by encouraging landlords to increase supply, though, which I think more than balances the increased demand. Your argument that it's not possible to build more apartments is undercut by recent history: in boom years, not only does a significant amount of development go on in prime neighborhoods, but previously marginal neighborhoods start to see development and become gentrified in the process. As others have pointed out, the 80/20 program makes this gentrification somewhat less disruptive to existing neighborhoods, which is a nice social goal but mostly unrelated to the core of our discussion.

I'll grant you that we're both speculating a little, but the changes in supply and demand from the 80/20 program are so minor that it's exceedingly unlikely to have a significant effect on pricing one way or the other. You seem mostly unhappy with the rent stabilization regime in general, and given the sheer number of units involved and the lack of market incentives present in the 80/20 program, it's probably true that it does skew market rents up. On the other hand, it is a lot cheaper in terms of public dollars...

I'm not sure I agree with your assertion that the absence of 80/20 programs would create such a disincentive that builders would cease developing rental housing. If government cheese were taken away, instead of making an enormous fortune on a new rental construction, developers would make only a small fortune. Would that mean that fewer housing units would be built? I tend to doubt it. As it is, every square inch of Manhattan below 96th st is developed anyway.

But even if your hypothesis is correct, and fewer developers were interested in building or re-building on what few parcels might be available, that just means that landowners who sell to builders would have to create more incentives for the builders to buy and develop their property, i.e. lower the price of the land. Lower price for land means the developer can afford to charge lower rents, and we arrive at the same conclusion as we would if the abolition of 80/20 created no disincentive at all.

The bottom line is that I believe firmly in free-market economics, and significant deviations from that - no matter how noble the cause - tend to help a minority of the population at the expense of the majority. True, there are some instances in which government has a legal, ethical and moral responsibility to interfere in free markets for the sake of the welfare of the people (artificial caps on the price of milk to ensure that such a vital necessity is affordable to all, for example, is a good thing; as are 'intrusions' into the 'rights' of property owners insofar as requirements that private property owners provide such basic services as clean water and heat to their tenants are concerned) but providing tax-payer-funded, market-screwing, LUXURY accommodations to people who can't afford them are not one of them.

I don't like my car. Can the taxpayers please subsidize my 'right' to lease a BMW for 33% of its true market cost? How about food? Can the government please provide me foodstamps that are redeemable at Nobu and the Four Seasons instead of 'forcing' me to shop at the supermarket?

Thanks.

I think we've made our basic points, so I'll just make the following final observations before I allow the thread to fade into obscurity:

1) Assuming a reasonably well-behaved market, there's no reason why developers would be making outsized profits now. If one landlord had rents too high, others would undercut the price until some sort of price equilibrium was reached. It doesn't make sense to argue that we don't want to intervene in markets on the one hand and then act like supply and demand doesn't provide reasonable checks on excessive profits on the other.

2) I've not seen a comparison between the 80/20 program and other mechanisms of providing affordable housing. The two other principal options that I've heard of are: 1) rent stabilization (which you also don't like, obviously) and 2) government-provided housing. The latter option is likely very expensive and not very good. If it turned out that the 80/20 program cost less than providing a comparable number of public housing units, would you still think it was a bad idea? To me, it would seem obvious that it was a great idea since we would be creating much nicer housing for the same amount of money, leveraging the efficiencies and market incentives of the developers rather than relying on traditional government programs. I also like the 80/20 program more than traditional rent stabilization, because it's more honest in terms of having the government directly pay the cost, it's means tested, and it doesn't distort the market.

3) Providing cheap financing is one of the more efficient things the government can do. Especially for buildings financed with liberty bonds (which I believe were provided by the federal government), the government can borrow money for much less than the developer could on his own. The government is therefore not paying nearly as much for the subsidy that it is providing as the developer would have had to pay for the same financing, so we end up with a much "cheaper" subsidy than we'd have with the government making direct cash payments.

I understand that people don't like that "poor" people get to live in fancy apartments, but this is an instinctive argument about "fairness" rather than a real look at the costs and benefits of the program.

rufus
11 days ago
ignore this person
report abuse LP1,

thanks for your helpful comment. i'm definitely not a snob; i just care about being in a safe, clean building. and yes, my friends in these buildings have told me stories of the subsidized people coming into the lobby totally drunk, throwing up on the sofas, causing a ruckus, or even getting into fights. and i know this is politically incorrect, but all these people were racial minorities who were being subsidized by taxpayer dollars

If you work hard enough to afford a $5000 apt, you shouldnt have to live next door to a person paying $400 for the same apt.

I just came from viewing a $5000 1 bedroom apt at silver towers only to notice graffiti by the elevator.

I was ready to sign a lease now i must rethink it altogether.

I have lived in the Chelsea Centro, an 80/20 building for more than 10 years and almost all the disruption and obnoxious behavior was from nouveau riche 20 somethings from outside NYC. If New York had not suffered absurd rent hyperinflation starting in the mid 90's these programs would be unnecessary. Also, I'm not complaining, but to call my apartment "luxury" is really stretching it. Yes it's cheap but it's the bare basics and the building isn't that well constructed. Most housing in New York is crap compared to other major cities I've been to, some of which are entirely rent controlled and 4 times cheaper, in terms of rent. Yes there are doormen but I have no need for them and would gladly pay less rent to not have them.

Someone mentioned a "major incident" at Chelsea Centro involving a middle income tenant. What was that? I missed it.